Money is Policy JRT Housing-Money 4-26lores

F i g u re I Distribution by Income Class of Home Mortgage Interest Deduction at 2017 Rates and 2016 Income Levels [returns in thousands, money amounts in millions of dollars] Income Class Tax Returns Tax Expenditure for Mortgage Interest Deduction All Itemized Returns Returns Returns Amount of local property taxes that a taxpayer can deduct. Proponents of both deductions insist they help make owning a home more affordable. There are currently no income restrictions limiting the households who may utilize either deduction. Both are available to all taxpayers regardless of income. Neverthe- less, only those taxpayers who forego the standard deduction on their federal tax return and “itemize” their deductions can claim the two deductions. Itemizing taxpay- ers generally have higher incomes than those who do not and represent only about 30 percent of all taxpayers. 12 The benefits associated with each deduction are also linked to the marginal tax rate of the households claiming them. A married couple in the highest tax bracket of 39.6 percent (making more than $466,950 annually) will receive a larger benefit than a couple in the 25 percent tax bracket (making between $75,300 and $151,900 annually), even if the amount of mortgage interest deducted by both couples is identical. A 2 017 report by the JCT demonstrates how the mortgage interest deduction and the deduction for local property taxes dispro- portionately benefit households with higher incomes. According to the report, more Money is Policy: How Federal Housing Dollars Are Spent Below $10,000 19,513 315 6 $2 $10,000 to $20,000 21,662 639 138 40 $20,000 to $30,000 21,408 1,109 350 132 $30,000 to $40,000 15,891 1,644 668 337 $40,000 to $50,000 13,391 2,257 1,153 602 $50,000 to $75,000 26,646 7,113 4,692 3,650 $75,000 to $100,000 17,351 6,837 5,074 5,538 $100,000 to $200,000 28,548 17,844 14,597 24,853 9,942 8,974 7,178 29,782 174,352 46,732 33,856 $64,935 $200,000 and over Total Source: Adapted from the Joint Committee on Taxation, Estimates of Federal Tax Expenditures for Fiscal Years 2016-2020, Table 2 and Table 3 (January 30, 2017). All returns include filers and non-filers. F i g u re J Distribution by Income Class of Real Property Tax Deduction at 2017 Rates and 2016 Income Levels [returns in thousands, money amounts in millions of dollars] Income Class Tax Returns Tax Expenditure for Real Property Tax Deduction All Itemized Returns Returns Returns Amount Below $10,000 19,513 315 2 – $10,000 to $20,000 21,662 639 117 $19 $20,000 to $30,000 21,408 1,109 333 76 $30,000 to $40,000 15,891 1,644 668 180 $40,000 to $50,000 13,391 2,257 1,197 335 $50,000 to $75,000 26,646 7,113 5,045 2,098 $75,000 to $100,000 17,351 6,837 5,552 3,194 $100,000 to $200,000 28,548 17,844 1,575 14,042 9,942 8,974 6,124 13,439 174,352 46,732 34,814 $33,382 $200,000 and over Total Source: Adapted from the Joint Committee on Taxation, Estimates of Federal Tax Expenditures for Fiscal Years 2016-2020, Table 2 and Table 3 (January 30, 2017). All returns include filers and non-filers. 13

Money is Policy JRT Housing-Money 4-26lores | Page 13