Is homeownership good for America?
According to an article in The New York Times, it appears to be. Whether or not this justifies a tax deduction, is another question.
It has long been an article of faith among policymakers that homeownership produces a big beneficial spillover to society at large. In the 1920’s, Herbert Hoover said a family that owned a home had “a more wholesome, healthful and happy atmosphere in which to bring up children.” Franklin Delano Roosevelt said that “a nation of homeowners is unconquerable.”
The government’s use of tax incentives to encourage homeownership has a cost, however. The mortgage interest deduction and other subsidies will cost the government roughly $716 billion in lost taxes over the next five years, the president’s tax panel said. And the subsidy distorts incentives to invest, pulling money into housing from other parts of the economy. So, are Americans getting value for their money?
Those who own homes are more likely to vote, to be knowledgeable of local politics, and to have children who finish high-school and don’t get pregnant. Therefore, isn’t it right to reward homeowners, by giving them a tax deduction for interest paid on their mortgage loans?
The question is, do those things happen because they are homeowners, or is it that those who buy homes are more secure and have more stable family lives, to begin with?
Ironically, the fact that homeowners are involved in civic duties and vote more often means that probably, these tax reform proposals will go nowhere.
Complete article: Buy a Home, and Drag Society Down
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Updated: January 2018