U.S. spends twice as much on tax breaks for rich homeowners as it does poor ones

The mortgage interest deduction, which offers tax relief to homeowners, benefits rich homeowners over poorer ones by a two-to-one margin, according to studies.
By Rick Docksai | Dec 06, 2017
A tax break meant to help Americans pay their mortgages has gone overwhelmingly toward the wealthiest homeowners. The tax break, known as the mortgage interest deduction (MID), provided $60.1 billion in tax relief to homeowners in the top income brackets in 2015 but only $29.9 billion to low-income homeowners.

Nor was 2015 a fluke. A new study by the rental aggregator Apartment List found that more than half of high-income households claim the MID, on average, with more than $10 billion of it going to households with incomes in the top 1%.

The MID reduces a taxpayer's taxable income by the amount of interest they owe on their mortgage. Wealthy Americans are likely to get the biggest benefits, as they have higher mortgage payments.

But the findings coincide with reports of consistently high number of low-income Americans facing evictions or bankruptcies because they cannot pay their rent or mortgages. The public rental-assistance program Section 8 is stretched so thin that New York stopped accepting new applicants in 2009 and Lost Angeles froze its application process for 13 consecutive years and only re-opened temporarily for two weeks in October.

Many policy analysts have criticized the MID for failing to help those who need housing assistant the most. Steven Bourassa, an MID expert and the director of the School of Urban and Regional Planning at Florida Atlantic University, told the Guardian that the tax break's beneficiaries are by and large people who make enough money to not even need it.

"I think it's totally misplaced priorities. I think some people probably think that some people are not deserving of that kind of assistance," he said. "Personally, I find it hard to explain."

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