The top Republican tax writer in Congress pledged a “careful, thoughtful review” of tax breaks for homeowners, including the mortgage interest deduction.
“Not every credit or deduction is a loophole,” Representative Dave Camp of Michigan, chairman of the House Ways and Means Committee, said at a hearing today in Washington.
In 2012, the home mortgage interest deduction cost the government $68 billion, according to the congressional Joint Committee on Taxation.
Critics of the deduction, including Eric Toder of the nonpartisan Tax Policy Center, say it does little to encourage homeownership and instead provides a benefit to higher-income households to purchase larger homes.
The deduction is available only to the one-third of taxpayers who itemize their deductions and tend to have higher incomes. More than three-quarters of the benefit in 2012 went to households with annual incomes exceeding $100,000.
“The key is really to focus the tax benefits more carefully,” said Phillip Swagel, a public policy professor at the University of Maryland who was a Treasury Department official under President George W. Bush.
Camp is pursuing a rewrite of the U.S. tax code that would curtail tax breaks and lower rates.
At today’s hearing, the committee is also examining other tax breaks for housing, including the ability to deduct property taxes, which cost the government $24 billion in 2012 in forgone revenue.
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