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Published in The Wall Street Journal
Regarding your editorial “The Realtors Take a Tax Hostage” (Oct. 18): You forget that the National Association of Realtors supports tax reform’s key goal: fiscally responsible tax cuts.
Unfortunately, that isn’t what we’ve seen so far in proposals released by congressional leaders and the White House. Doubling the standard deduction is insufficient to offset the elimination of the state and local tax deduction, the loss of personal exemptions and other changes proposed repeatedly throughout the tax reform debate. Instead, what’s delivered is higher taxes for millions of middle-class homeowners.
Our concerns build from there.
We agree with your assessment that the mortgage-interest deduction is baked into home prices. That also means eliminating the mortgage-interest deduction for all but a few wealthy itemizers will cause home values to come down. So in addition to a tax increase, middle-class homeowners will also lose equity in their homes.
Yes, other countries handle mortgage interest differently, but they also have different demographics, housing finance systems and social safety nets. The Journal’s argument is the height of a false equivalency. In the U.S., we’ve incentivized homeownership in the tax code for over 100 years because America’s middle class depends on homeownership to build wealth. Middle-class families generally can’t borrow money to purchase stocks, and most aren’t paying cash for homes. They can, however, get a mortgage to invest in their future.
We know the middle class takes advantage of the mortgage-interest deduction because 53% of those claiming it in 2014 earned less than $100,000 and 86% earned less than $200,000. We know homeownership works because the average net worth of a homeowner stands at 45 times that of a renter. Said differently, the tax incentive to do so isn’t a “subsidy.” It’s a proven wealth-builder for middle-class families. One we shouldn’t push out of reach.