What does it say about Oregon’s priorities when in the midst of a low-income housing shortage, we, as taxpayers, subsidize people who buy second homes?
That is what we do, and have done for decades, by allowing people to claim the mortgage interest on a second home as a tax deduction. It’s been a point of contention among housing advocates for years. Various modifications to scale back the state deduction have been proposed, but none has made it out of the Legislature.
On March 4, lawmakers introduced House Bill 3349 , which targets the most offensive aspect of the original tax law: interest deductions on second homes, which are often homes that are not a principal residence, in small towns, and frequently leased out as a short-term rentals to tourists. Street Roots has consistently supported modifying this housing benefit in a way that actually benefits people who need housing.
In virtually every county in Oregon, low-income people are struggling to acquire or maintain basic housing. Too often, rent consumes the majority of a household’s income, or high costs leave them without adequate housing at all. Service industry workers can’t afford to live in their hometowns where satellite homeowners have bought up a substantial part of the housing stock for vacation housing and short-term rentals – all with the support of Oregon’s tax policy.
As a whole, the mortgage interest deduction is Oregon’s biggest housing subsidy, rising to the tune of $1 billion per budget period. By design, it benefits the wealthiest Oregonians the most.
FURTHER READING: Most of Oregon's billion-dollar housing subsidy goes to top earners
House Bill 3349 would eliminate the deduction for owners of vacation homes.
It would phase out the deduction for the highest earners in the state, while leaving it largely intact for the vast majority of homeowners.
And the money not depleted by the deduction will be allotted instead to the Oregon Housing Fund.
The Housing “trust fund,” as it’s known, was created to expand the state’s housing stock for low- and extremely low-income Oregonians. Because that’s what Oregonians desperately need. Oregon families, notably renters, and notably renters of color, are struggling to keep their heads above water. The Portland metro area is short an estimated 48,000 homes that would be affordable to very and extremely low-income families, according to a Metro analysis on figures from the U.S. Bureau of Housing and Urban Development, or HUD.
In our Feb. 22 edition, Street Roots talked with U.S. Sen. Ron Wyden , who spoke of using tax policy to push progressive environmental policy, managing the push and pull forces of the tax code to promote what needs to be done. Oregon needs to do the same.
If we continue to incentivize luxury housing, then we willfully neglect the basic rights of hundreds of thousands of low-income Oregonians, of today and tomorrow, struggling to find housing they can afford, with rents that won’t drain their savings, erode their financial security and perpetuate generational poverty.
Equally to the point, this existing second-home kickback isn’t necessary. The notion that this perk for wealthy homeowners was an incentive to encourage people to buy a second house in the hottest market in one of the most popular destination states has always been, and continues to be, simply ludicrous.
The time is overdue for lawmakers to finally make this much-needed adjustment a reality.
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