Street Roots • Aug. 17-23, 2018
News
Page 5
" I th in k people
were shocked when
they found out
the statistics of
what federally and
statewide we put
Into homeowner tax
benefits? p rim a rily
the mortgage
interest deduction?
and conversely how
1 little we pat Into
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1 s renters and the
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REP, ALISSA KERIY-GUYER
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P HO TO ILLUSTRATION BY KRO ACH/ISTOCK
reform revisited
Rep. Keny-Guyer is considering a proposal to limit
the mortgage interest deduction, whose dollars
disproportionately benefit wealthy Oregonians
BY JOANNE ZUHL
E X E C U T I V E E D IT O R
tate Rep. Alissa Keny-Guyer
(D-Portland) said she will revisit
Oregon’s largest and most popular
housing subsidy in the 2019 legislative
session.
The problem is that the much-debated
mortgage interest deduction favors
wealthier homeowners, while the poorest
state residents struggle to keep a roof over
their heads. That’s not how housing dollars
should work, said Keny-Guyer, who chairs
the House Interim Committee on Human
Services and Housing.
Last year, the committee heard a bill to
limit the deduction for the highest-income
homeowners. The bill died in committee,
but Keny-Guyer emerged from the debate
feeling the support was there to revisit the
issue again in the upcoming session.
“I think people were shocked when they
found out the statistics of what federally and
statewide we put into homeowner tax
benefits, primarily the mortgage interest
deduction, and conversely how little we put
into non-homeowners - renters and the
homeless,” Keny-Guyer said.
“As the housing chair, I look at where we
spend our housing dollars and I m very
alarmed and concerned at how much goes
to the upper end. And I always lament the
fact that we don’t have enough for housing,
and it’s not that we as a state don’t allow
S
significant amount for housing; it’s just that
we put it in the wrong area. I want to
address that in the Legislature, and it’s one
of my top priorities.”
Each biennium, the state’s mortgage
interest deduction sends $1 billion to
Oregon homeowners - more than half of it
going to the top 20 percent of income
earners, according to statistics compiled by
the Oregon Center for Public Policy, which
opposes the deduction.
The majority of homeowners, those in the
lower income levels, receive less than 15
percent of those dollars.
“We have, over the years, been spending
$1 billion per biennium on our mortgage
interest deduction, and only $10 million on
our emergency housing assistance for
distressed renters and the State
Homelessness Assistance Program. That’s 1
percent of a billion,” she said. “We’re so out
of whack on how we allocate our housing
dollars.”
The specifics of any modifications to the
deduction are yet to be decided, Keny-Guyer
said, but it is expected to preserve the
deduction for most homeowners, with some
limits placed on the highest mortgages.
In Oregon, the mortgage interest
deduction, like most state tax laws, directly
reflects federal laws. Until recent changes,
homeowners were allowed to deduct the
interest on mortgages up to $1 million. Last
year, homeowners received nearly $70
billion in federal deductions.
However, this year, the Trump
administration changed the tax policy to
allow for interest deductions on mortgages
up to $750,000. Homeowners are also
allowed to use the deduction when
purchasing a second home. The cap on the
mortgage applies only to new homebuyers.
“We will be coming forward with what will
be a very reasonable proposal,” Keny-Guyer
said. “Certainly the intent remains to leave
thé vast majority of existing homeowners
unaffected and really look at just eliminating
or reforming the benefits that go to the
wealthiest Oregonians who do not need help
in affording a home.”
Changing one of the largest and most
popular tax deductions won’t come without
a fight. As in the past, the national and local
Realtors associations are expected to argue
against any modifications to the law,
particularly with the changes already at the
federal level.
The Oregon Association of Realtors did
not respond to requests for an interview, but
its position on the deduction has been
consistent over the years. The mortgage
interest deduction is a strong incentive for
homeownership at all income levels,
according to the association.
Oregon’s homeownership rate hovers
around 62 percent. That’s just slightly lower
than the 63 percent rate in Washington, one
of nine states that do not collect income
taxes and therefore do not offer the interest
deduction. New Hampshire, which also
doesn’t offer the deduction, has a
homeownership rate of 71 percent. Alaska,
Florida, Tennessee and Wyoming also do not
offer the deduction, and all have
homeownership rates higher than Oregon’s.
Although the Realtors consistently defend
the deduction as an incentive compelling
people to buy homes, a survey compiled in
the National Association of Realtor’s 2018
Home Buyer and Seller Generational Trends
report shows the tax benefits are low on the
list of reasons for buying a home.
Only 1 percent of all buyers surveyed said
tax benefits were the primary reason for
buying a home, ranking 14th out of 16
options. This supports critics’ view that the
deduction benefits people who already
chose to buy a home but might be inclined
to buy more expensive properties with the
deduction.
“The policy continues to be ineffective,
inefficient, and it does nothing to address
Oregon’s severe housing crisis,” said Juan
Carlos Ordonez, communications director
with the Oregon Center for Public Policy.
“It’s high time Oregon put its housing
resources to the best use, and for that to
happen, the mortgage interest deduction
needs to be reformed.”
Ordonez said the forthcoming proposal
would be “reasonable.”
“Certainly the intent remains to leave the
vast majority of existing homeowners
unaffected and really look at just eliminating
or reforming the benefits that go to the
wealthiest Oregonians who do not need help
in affording a home,” Ordonez said.
The current system, according to
Ordonez, actually does harm to prospective
homeowners by artifically inflating pricing.
Incentives for housing should be directed at
people who are struggling under the
region’s housing crisis.
“It is truly an indefensible policy,”
Ordonez said. “It makes no sense. Every
See DEDUCTION, page 12