What’s wrong with the venerable deduction, which celebrated its centennial last year? “There’s a lot of things wrong with it,” says Sheila Crowley, the National Low Income Housing Coalition‘s (NLIHC) president. “It’s regressive, inefficient, expensive.”
It also is not being used by as many as half of current homeowners, she says. “You have to itemize. Only half the people who pay mortgage interest get to take the mortgage interest deduction.”
How to fix that? Turn the deduction into a tax credit that would be given to all homeowners. That would expand the number of homeowners who could benefit from 39 million to 55 million, Crowley says. And it would most benefit those making $100,000 or less, while raising taxes mainly on people making $250,000 or more.
The campaign to make this happen is called United for Homes, and 1,600 organizations have signed onto it since it began last year. [Including Monarch Housing]
Wrote Mark Fogarty.
He notes that their is opposition to the reform “Industry groups like the National Association of Realtors and the National Association of Home Builders.”
Crowley figures the money saved by switching to a 15% tax credit would come to about $230 billion over 10 years and could be used to achieve a lofty goal: ending homelessness in America. She would have the savings fund an entity authorized in Congress by the 2008 Housing and Economic Recovery Act that was supposed to be funded by Fannie Mae and Freddie Mac. The National Housing Trust Fund (NHTF) does exist, but has not been funded as Fannie and Freddie became wards of the federal government that same year.
The NHTF is designed to expand and reserve affordable rental housing to low-income families. Targeting the very low-income end of the spectrum could end homelessness within a decade without increasing the federal deficit, the coalition argues.
Crowley admits that the legislation containing her group’s proposal, HR 1213, sponsored by Rep. Keith Ellison, D-Minn., has no chance of passage in the remainder of this Congress. She hopes it will be considered as part of a comprehensive tax reform in the next Congress. (She points out that Camp, who opposes this idea, will not be chairman of Ways and Means in the next session.)