How Home-ownership and the MID Became the Engine of American Inequality

Home-ownership and the MID Benefits the Wealthy While Low-Income Households Struggle to Make Rent

In a May 9, 2017 New York Times article, “How Home-ownership Became the Engine of American Inequality,” Matthew Desmond examines the Mortgage Interest Deduction (MID), its benefits to wealthy and upper middle-class homeowners and the plight of low income renters in the Boston area and across America.

Writes Desmond, “An enormous entitlement in the tax code props up home prices —
and overwhelmingly benefits the wealthy and the upper middle class.”

Simply put, home-ownership for wealthy and upper middle-class benefits from the MID while lower-middle class and low-income renters do not.

The National Low Income Housing Coalition (NLIHC) created the United for Homes campaign to end homelessness, help build a strong foundation and strengthen communities.

Families–and especially children–who live in a stable, affordable homes have better health and education outcomes, have greater access to economic opportunities, and benefit from stronger communities.

United for Homes urges reform of the mortgage interest deduction (MID)—a $70 billion a year tax write-off that largely benefits America’s highest income families—and a reinvestment of the savings in housing that serves families with the greatest, clearest, most pressing needs through solutions like the national Housing Trust Fund (HTF) and rental assistance programs.

The NLIHC supports the idea of lowering the size of deductible mortgage debt to $500,000 and reallocating the savings to housing assistance for low-income families.

“The solution is so obvious,” (Diane) Yentel, president & chief executive officer of the NLIHC says. “There are a number of programs that have proven success in ending homelessness and ending housing insecurity.”’

The problem is not in the policies’ prescriptions but in their dosage: We severely under-fund programs that work. By one estimate, capping the MID at $500,000 would save $87 billion over 10 years, even though less than 6 percent of mortgages nationwide exceed half a million dollars. That savings would allow 1.2 million additional families to benefit from housing vouchers.”

“Of course, reforming the MID is one thing. Redirecting the savings to low-income families is quite another. ‘The much bigger hurdle,’ Yentel says, ‘Is making sure that dollars are reaching affordable-housing programs.”

Reforming the MID and reinvesting the money into affordable housing for our poorest neighbors would go a long way in addressing our country’s affordable housing crisis and prevent homelessness for people like Chrisaliz Diaz.

Diaz was renting an apartment for herself and her two sons in Braintree, Massachusetts.

Diaz told Desmond, ‘I’m worried about eviction, because technically if you put my income to my cost of living, I have so many expenses. If we have to leave, we would have to stay with family. I’m not too prideful for a shelter — I grew up in a shelter system — but I don’t want my boys to grow up like that. I’d rather stay with family and explain to my boys that Mommy just needs to get on her feet. People who are living in a middle- to-lower-class system, there’s no progressing. You’re stuck in that system. I don’t have subsidies. I work, but I feel stuck in this cycle and can barely make ends meet.’’

Sadly, it is revealed at the end of the article that a job change led to a risk of eviction for Diaz. And then she lost her new job.

We previously reported how the Trump Tax Plan Is a Missed Opportunity for Re-balancing Housing Policy.

One way to combat the injustice of American housing policy is to join and support the United for Homes campaign.

Mathew Desmond’s Article in the NY Times

Mathew Desmond’s Book Evicted

United for Homes

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