About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 Gerald Prante, Who Benefits from the Home Mortgage Interest Deduction 1 (2006)

handle is hein.taxfoundation/ffejxz0001 and id is 1 raw text is: FOUNDATION' February 3, 2006 Who Benefits from the Home Mortgage Interest Deduction? by Gerald Prante Despite recent attempts by real estate, home building, and mortgage-lending organizations to portray the home mortgage interest deduction as vital to middle-income family budgets, an analysis of data from the Internal Revenue Service tells a different story. The most recent IRS data show few low- and middle-income taxpayers benefit from the home mortgage interest deduction. Those who filed tax returns with under $30,000 in adjusted gross income (AGI) in 2003 received just 9 percent of deductions for home mortgage interest, despite filing 52 percent of all tax returns. (The median taxpayer's AGI was approximately $29,000 in 2003.) In contrast, 36 percent of home mortgage interest deductions were claimed by taxpayers with AGIs over $100,000.1 Table 1 illustrates the regressive nature of the home mortgage interest deduction. Those in lower income groups claim few deductions, while those earning over $75,000 in AGI claim the vast majority. Table 1. Home Mortgage Interest Deduction Disproportionately Benefits Upper-Income Taxpayers, 2003 Adjusted Gross Income Percent of Home Percent of All Average Mortgage Percentage of Mortgage Interest :Tax Returns in: Interest Deduction Returns Claiming :Deduction Claimed: Income Group: Per Return Mortgage Interest Deduction Under $20,000 4.2%: 37.8%ii $278:: 4.0% :$20,000 - $29,999 5.1%: 14.1 0 $910: 13.1%: :30,000 - $39,999 7.20o 10.7 0 $1,674 242 S40,000 - S49,999 7.9 8.0%:: 2,462 35.2%:: $50,000 - $74,999 21.7:o 13.3%. $4,068 50.9°/a:: :$75,000 - $99,999 18.2%: 7.3%:: $6,210: 69.0% .: . ... . . . .. .. .. .. .. .. ..... . . . . . . . . . . . . . . . . . . . . . . . . .... .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ... . . .... .. .. .. .. .. .. ... .. ... .. ... .. ... .. ... .. ... .. .. ... .. ... . .... .. ... .. ... .. ... .. .. ... .. ... .. ... .. ... .. ...... . . .. .. ... .. ... .. ... .. ... .. ... .. ... .. .. ... .. ... .. ... .. ... .. . . ...... .. .. ... .. ... .. ... .. ... .. ... .. ... .. .. ... .. ... .. ... .. ... .. ... .... $100,000 - $199,999 24.4%: 6.8%: $8,928: 78.9%. ............................................................. ...................................... . ................................:. ............................... ... . . . .............................................. S200.000 and over 11.21%: 1.9%. $14,374: 75.7%o: ............................................................................................ ! ! .2 % ! ..................... ! -9 °/ ii ......................... $ ! 4 , 3 74...... .......................................... 0...... Source: Internal Revenue Service, Tax Foundation calculations. Factors Affecting the Distribution There are four key factors causing the home mortgage interest deduction to be more valuable for high-income earners than low-income earners.

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most