- The Washington Times - Thursday, September 30, 2010

ANALYSIS/OPINION:

For nearly a century, the mortgage-interest deduction section of the U.S. tax code has helped generation after generation achieve the American dream of homeownership. Today, the state of both our nation’s economy and its real-estate market are tenuous, still recovering from the excesses of the past decade. But for the past century, responsible homeownership has provided the underpinnings for a strong national economy and stable society. In the ongoing reform of the country’s housing and tax policies, the mortgage-interest deduction must be kept as a support for future homeowners and families.

People usually don’t buy homes because of the mortgage-interest deduction. They buy homes to satisfy social, family and personal goals. The deduction does,however, facilitate homeownership by reducing the carrying costs of ownership. It is designed to offer a constant and dependable level of support once an individual or family has become an owner and taken on the responsibility of a mortgage.

The deduction is not a tool for the nation’s wealthiest to subsidize their vacation homes, as its detractors claim, but instead for our country’s working families to be able to purchase a home and become permanent, active members of their communities. In the most recently available data from the Internal Revenue Service, 63 percent of the families who claim the mortgage-interest deduction earn between $50,000 and $200,000 per year. It is the single biggest deduction that many families take.

Individuals, families and communities all benefit from responsible homeownership. Children of parents who own homes enjoy many positive social benefits, such as lower juvenile-delinquency rates, lower teen-pregnancy rates and higher levels of scholastic achievement. Homeowners are more likely to be involved and engaged in local issues, and they move less frequently than renters. This helps prevent crime, improve childhood education and support neighborhood upkeep.

In addition, homeowners are estimated to pay 82 percent to 92 percent of all income taxes. By facilitating homeownership, the mortgage-interest deduction helps grow this tax base, which in turn helps localities to support mass transit and education initiatives.

The mortgage-interest deduction did not cause the housing bubble or the credit crisis. It is not right to take it away from American families. The economywill not fully recover until the housing market comes back. And it will. But we have to make the right choices to get us there. Eliminating the mortgage-interest deduction could erode the value of homes and homeownership, would exert downward pressure on home prices and would hamper economic recovery just as we are seeing signs of stability.

Owning a home has long-standing government support in this country because homeownership benefits individuals and families, strengthens our communities and is integral to our nation’s economy. A return to appropriate lending and the continued support of incentives like the mortgage-interest deduction will take us in the right direction, so that individuals, families and communities have the opportunity to enjoy the full benefits of homeownership for generations to come.

Alfred A. DelliBovi is president and CEO of the Federal Home Loan Bank of New York and former deputy secretary of housing and urban development under President George H.W. Bush.

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