OPINION | An audit of the state’s Home Mortgage Interest Deduction reveals the tax policy’s inequities
The largest government subsidy for housing in Oregon does not help people exit homelessness. Rather, it benefits high-income, white, urban Oregonians, according to an audit of the state’s Home Mortgage Interest Deduction this month by Secretary of State Shemia Fagan and the Oregon Audits Division.
The state is losing more than a half-billion dollars annually in revenue due to this expenditure.
Do you ever hear people impatiently wonder why homelessness isn’t solved since so much money is “thrown at it”?
Let me be clear: far more public money is thrown towards wealth that has accrued with mostly white families. Meanwhile, Black and Indigenous Oregonians are disproportionately impacted by homelessness.
If that half-billion dollars were instead captured and directed toward the state’s homelessness crisis, 25,000 people experiencing homelessness could move into apartments with support services, year after year.
I base that on how much Urban League spends on its “scattered site” approach to renting apartments for people in Portland while providing support services.
The mortgage interest deduction has been in the federal tax code since the beginning of the modern tax system in 1913, and was then absorbed into Oregon’s tax system, too, in 1923.
While one might expect that this deduction is meant to spur people to buy homes, that’s rarely the case.
Tax attorney Dorothy A. Brown writes in “The Whiteness of Wealth” that mortgage interest deductions don’t encourage homeownership that wouldn’t otherwise happen. What they do is encourage people to buy “larger and more expensive homes, so they can maximize their deductions.”
So, what is rewarded is increased housing costs as well as carbon consumption.
“In truth, homeownership in America is rigged and has been from the beginning,” Brown writes. “Most white homeowners win, and all but a few (Black) homeowners lose. Forget the Fair Housing Act, forget redlining, forget the illegal but still active practice of mortgage discrimination. Today’s federal government creates and perpetuates pro-white policies in the form of tax subsidies for homeownership that are perfectly lawful.”
In Oregon, white families are twice as likely as Black families to own houses, according to the state audit. And then the mortgage interest deduction benefits higher-income taxpayers because they are “more likely to itemize their deductions … own more expensive homes … and have higher marginal tax rates leading to a larger benefit per dollar deducted.”
The state audit recommends that the legislature address the inequity of the mortgage interest deduction. While recent legislatures have brought bills forth attempting various fixes — from limiting the income levels of people claiming the deduction to preventing the use of the deduction for second properties — none have succeeded.
This audit arms the public with a sharpened knowledge of how inequitable this tax policy is.
Demand that public funds alleviate the housing crisis, not exacerbate it.
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