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Archive for December, 2010

29 DECEMBER 2010 | HOME MORTGAGE INTEREST DEDUCTION

29 Dec , 2010

Recently, The National Commission on Fiscal Responsibility and Reform, co-chaired by North Carolinian Erskine Bowles, has called attention the home mortgage interest deduction (MID)  provisions of the Internal Revenue Code, while making sweeping proposals to address the growing federal budget deficit.

Briefly, the MID allows homeowners to deduct the interest paid on their mortgages in calculating their annual tax liability.  The current code allows for deductions on interest paid on up to $1 million of primary or secondary home indebtedness as well as up to $100,000 in home equity indebtedness.  This deduction reduced individual tax liability by $86 billion in 2009 and is projected to reduce tax revenue by $500 billion for the period 2010-13.

By nature this interest deduction benefits higher income taxpayers disproportionately due to the higher marginal tax rates coupled with higher mortgage levels.  75% of the benefits of the MID accrued to taxpayers with over $100,000 in annual income.

Comparing the $86 billion housing subsidy that this deduction provides with the FY11 Department of Housing and Urban Development (HUD) total budget of $43.58 billion raises some questions about our collective housing priority.  With very few low or very low income households able to take advantage, it is safe to say that the housing subsidy provided to middle and upper income Americans is double that of the housing subsidy (through HUD) that is available to very low-, low-, and moderate income Americans.

It can be argued that the MID has helped raise the national homeownership rate since its inception in 1965 when the homeownership rate was at 63% vs. today’s current rate of 66.9% (the rate peaked in 2004 at 69.2%).  However, the U.S. current homeownership rate lags somewhat behind Canada’s national rate of 68.7% in the absence of an MID in Canada.

The Commission has proposed a tax credit of 12% on interest paid on up to $500,000 in mortgage debt on primary residences only.  This change will increase government tax revenue while also redistributing the subsidy more proportionately toward lower and moderate income taxpayers.

Habitat is a proponent of home ownership at all levels of our society.  However, the allocation of housing subsidy toward higher income taxpayers raises some questions of economic justice that should be discussed.  What do you think?

DEC 16: POVERTY QUIZ

16 Dec , 2010

Thanks to our friends at the North Carolina Housing Coalition, this link to a quiz on poverty compiled by the group “Half In 10” that signifies cutting poverty in half in ten years.

Take the quiz and learn something at the same time. I did and got 11 out of 15 correct, which is better than 10 in 15, that’s about all I can say about that. The statistics are stunning and shows in numbers the difficulty a family has in achieving decent, affordable housing while working in low wage employment.

Here’s the link: http://halfinten.org/issues/articles/how-much-do-you-really-know-about-poverty

‘TIS THE SEASON | 9 DECEMBER 2010

13 Dec , 2010

I recently had the pleasure to meet Ari Margolis, the new assistant rabbi at Temple Beth Or in North Raleigh.  I was touched by his commitment to practical service and left feeling that we’d be seeing more of each other.

In the December 9th News Observer, I was pleased to see Ari’s photo on the front of the local page and this quote from him describing the Jewish celebration of Hanukkah:

In reference to Hanukkah being a celebration of miracles, Rabbi Ari suggests that miracles aren’t some grand magic show by God, but rather as he says, “…they (miracles) are proof that we partnered with God.  And that’s the true essence of this holiday; that we can be the source for creating miracles, large and small, for others.  The miracles people will talk about and celebrate later on are in our hands now.  That’s how we bring light to the world.”

Ari was speaking of Hanukkah, but when I read that, I was taken by how appropriate those same words would be for myself (a  Christian) speaking of Christmas.  And how true what he says.  I’ve seen it over and over in my work with Habitat.  It is indeed a miracle that Habitat homes are built, but there is nothing mysterious or magical about it—just the pure simplicity of people stepping forward and engaging in selfless acts of service to their neighbors.

A simple holiday message.  How refreshing.  Thank you, Rabbi Ari.


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