Sunday, May 7, 2017

Why should the tax code subsidize home buyers over renters?

See Houses of Lobbyists. WSJ editorial.
"The deduction also disproportionately benefits the affluent, who buy more expensive homes with bigger mortgages. A 2013 Congressional Budget Office study found that 75% of the benefit of the mortgage-interest deduction goes to the top 20% of income earners. Two of three American tax filers don’t even itemize, which means they can’t deduct mortgage interest even if they have it.

It’s also not clear the mortgage deduction is as critical to home ownership as advocates contend. Canada and Britain have similar rates of home ownership as the U.S. (nearly two thirds of their citizens) without a mortgage-interest deduction. If the housing industry really depends on a tax subsidy, maybe it’s time we ask why the U.S. tax code should favor buyers over renters."

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