Time Has Come to Change Mortgage Interest Deduction and Invest in the National Housing Trust Fund
WASHINGTON, March 18, 2013 /PRNewswire-USNewswire/ -- The National Low Income Housing Coalition (NLIHC) announced the launch of a major new campaign to reshape U.S. tax policy to make affordable housing more available to the nation's 10.1 million extreme low-income renter households. The centerpiece of the NLIHC campaign is a proposal to modify the mortgage interest deduction for higher income Americans and invest the savings in the National Housing Trust Fund, which was established to serve low-income housing needs. The organization today also released a new national public opinion poll showing broad, bipartisan support for such a proposal.
The Nation is in the Midst of an Affordable Housing Crisis
In the wake of the financial and mortgage meltdown, there is now a more urgent crisis in affordable housing, which has become increasingly scarce for extreme low-income households, those who make no more than 30 percent of the median family income in their communities. These poor families are now in trouble despite the billions of dollars spent to address the national housing crisis. NLIHC estimates that only 5.6 million housing units exist for the 10.1 million extreme low-income households that need them. The vast majority of these households – 76 percent – are currently spending more than 50 percent of their income on housing costs. Nearly half of these households are families with children, many considered at high-risk for homelessness.Change the Mortgage Interest Deduction to a Tax Credit Targeted to Those Who Need It Most The NLIHC proposal would limit the mortgage interest deduction (MID) to the first $500,000 of mortgage debt and convert it to a 15 percent non-refundable tax credit. The change would carefully target the tax benefit to where it is needed the most – low and middle-income Americans, especially those who cannot itemize deductions and thus fail to benefit from the current tax law. Under this proposal, taxes will be reduced for 16 million American households with incomes of $100,000 or less per year. Invest in the National Housing Trust Fund The proposed change to the MID would generate approximately $200 billion in savings in the first ten years, which the NLIHC proposal would invest into the National Housing Trust Fund (NHTF). The NHTF was signed into law in 2008 by President George W. Bush with bipartisan support, but has never been funded. The Trust Fund was intended to provide communities with funds to build, preserve, rehabilitate and maintain rental homes that are affordable for extreme and very low income households. Trust Fund dollars would go to states providing grants to qualified housing organizations to provide affordable homes for the people who need the most help. Americans Strongly Support Efforts to Address Homelessness, Modify MID A new poll conducted for NLIHC found that 74 percent of respondents believe the nation is not doing enough to end homelessness, and 76 percent support funding a federal government program to make more affordable rental housing available to low-income families. Proposals to modify the mortgage interest deduction also received broad support among respondents, with 60 percent support capping or limiting the tax break or converting the deduction to a tax credit.