Lawmakers rethinking support for mortgage interest deduction

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When Rep. Gary Miller, R-Calif., introduced a measure in January 2011 opposing new restrictions on the mortgage interest deduction, it drew 199 co-sponsors. An identical measure put forward by Miller in January 2013 has just 20 co-sponsors to date, Bloomberg News reports.

“What that says to me is lots of members of Congress are taking a second look at this,” Sheila Crowley, president and CEO of the National Low Income Housing Coalition, tells Bloomberg’s Marc Heller.

Critics have said that the way the deduction is structured now, it mostly benefits the wealthy — the bigger your mortgage, and the higher your tax bracket, the more you save. Families who don’t file itemized tax returns don’t benefit at all.

A Congressional Research Service report is the latest illustration of how the tax break — which is expected to cost the government $379 billion from 2013 to 2017 — is distributed unevenly, benefiting residents of states like California, Colorado, Connecticut, Hawaii, Massachusetts and New Jersey more than those in places where home values and incomes are lower (Iowa, Arkansas, Kentucky, West Virginia and Mississippi).

The National Low Income Housing Coalition advocates converting the deduction into a credit so people who don’t file itemized returns could claim it. Source: bloomberg.com.

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