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have benefi ted from a simplifi ed and more equitable tax code, but not at the expense of homeownership. A doubling of the standard deduction together with an elimination of various other federal incentives will have signifi cant impacts on the housing market and the economy—particularly in high-cost, high-tax states like California. Currently, more than 7.5 million households own their own home in California. That represents more than half of the entire population of the state, so issues that affect housing and home- ownership will affect most Californians. Perhaps more impor- tantly, this is not merely a luxury of the rich: many of those who currently benefit from incentives like the mortgage interest deduction (MID) are middle class, with nearly half earning less than $100,000 per year. In recent years, the typical family that has purchased the median-priced home has earned roughly $120,000. Under the current tax code, that translates into more than $37,000 in itemized deductions per year that is sheltered from taxation. This is well above the current standard deduction of $12,700 and represents a significant financial incentive to purchase a home. Removing several key deductions, while boosting the amount that families can deduct regardless of their housing choice, means that these incentives essentially will be rendered useless to the majority of Americans and that existing homeowners will lose much of the support they received from the government for purchasing their home. Currently, nearly 4.3 million California taxpayers take an itemized deduction for mortgage interest and that number rises to more than 5 million for those who deduct their California income taxes. Removing these benefits will result in an increase to the cost of homeownership for many Californians, and the state simply cannot afford that cost. The homeownership rate in California is already danger- ously close to 50 percent, meaning that if current trends persist, California will become a majority renter state in the near future. Affordability in the state is already abysmal with nearly 3 out of 4 California households unable to afford to purchase the median-priced home. Undermining homeownership incentives and increasing the cost of homeownership will only exacerbate these distressing trends and accelerate the declines in home- ownership. Finally, by grandfathering in existing mortgages, homeowners with high-balance loans will have yet another incentive to stay put, which will exacerbate our supply issues even further. This threat expands well beyond the confines of the real estate market. Being on the front lines of housing, REALTORS® have been banging the drum for affordability for some time. Now, the consequences are bleeding over into broader impacts on the overall economy with businesses saying that they can no longer effectively attract skilled workers due to prohibitive housing costs. Tax reform that raises the cost of homeowner- ship and eliminates the incentive to own will wreak havoc in California—not just on the housing market, but on the entire economy. We must stay engaged and keep homeownership front and center. California, and future generations, can afford no less. Visit Us Today… Coming Soon… Phase I : Open For Business • brew house and tap room • patio seating (inside & out) • family and pet friendliness • sandwiches and light fair Phase II : Brewery & Full Restaurant • visable beer tanks • watch beer being made • family and pet friendly • full dinner menu Golden State Brewery and Grill 7560 Monterey Street • Downtown Gilroy • 408.846.7070 • GILROY • MORGAN HILL • SAN MARTIN JUNE/JULY 2018 13