As we all struggle through the recovery from the "Great Recession", there are certainly many ideas on how to best get our economy rolling and our national budget balanced. I'd like to highlight two of them here.
Many people may not be aware that there have been calls from some quarters to eliminate the mortgage interest deduction for homeowners. This deduction has been a significant factor in making home ownership affordable. The proposition to eliminate this deduction has been met with many responses that point out the severe damage it would cause to the nation's economy. The number and strength of those responses make it surprising that anyone would still support such a move.
Yet, in a recent column in the Los Angeles Times, Doyle McManus does just that.
McManus cites comments from the Mercatus Center at Virginia's George Mason University, an admittedly "mostly conservative" think tank. The specific source of what he quotes is not identified but it includes the statement, "Most taxpayers do not benefit from this deduction at all or receive a very small benefit".
Now, I don't know what home prices are like in Virginia, but the California Association of Realtors (C.A.R.) estimates that if the mortgage interest deduction were to be taken away it would cost the average Californian $3940 annually. That's a considerable benefit to any bank account. It's equivalent to adding about $328 to the average monthly mortgage payment. I'm curious to know what kind of thinking goes on in that tank to call this no benefit or a very small benefit.
Another claim McManus makes is that "our mortgage interest deduction doesn't directly support homeownership". He gives no evidence to support that claim. C.A.R. President Don Faught, however, cites a recent C.A.R. survey which found that "nearly eight in 10 home buyers said that the mortgage interest and property tax deductions were 'extremely important' in their decision to purchase a home."
McManus still suggests that the current mortgage interest deduction doesn't increase home ownership, it merely allows those who can already afford a home to buy a bigger home. Really? Considering how long and hard most first time home buyers have to struggle to get themselves in a position to make that first home purchase, don't you think a benefit of even $100 to $200 in monthly costs makes a big difference?
Perhaps Mr. McManus hasn't been out in the field helping those buyers achieve the American Dream. Well, I have, and it makes a huge difference.
By the way, C.A.R. works diligently to support California homeowners by dispelling ill-conceived notions and defeating counter-productive bills in our state legislature.
So there you have it: L.A. Times columnist Doyle McManus wants to cost you an average of $3940 annually in tax payments, and the California Association of Realtors points out that would be bad not only for you but for our economy.
When it comes to the affordability of home ownership, who's on your side?
Comments by Doyle McManus were published in an article in the L.A. Times on February 6, 2013.
Comments by Don Faught were made in a rebuttal to Mr. McManus' article, available on the C.A.R. guest web site.