Wealthy taxpayers are primary beneficiaries of the mortgage deduction

The mortgage tax deduction is often described by politicians as a benefit empowering middle-class consumers to move into homes of their own, but it is actually a housing subsidy most advantageous to the wealthiest Americans, according to The New York Times's FiveThirtyEight blog.

The Times reports that elimination of this exemption, which allows homeowners to deduct mortgage interest on their taxes, would result in the Treasury taking in about $80 billion more revenue annually. Yet widespread support of the subsidy makes elimination a politically difficult proposition. The Times cites a National Association of Home Builders survey that found a candidate supporting elimination would lose significant support from voters.

However, a recent Times/CBS News poll suggests lower and middle-income taxpayers might have a mistaken impression of how much they benefit from this exemption. Only 1 percent of respondents to the Times/CBS poll said they favor federal housing subsidies for the well-to-do, but the Times illustrates this is exactly the demographic taking out the biggest mortgages and therefore benefiting most from the interest deduction.

Recent reports from the Luxury Institute, DataQuick and the Detroit News indicate the high-end housing market is recovering more quickly than other market sectors.

More News