Minnesota Representative Keith Ellison reintroduced the Common Sense Housing Investment Act (H.R. 1213), which would reform the Mortgage Interest Deduction and to use the billions saved to fund affordable housing programs, for renters in particular.
H.R. 1213 would create a new balance between homeowners and renters to make federal housing resources more accessible and better targeted to those struggling with housing needs.
MHP, along with the National Low Income Housing Coalition, is actively supporting this legislation and invites others to lend their support, since passage will require a lot of education and hard work.
Closing the income gap among homeowners
Currently the Mortgage Interest Deduction (MID) is claimed by those who itemize their taxes rather than take a standard deduction. However most Americans, in particular lower-income families, do not itemize their deductions and do not take advantage of the MID. If enacated, H.R. 1213 would help close the gap between high-income and moderate and low-income homeowners by converting the MID into a 15% non-refundable tax credit. This would enable moderate and low-income homeowners to benefit come tax time, even without itemizing tax deductions. By reducing the size of a mortgage eligible for a tax break from $1 million to $500,000, H.R. 1213 will be directing more of its assistance to lower-income homebuyers.
It's time to think of renters too
In large part because of the MID, federal housing policy overwhelmingly favors homeowners over renters. Despite a much greater chance of living in unaffordable housing, renters in this country have few tools to support their needs. H.R. 1213 will still reward homeownership, but will also use the billions saved annually from the restructuring of homeownership assistance to fund several important housing rental programs without costing the federal government any additional money.
$196 billion (over ten years) will be saved by going from a mortgage interest deduction to a credit on a reduced mortgage amount. H.R. 1213 proposes funding the following housing programs:
- 60% of dollars saved (about $109 billion over ten years) go toward the National Affordable Housing Trust Fund (NHTF). Once it is capitalized, NHTF will provide communities with funds to build, preserve, and rehabilitate rental housing that is affordable for extremely and very low income households.
- 30% of dollars saved (about $55 billion over ten years) go toward Section 8 rental assistance, both project- and tenant-based.
- 10% of dollars saved (about $18 billion over ten years) go toward Public Housing Capital Funds to help preserve aging public housing, which is at risk across the country.
- The Low Income Housing Tax Credit (LIHTC) allocation will be raised from $1.75 per capita to $2.70 per capita which will make an additional $14 billion available to develop LIHTC housing over ten years. LIHTC is an indirect federal subsidy to develop affordable housing.
Americans favor the type of policy reform that Rep. Ellison proposes with H.R. 1213
A recent poll commissioned by the National Low Income Housing Coalition, a supporter of H.R. 1213, shows that most Americans (76%) support the MID, but that there is strong support for reforming it to make it more beneficial for middle and low income homeowners. The results show that 56% of Americans favor replacing the MID with a tax credit to help ensure benefits to lower income homeowners. The poll also found that 63% support reducing the cap of the MID to $500,000. Support for this reform is tripartisan: Democrats (68%), Republicans (61%) and Independents (62%).
In addition, 68% of Americans believe that not being able to find affordable housing is a large or very large national problem. The survey found that 69% of Americans support federal programs to build or rehabilitate affordable rental housing.59% support federal programs to help low income families pay their rent.
Rep. Ellison and co-sponsors, Rep. Barbara Lee (D-CA) and Rep. Jan Schakowsky (D-IL), are answering the call to change the MID to make it more equitable and to use the billions saved to improve the lives of the lowest income Americans.
"In the wealthiest nation on earth, it is unacceptable that in Minnesota, thousands of people are homeless every night," said Rep. Ellison at MHP's Federal Policy Forum on April 4 (pictured right). "It is unacceptable that half of all renters cannot afford their housing."
What can you do?
1. If your organization supports H.R 1213, endorse it here.
2. Join United for Homes, a campaign for the National Housing Trust Fund and a strong supporter of H.R. 1213. The NHTF will provide America's poorest families with safe, affordable housing.