The bill includes the United for Homes campaign’s proposed modifications to the mortgage interest deduction (MID), and would direct the majority of the revenue saved by the modifications to the National Housing Trust Fund.
In his letter, Mr. Ellison cites new data from a Department of Education report showing an 8% increase in child homelessness since 2012-2013. Mr. Ellison states,
“We now have more than 1.3 million homeless children, up from 679,724 before the Financial Crisis. This is an alarming byproduct of the terrible rental housing crisis we face. This rise in child homelessness is due to inadequate – and declining – federal assistance for rental housing. Yet, generous benefits for homeownership remain untouched.”
Mr. Ellison cited a recent report issued by the Congressional Budget Office that states:
“In 2014 the federal government provided $51 billion in low-income housing assistance. . . . By comparison, the federal government provided much more support for housing that does not depend on the income of the household. . . . That support, which amounted to about $130 billion in 2014, mostly takes the form of preferential tax treatment—that is, tax expenditures—for homeowners. The tax deduction for mortgage interest payments on owner-occupied residences accounts for most of those tax expenditures and accrues mostly to tax filers in the highest income quintile.”
The United for Homes campaign proposes to modify the current MID by
reducing the size of a mortgage eligible for a tax break from the current $1 million to $500,000 (fewer than 4.6% of mortgages originated nationwide from 2011 to 2013 were over $500,000, and people with mortgages over $500,000 would still receive a tax break on the first $500K of their mortgage) and
converting the deduction to a 15% non-refundable tax credit. Phased in over five years, these two changes would create an additional $230 billion in revenue over ten years for affordable housing without adding a penny to the federal deficit.
The changes would also expand mortgage interest tax benefits to 16 million more households, 99% of whom have incomes below $100,000.
Funding the NHTF with revenue raised by modifying the MID is one of Monarch Housing and the NLIHC’s top policy priorities. We call on all advocates to urge their Representatives to cosponsor the bill.