Washington should stay away from touching
the mortgage interest tax deduction, warns the
U.S. housing industry.
Lately, housing is on the mend and one of the
few bright spots in a lumbering economic
recovery. Taking away a key tax break could
throw a wrench into home buying plans and hurt a
Lawmakers in both parties are on the lookout
for tax revenue as a way to avert the fiscal
But the housing industry is preparing to
fight against any move to get rid of the
mortgage interest tax break.
"[Getting rid of it] would throw the housing
sector into turmoil ... and chill the market
just as it is trying to recover," said Jerry
Howard, CEO of the National Association of Home
Powerful housing lobbying groups are taking
their fight to the grass roots, armed with
granular data on the benefits of the homeowner
tax break in every congressional district.
Lobbyists from the industry have spent a
combined $30 million this year, up from $27
million last year, according to Center for
Responsive Politics figures. The bulk of that
came from the powerful group, the National
Association of Realtors, which spent a record
$25 million on lobbying this year, more than any
other year, federal records show.
They're ensuring that leaders don't do
anything "penny-wise and pound foolish," said
David Stevens, CEO of the Mortgage Bankers
This isn't the first time Washington has
taken a critical look at the mortgage interest
It is one of the oldest tax breaks and
designed to encourage home ownership, by
lowering the tax bill for homeowners.
It tends to benefit upper middle class
families the most, according to the Tax Policy
Center. For those earning more than $250,000 a
year, the annual tax savings run about $5,460.
For those with annual incomes of less than
$40,000 a year, the average savings is just $91,
according to the center.
The deduction is the third largest tax
expenditure on the federal budget, according to
the Congressional Research Service. The amount
of revenue the government would forgo from those
claiming mortgage interest deductions is
estimated to reach $100 billion by 2014.
President Obama has proposed in his budget a
cap on itemized deductions to 28% of gross
income from 35% for high-income Americans. The
cap would apply to many popular deductions such
as mortgage interest and charitable donations.
But Obama's proposals have gotten nowhere,
thanks to lobbying from home builders, the
National Association of Realtors and the
Mortgage Bankers Association.
But this time, lobbyists are worried. That's
because for the first time in years,
House Republicans say they are open to scrubbing
any tax breaks from the books as part of
Stevens of the Mortgage Bankers Association
said the economy "could actually move backwards"
if the deduction is taken away, he warned
because it has a
significant impact on middle class Americans'