Reducing the Mortgage Interest Deduction Could Be a Bipartisan Victory
The mortgage interest deduction (MID) is an annual tax deduction that applies to interest paid on mortgages of up to $1,000,000. According to the National Low Income Housing Coalition (NLIHC), home mortgages were rare when the MID was enacted in 1913 in conjunction with the federal income tax.
"The laws that govern home mortgages have been changed just once in 102 years...There is no apparent policy rationale behind the current cap," states the new NLIHC report.
The NLIHC finds that that phasing in two reforms—a reduction of the eligible amount to $500,000 and a conversion to a 15 percent tax credit—over five years would "generate an estimated $213 billion in new revenue over ten years."
The Post thinks that such a reform is politically viable. The report finds that only five percent of mortgages made from 2012-2014 were over $500,000; that they were concentrated in just 48 counties; and that most of these counties are in heavily Democratic areas.
"For Democrats, it’s an opportunity to practice what they preach on income equality; for Republicans, a chance to show flexibility on raising revenue without harming their constituents," writes the Board.