Homeowners rely on federal incentives

There's chatter about eliminating the deductibility of mortgage interest for homeowners. This is a misguided idea. Here's why: Homeowners already pay the bulk of federal income taxes (between 80 percent and 90 percent of all federal income taxes collected). Increasing their tax burden would be unfair.

The economic meltdown spawned by careless lending has homeowners reeling from declining property values. Eliminating this significant homeownership incentive would further erode those values by an additional 15 percent, according to Lawrence Yun, Chief Economist for the National Association of Realtors. Since a vibrant housing market is a key economic driver (every home purchased pumps $60,000 into the economy and approximately 19 percent of GDP centers on housing), any further erosion in this arena would negatively impact other sectors.

De-incentivizing homeownership would also lessen many other beneficial effects. Owning a home has long been one of the best ways to build wealth. Historically, a homeowner's net worth is between 31 and 46 times greater than a renter's. Studies have shown that people who own homes are more likely to vote, volunteer and contribute to their neighborhoods. And homeowners move less frequently than renters, providing better neighborhood stability, reduced crime and improved neighborhood upkeep.

Most importantly, Americans value homeownership. By overwhelming margins they do not want the tax credit tampered with. In a recent survey commissioned by the National Association of Home Builders, 80 percent of respondents said they support retaining federal tax incentives to promote homeownership. Even when told that eliminating the mortgage interest deduction would help ease the federal deficit, 72 percent still opposed abolishing it. And these results cut across all lines. Among Republican respondents, 72 percent wanted to retain the mortgage interest deduction; among Democrats, 64 percent; independents, 75 percent. Even 55 percent of renters wanted to keep the interest deduction.

Bob Dohn

Schaumburg