Las Vegas Sun

March 28, 2024

Elimination of mortgage interest deduction would hurt America

In his budget speech Wednesday, President Barack Obama once again suggested a cutback in the mortgage interest deduction. Late last year his deficit commission proposed serious changes in tax policy that would harm housing on a number of fronts.

Innocuous as it may seem to some, there is a real possibility that these actions are just the first step in a longer-range campaign to eliminate the mortgage interest deduction for homeowners in general.

When government kills a deduction that’s been around as long as the mortgage interest deduction, they essentially are creating a new tax. Additionally, it would put the dream of homeownership further out of reach for America’s new families.

There are many good reasons to keep the mortgage interest deduction. First of all, a home of your own has always been the foundation of the American dream. The social benefits are immense.

President Franklin D. Roosevelt said that a nation of homeowners is unconquerable. President Bill Clinton called homeownership an essential part of the American dream, and President George W. Bush said it has the power to transform people.

Documented research has shown that there is a higher educational performance and better behavior of children among homeowners, that crime rates are lower, there is less dependency on welfare, there is greater household participation in civic affairs and there is better household health.

From a financial standpoint, there are a number of advantages: deduction of mortgage interest, deduction of real estate taxes, capital gain exclusion and the fact that, regardless of market ups and downs, in most cases the value of the typical family home is that family’s major asset. Paying off a mortgage for many has become a form of enforced savings.

Economists, market experts and analysts agree that elimination of the mortgage interest deduction would result in a further drop in home values. There would be even more foreclosures.

Public support for retaining the interest deduction is overwhelming. According to a nationwide survey of likely voters in September, nearly 80 percent supported retaining federal tax incentives to promote homeownership, which has been in the tax code since the introduction of federal income taxes in 1913.

In fact, an even higher percentage (82 percent) of renters favor providing tax incentives to promote homeownership. Most renters aspire to someday become owners.

Eliminating this tax break for homeowners is tantamount to forcing new taxation on an economy where most thinking people believe the best way out of a hole is not to dig it any deeper with new taxes.

Larry Kush, a 30-year Phoenix homebuilder, is national chairman of the National Association of Home Builders for the six-state area of Arizona, Colorado, Nevada, New Mexico, Utah and Wyoming.

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