If you have a mortgage on your home, you can deduct the
interest from your taxes. It's a popular, well-entrenched policy. But according
to one policy adviser to a U.S. senator, "the mortgage-interest deduction,
from a purely policy perspective ... makes no sense."
It's a view that's supported by a mountain of academic
research: The mortgage-interest tax deduction benefits the rich more than the
poor, has little effect on home ownership and isn't even really a bargain for
homeowners because it raises home prices.
So do policy advisers tell members of Congress to fight the
mortgage-interest tax deduction?
"If you're relatively green in Washington, I suppose
that happens. And I suppose you're laughed at," said the adviser, who
preferred not to give his name for fear of losing his job. "The
mortgage-interest deduction is a sacred cow."
Everyone in Washington, D.C., knows that there are many
powerful forces making sure that no one ever suggests getting rid of the
mortgage-interest deduction. Jimmy Williams, a former lobbyist for the National
Association of Realtors, was one of those forces.
"If I were at the Realtors right now, I'd declare
war" on anyone who tried to get rid of the deduction, Williams says.
He would run ads, encourage Realtors across the country to
make phone calls and give money to the most powerful legislators in Washington.
"And then you sit back and just say, 'You really want to go down this
path? That's just not a really smart way to run for re-election.' "
Jamie Gregory, who currently lobbies for the Realtors, says
if you got rid of the deduction tomorrow, home prices would fall all over the
country, which would destabilize the economy. And besides, he says, the biggest
lobby in favor of the deduction is homeowners.
"For middle-class Americans, either doing away or
limiting the mortgage-interest deduction is going to be a tax increase,"
he says.
People who have bought a house assuming they'll get a break
on their taxes each year want that tax break. They might not be able to afford
the house they're in without it.
Of course, you could phase out the deduction out over time,
making it apply only to future homebuyers. Who knows what solutions smart
policy staffers in D.C. could come up with — if they weren't afraid of being
laughed at for being so naive?
Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.
Michael Quinn, Esq.
