By Mark Blazek, President
Greater Chattanooga Association of REALTORS®
In a continuing effort to find sources of revenue to avoid adding to the national debt – now in excess of $17 Trillion - Congress and the White House remain deep in debate over, among other things, limits on a broad array of deductions for taxpayers. One of their agenda items is the mortgage interest deduction (MID), a tax break for homeowners that REALTORS® believe is unquestionably vital to the stability and continuing recovery of the American housing market and economy.
What had started as one of many recommendations by the President’s debt reduction task force, known chiefly by the names of its bipartisan co-chairs, former Senator Alan Simpson and former White House Chief of Staff, Erskine Bowles, the deduction has become needlessly politicized. The merits of the MID have unfortunately been lost in the political back-and-forth now so common in our national conversation. However, specific legislation capping or eliminating the MID has not yet been proposed, leading some within the public square to speculate that it might be on the table as public policy makers in Washington look for ways to address both the deficit and long-term debt.
The Greater Chattanooga Association of REALTORS ® won’t speculate on any hypothetical scenarios, but has always been a long-standing supporter of the MID. Until such time as Congress introduces specific legislation, there’s nothing definite to analyze or review about any proposed changes to the MID. But our local homebuyers and homeowners should know that we will remain vigilant in opposing any future plan that modifies or excludes the deductibility of mortgage interest.
REALTORS® fully recognize the potential of serious damage to a recovering economy and the possibility of a “double-dip” recession. As is almost always the case, housing has led the way out of the most recent recession, and the continued strength of the home buying market carries enormous influence on hundreds of other industries, as well as the equity markets.
We’re still healing. We’ve made excellent progress here, and in fact, the greater Chattanooga area is one of the beacons of success of which we can be proud. But in a broader sense, the market is still in a recovery cycle. Another recession could severely impact the growth we’ve experienced to date. The debate over limiting tax deductions is an important one, but the MID should not be part of it. Too many Americans rely on this crucial tax opportunity.
The MID has stood the test of time for over seventy years. It is a foundational part of the middle class aspiration to homeownership, and we’ve seen, too, that it also benefits lower income families. Sixty-five percent of families who claim the MID earn less than $100,000 per year. In addition, American homeowners already pay 80 to 90 percent of U.S. federal income tax, and this share would rise if the MID were eliminated or reduced.
Our REALTORS® believe that changes to this important homeownership benefit would devastate the wealth accumulation of millions of hardworking middle-class families and the dreams they’ve diligently worked to achieve such as college, retirement or starting a small business. The ability to deduct the interest paid on a mortgage means significant savings for many families in this country. Tampering with the MID could tip the economy into that ”double-dip” recession resulting in further job losses for the country, and could effectively close the door on everyone’s chance to achieve the American dream.
You can count on it that REALTORS® will fight hard to keep that door open for current and future generations of Americans.