Housing advocates want lawmakers
to cap the state's mortgage interest
deduction. Realtors are ready to p u t
up a fight for its preservation.
A taxing issue
BY JOANNE ZUHL
opportunity Network, a statewide coalition
of affordable housing and low-income
regon s biggest - and most beloved
services, in spearheading legislation for the
housing subsidy is subsidizing the
2017 legislative session in Salem. The two
wrong people.
groups are joined by the Human Services
That s the perspective of a growing *
Coalition of Oregon, Oregon Housing
coalition of organizations looking to modifj
Alliance, Tax Fairness Oregon, and Habitat
Oregon’s mortgage interest deduction, or
for Humanity of Oregon in calling for caps
MID, to make it more equitable for
on the deduction and more equitable
moderate- to lower-income homeowners.
distribution of the subsidy.
These are the homeowners who need it
Every homeowner knows about the MID,
they say, not the state’s top 20 percent of *
but not all reap the same benefits.
mcome earners, who claim more than 60
It allows homeowners who itemize their
percent of the state subsidy in terms of
taxes to deduct from their taxable income
dollars.
the interest paid on mortgages up to $1
At a time when we are facing a severe
million. Considering that payments in the
housing crisis in Oregon, the biggest
early years of any 20- or 30-year loans are
housing subsidy in our state is mostly givim
largely interest, the amount can be
money to the most well-off Oregonians - ‘
substantial.
people who already have a home, who are in
The deduction is expected to cost the
secure shelter for themselves and really do
state an estimated $1 billion in forgone
not need any help from the state to afford a
income tax revenue for the 201749 budget
home, said Juan Carlos Ordonez,
While the details of the proposal are yet
communications director with the Oregon
to be determined, the proposal lays out
Center for Public Policy, or OCPP.
several modifications:
‘Reforming the MID is something that
B * CaP the amount of mortgage interest
STAFF W R ITE R
_
B
*
? ° uld
done a lon§ time ago. But
uregon s housing crisis certainly adds
urgency to this.”
The OCPP is joining the Oregon
d®ducted on state taxes at
this leyeV ptyponentesay Hi,.
-- --
nunic. liupufieilLS (
the changes emphasize that this would not
affect rental housing, since landlords take
different deductions for rental property.
■ Ultimately phase out the deduction fo:
high-income households.
While the proposed bill cannot obligate
how the revenue generated from the cap
would be spent, it does call for establishing
“legislative intent” to use the tax savings or
affordable housing, rental housing and
homelessness prevention.
Housing advocates say these
modifications could generate at least $100
million biennially for housing needs across
the state.
Another option proponents say they
would consider instead of the cap would be
to convert the deduction into a refundable
tax credit applicable to all taxpayers, not
just those who itemize their taxes.lt could
also make higher income brackets exempt.
Basically the policy is upside down,” said
Kuth Adkins, policy director with the
Oregon Opportunity Network. “The
Legislative Research Office has confirmed
that Oregon’s mortgage interest deduction
l.hMni) ¿iliLLTuMu
T1
7 i J° " tynnnh0me0W nerswon’t be affected.
the same time, we know we have a housing
A $300,000 mortgage, for example, under
current interest rates would create $12,652
m mterest payments its first year. (The
median price for homes listed
in Oregon is $319,000, but
in Portland it is in excess
of $400,000, according
to Zillow.)
■ Eliminate
use of the
crisis across the state, but specifically folks
in low- to moderate-income families,
particularly in communities of color^ are
shut out of homeownership. And we also
have a lot of current homeowners with low
incomes who are facing the possibility of
r e p Z 1”61r h° meS d“e t0 " eeding he’P
S
Adkins said they want to see the
recouped money applied to support
homeownership, just at more middle- and
lower-mcome brackets, such as starter
home development and down-payment
assistance for first-time homebuyers.
We need to get this back in line with our
values and what’s sensible as policy, so we
free up some revenue and invest it in
homeownership for low-and moderate-
income families,” Adkins said
the Ore 6 OtA
h er
°f the ar«ument is
the Oregon Association of Realtors, which
has smd it would oppose any new c^p on
the deduction. From the Realtors’
s
s
g
i
i
g
l
B
which benefits coastal and vacation area
communities.
The proposal would apply only to state
a ' i " « ' “’' ' " ' 1”
" ''“
homeownership and that without it,
See MORTGAGE. page s
Higher-income
homeowners in a
higher tax bracket
have that same
percentage applied
■Uudtifli iGtioas^such.
as for mortgage
' interest. Research
from the Oregon
Center for Public
Policy, which is
calling for a lower
cap on the
mortgage interest
deduction,
conclude that-the
top fifth of state
taxpayers receive
more than h a lf-
61 p e rc e n t-o f the
subsidy dollars.