Deep Sixing the Home Mortgage Deduction

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Seth Hanlon says that the home mortgage deduction is more valuable for high earners than for low earners. Here’s the data:

This seems to suggest that eliminating the mortgage interest deduction would raise effective marginal rates more on rich people than on middle earners, so it would be a progressive thing to do. But I have a couple of questions about this:

  • Above the $40,000 line, the mortgage interest deduction seems to amount to about 1% of income for everyone. But a tax increase of one percentage point is a bigger deal for a median earner than it is for a high earner. So it’s not clear just how progressive it would be to get rid of this deduction.
  • This data is solely for owner-occupied housing. But renters benefit too, since landlords can deduct mortgage interest just like homeowners. This reduces their average costs and therefore (on average) reduces rent levels. You need to account for this to see how much benefit there is for workers who earn less than $40,000.

I’m probably in favor of phasing out the mortgage interest deduction regardless since I think we’re well past the time when the federal government has any legitimate interest in spurring homeownership. Still, I’m not sure it would be all that progressive a move.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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