Money is Policy JRT Housing-Money 4-26lores | Page 13
F i g u re I
Distribution by Income Class of Home Mortgage Interest Deduction
at 2017 Rates and 2016 Income Levels
[returns in thousands, money amounts in millions of dollars]
Income Class
Tax Returns
Tax Expenditure for
Mortgage Interest Deduction
All
Itemized
Returns Returns Returns Amount
of local property taxes that a taxpayer can
deduct. Proponents of both deductions
insist they help make owning a home more
affordable.
There are currently no income restrictions
limiting the households who may utilize
either deduction. Both are available to all
taxpayers regardless of income. Neverthe-
less, only those taxpayers who forego the
standard deduction on their federal tax
return and “itemize” their deductions can
claim the two deductions. Itemizing taxpay-
ers generally have higher incomes than
those who do not and represent only about
30 percent of all taxpayers. 12
The benefits associated with each deduction
are also linked to the marginal tax rate of the
households claiming them. A married couple
in the highest tax bracket of 39.6 percent
(making more than $466,950 annually) will
receive a larger benefit than a couple in the
25 percent tax bracket (making between
$75,300 and $151,900 annually), even if the
amount of mortgage interest deducted by
both couples is identical.
A 2 017 report by the JCT demonstrates how
the mortgage interest deduction and the
deduction for local property taxes dispro-
portionately benefit households with higher
incomes. According to the report, more
Money is Policy: How Federal Housing Dollars Are Spent
Below $10,000 19,513 315 6 $2
$10,000 to $20,000 21,662 639 138 40
$20,000 to $30,000 21,408 1,109 350 132
$30,000 to $40,000 15,891 1,644 668 337
$40,000 to $50,000 13,391 2,257 1,153 602
$50,000 to $75,000 26,646 7,113 4,692 3,650
$75,000 to $100,000 17,351 6,837 5,074 5,538
$100,000 to $200,000 28,548 17,844 14,597 24,853
9,942 8,974 7,178 29,782
174,352 46,732 33,856 $64,935
$200,000 and over
Total
Source: Adapted from the Joint Committee on Taxation, Estimates of Federal Tax Expenditures
for Fiscal Years 2016-2020, Table 2 and Table 3 (January 30, 2017). All returns include filers and
non-filers.
F i g u re J
Distribution by Income Class of Real Property Tax Deduction
at 2017 Rates and 2016 Income Levels
[returns in thousands, money amounts in millions of dollars]
Income Class
Tax Returns
Tax Expenditure for
Real Property Tax Deduction
All
Itemized
Returns Returns Returns Amount
Below $10,000
19,513
315 2 –
$10,000 to $20,000 21,662 639 117 $19
$20,000 to $30,000 21,408 1,109 333 76
$30,000 to $40,000 15,891 1,644 668 180
$40,000 to $50,000 13,391 2,257 1,197 335
$50,000 to $75,000 26,646 7,113 5,045 2,098
$75,000 to $100,000 17,351 6,837 5,552 3,194
$100,000 to $200,000 28,548 17,844 1,575 14,042
9,942 8,974 6,124 13,439
174,352 46,732 34,814 $33,382
$200,000 and over
Total
Source: Adapted from the Joint Committee on Taxation, Estimates of Federal Tax Expenditures
for Fiscal Years 2016-2020, Table 2 and Table 3 (January 30, 2017). All returns include filers
and non-filers.
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