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Dylan Matthews – America’s biggest housing program is run by the IRS, and it’s a huge giveaway to rich people

The mortgage interest tax deduction is a garbage policy.

It’s hugely regressive: 52 percent of the benefit goes to the richest 10 percent of Americans, and only 0.1 percent of the benefit goes to the poorest 20 percent. The deduction is supposed to encourage homeownership, but economists Edward Glaeser and Jesse Shapiro have found that it overwhelmingly goes to rich people who’d own homes anyway, so there’s “almost no effect” on the number of people owning. It does, however, make people buy bigger houses, which is bad for carbon emissions, encourages low-density, sprawling housing construction, and discourages living in cities. As if that weren’t enough, it gives housing an edge over alternative investments, which prevents investment in more productive areas. And its cost dwarfs spending on housing programs actually meant to help the poor.

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