While HBA members were busy Bringing Housing Home™ during in-district meetings with lawmakers, tax staff at the National Association of Home Builders were on Capitol Hill fighting to protect home ownership tax incentives, including the mortgage interest deduction, in any future tax reform effort.
The Senate Finance Committee is currently examining tax reform efforts and conducted a roundtable on home ownership tax rules that also included tax staff from industry groups and economists from Washington think tanks and local universities.
During the roundtable, NAHB staff and representatives from the Mortgage Bankers Association and National Association of Realtors® provided research and data explaining the history, role and beneficiaries of the mortgage interest and property tax deductions. The mortgage interest deduction is widely claimed by the middle class, providing nearly $70 billion in tax benefits a year to our nation’s home owners. Moreover, the benefits tend to be collected by younger households, who being in the early years of a mortgage, are paying more interest and thus claiming larger deductions.
The roundtable also discussed the capital gain exclusion, an important rule particularly for older home owners looking to relocate, as well the deduction for mortgage insurance (include PMI) and the exclusion for forgiven mortgage debt.
A Trillion-Dollar Hit
While economists from the think tanks made the argument that the housing tax incentives should be transformed, weakened, or perhaps eliminated, our housing experts explained to the Senate staffers the significant economic harm that would come from increasing the cost of home ownership. Citing studies from NAHB’s Housing Economics team, academics, and tax think tanks, our team reported that repeal of the mortgage interest deduction would reduce GDP by $100 billion a year, eliminate at least $1 trillion in household net worth, and delay home ownership for younger households.
The Senate Finance Committee also will be holding other tax reform working groups and the collective findings could be used by members to craft a comprehensive tax reform bill later this year.
Many tax analysts believe that the 2015 political environment will not allow for consideration of comprehensive tax reform that includes changes to the individual side of the tax code. However, there is a window in 2015 for debate of business-only tax reform.
Your Home Builders Association has argued that business tax reform must include rate reductions for pass-through entities (S Corporations, LLCs), as well as C corporations. And business tax reform should protect key tax rules that encourage investment and economic growth, such as the Low-Income Housing Tax Credit, business loan interest deductibility, like-kind exchange, and tax accounting rules for home construction contracts.
As the association has been doing during earlier rounds of tax reform discussions, your Home Builders Association will continue to be highly engaged, presenting our research concerning housing and tax policy and the economic benefits of housing, home ownership and residential construction.
According to a new report by NAHB, the vast majority of taxpayers claiming the mortgage interest deduction, 91 percent, earn less than $200,000 per year.
In South Carolina the percentage is higher: 94.1 percent.
Higher cost states, like New York and California, have lower home ownership rates and therefore lower use of the mortgage interest deduction. The highest percentage of claimants earning less than $200,000 and using the mortgage interest deduction can be found in Idaho, at 95.4 percent. The lowest percentage of claimants is in Connecticut, at 87.4 percent.
Read the complete report at Eye on Housing by clicking here.
A report by Robert Deitz, Ph.D., and Natalia Siniavskaia, Ph.D., of NAHB’s Economics and Housing Policy Department, found that the overwhelming majority of taxpayers using the Mortgage Interest Deduction are middle class taxpayers. The report demonstrates the importance of preserving the Mortgage Interest Deduction.
Click here to read the complete report by Dr. Deitz and Dr. Siniavskaia at NAHB.org.
The National Association of Home Builders (NAHB) today applauded the GOP Platform Drafting Committee for recognizing the importance of the mortgage interest deduction within its proposed platform.
“We are very pleased that the committee has recognized the crucial importance of the mortgage interest deduction,” said NAHB Chief Executive Officer Jerry Howard. “At a time when so many are struggling to recover from the recession, this action helps cement much-needed political support for a tax break that primarily benefits middle-income families.”
Including the mortgage interest deduction in the draft GOP platform also makes sense because of the broad support that the incentive enjoys among voters across the country, added Howard. An NAHB-commissioned poll this January found that 77 percent of Republicans, 71 percent of Independents and 71 percent of Democrats oppose eliminating this important tax break.
“Middle-class voters have seen their household wealth decline throughout the recession, and to a large extent they are the ones who will decide the outcome of this election,” noted Howard. “They are also the prime beneficiaries of the mortgage interest deduction. With this in mind, it seems obvious that maintaining this cornerstone of American housing policy should be among lawmakers’ primary goals.”
With the South Carolina GOP presidential primary less than two weeks away, presidential contenders should heed a new statewide poll showing that voters in the Palmetto State believe that owning a home remains an integral part of the American Dream and that policymakers need to take active steps to protect homeownership.
“The survey underscores that South Carolina voters believe homeownership is a core value that anchors the middle class and they oppose efforts to eliminate or reduce the mortgage interest deduction and to make it more difficult for creditworthy home buyers to obtain affordable financing,” said Hal Dillard, president of the Home Builders Association of Greenville and a home builder in Greenville County.
“South Carolina’s voters are sending a clear message that the opportunity to own a home remains a cherished ideal and the government has an important role to play to keep homeownership affordable for hard-working American families,” added Dillard. “That’s a message we hope candidates running at all levels of government this November will heed.”
The polling found that 98 percent of South Carolina home owners are happy with their decision to purchase a home and 79 percent of all voters believe that despite the risk of ups and downs in the housing market, owning a home is one of the best long-term investments they can make.
Moreover, 65 percent of the respondents said they would be less likely to vote for a candidate for Congress who proposed eliminating the mortgage interest deduction and 73 percent believe it is appropriate and reasonable for the federal government to provide tax incentives to promote homeownership.
These are among the key findings of a survey of likely South Carolina voters that was conducted on behalf of the National Association of Home Builders by Public Opinion Strategies of Alexandria, Va., and Lake Research Partners of Washington, D.C.
Among the other survey results:
- 99 percent of home owners said that it is important that they own their own home.
- Homeownership and a retirement savings program are considered by voters to be their best investments.
- Nearly three out of four voters who are not currently home owners (73 percent) said it was a goal of theirs to buy a home.
- 64 percent believe it is appropriate and reasonable for the federal government to help home buyers afford a long-term or 30-year fixed-rate mortgage.
- 68 percent of voters would oppose eliminating or reducing tax deductions such as the mortgage interest deduction in exchange for a lower federal income tax rate if it meant that their final tax bill would be higher.
South Carolina’s home builders, Realtors, business leaders and elected officials held a rally on the steps of the statehouse in Columbia on Jan. 12 to show their support for homeownership. More than 800 people came out. In addition, the rally was an opportunity for presidential hopefuls to voice their support for a continued federal role for housing and to offer their views on how to help prospective home buyers and boost the housing market and overall economy.
This statewide survey of 500 likely 2012 voters was conducted Jan. 2-5 by Public Opinion Strategies of Alexandria, Va., and Lake Research Partners of Washington, D.C. It has a margin of error of ±4.4 percent.
Read the complete results of the survey at HBAofGreenville.com by clicking here.