National Association of Realtors (NAR) President Ron Phipps recently reaffirmed his organization’s support of the mortgage interest tax deduction (MID), a long-accepted cornerstone of the home buying process that, regardless of its several decades of popularity, is threatened by upcoming cuts to government spending.
As originally reported by Chicago Agent in September, MID was floated as a possible component of the Super Committee’s far-reaching deficit reduction plans, but now, the program has reemerged as a part of the Obama administration’s proposed cuts, and supporters such as Phipps are defending the measure as a true stimulate to housing.
“Owning a home is a long-standing and abiding fundamental American value because it benefits individuals and families, strengthens communities, and is integral to the nation’s economy,” Phipps wrote in his statement. “It is imperative that Congress preserve the mortgage interest deduction and that the nation’s 75 million home owners continue to receive this important tax benefit, which helps primarily middle- and lower income families.”
Not everyone, though, is so hot on MID, and some even argue that it should expire. Most recently, Stan Humphries of Forbes called for the program’s termination, citing its projected cost of $131 billion in 2012 and non-effectiveness in actually stimulating housing. Humphries mentioned Australia and Canada, two developed nations that, without a MID-like program, have comparable homeownership rates to the U.S.
But perhaps there are other, complementary benefits of the reduction? As we mentioned in our previous report, families save on average more than $3,000 a year from MID. 65 percent of those families earn less than $100,000 a year, meaning that the $3,000 in savings is most likely spent on food, clothing and other items that directly stimulate economic growth.
Debate will surely continue, and as Phipps promised, the NAR will commit its formidable lobbying efforts behind the cause: “NAR will remain vigilant in opposing any plan that modifies or excludes the deductibility of mortgage interest.”