White Picket Fence? Not So Fast
By VIRAL V. ACHARYA, MATTHEW P. RICHARDSON, STIJN VAN NIEUWERBURGH and LAWRENCE J. WHITE
NYT
THE United States spends more than $100 billion annually to subsidize homeowners. Renters get no breaks; homeowners get tons of them. Their mortgage rates are subsidized through the government-sponsored enterprises Fannie Mae and Freddie Mac; they get a big deduction on federal income taxes for mortgage interest payments and for state and local property taxes; and they even get favored treatment on capital gains from the sales of primary residences.
Americans love the idea of a house and a white picket fence. The government encourages ownership through housing subsidies, believing that it stabilizes communities. Owners see their homes as their share of the American dream, and their best way to save money.
But according to the Congressional Joint Committee on Taxation, these tax breaks add up to $700 billion in lost government revenue over the five-year period through 2014. As the government struggles to come up with spending cuts and revenue sources, housing subsidies are an obvious place to look.
Until recently, support for home ownership was untouchable because the programs were popular with voters and because of unrelenting lobbying efforts. The political right sold them as part of its “ownership society,” whereas the left used them to fight rising income inequality. But the policies have turned into a major disappointment for both sides.
(More here.)
NYT
THE United States spends more than $100 billion annually to subsidize homeowners. Renters get no breaks; homeowners get tons of them. Their mortgage rates are subsidized through the government-sponsored enterprises Fannie Mae and Freddie Mac; they get a big deduction on federal income taxes for mortgage interest payments and for state and local property taxes; and they even get favored treatment on capital gains from the sales of primary residences.
Americans love the idea of a house and a white picket fence. The government encourages ownership through housing subsidies, believing that it stabilizes communities. Owners see their homes as their share of the American dream, and their best way to save money.
But according to the Congressional Joint Committee on Taxation, these tax breaks add up to $700 billion in lost government revenue over the five-year period through 2014. As the government struggles to come up with spending cuts and revenue sources, housing subsidies are an obvious place to look.
Until recently, support for home ownership was untouchable because the programs were popular with voters and because of unrelenting lobbying efforts. The political right sold them as part of its “ownership society,” whereas the left used them to fight rising income inequality. But the policies have turned into a major disappointment for both sides.
(More here.)
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