Monday, August 24, 2015

Who Does Federal Housing Policy Help?


Vox puts together a cool chart:

If you take out a mortgage to buy a house, the federal tax code lets you deduct your interest payments from your taxable income. People can also deduct state and local property taxes from their federal income taxes.

The blue bars show the value of these tax breaks for different income brackets. They can be compared with subsidies the federal government provides to low-income people to help them afford housing — represented by the yellow bar. As you can see, the tax breaks provided to the richest Americans, on a per-person basis, dwarf the value of housing subsidies provided to those with low incomes.

But the combined effect of these policies is to hurt the middle class the most. Most households in the middle of the income distribution are too wealthy to qualify for federal housing subsidies. At the same time, they tend to have relatively small houses and be in low tax brackets, so they don't get much benefit from housing-related tax breaks.

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