That's one argument used by those who want to eliminate or reduce the tax deduction for interest on home mortgages.
The issue is relevant because anti-tax Republicans have at times talked about removing certain deductions. It's also relevant to local governments, which is why Tampa Mayor Bob Buckhorn and Hillsborough County Commission Chairman Ken Hagan were part of a rally to highlight the benefits of the deduction that was held under the unforgiving sun in downtown Tampa's Joe Chillura Park.
State representatives Dana Young and Janet Cruz also spoke, while a bevy of other local Democrats and Republicans gathered underneath the event tent sponsored by the National Association of Home Builders, a group that's concerned the deduction could be eliminated.
NAHB Chairman Barry Rutenberg said flatly, "Washington policy makers need to be talked to frequently to make sure that we have the possibility of home ownership." He complained that credit standards had grown too stringent, and feared that a 20 percent down payment may be required for first time home buyers.
Currently, interest on a mortgage taken out to buy or improve a home can be fully deducted, provided the loan amount is less than $1 million for married couples and $500,000 for singles. Home equity loans for everything else is limited to $100,000 for couples and $50,000 for singles.
The often discussed Simpson-Bowles report on how to reduce the deficit proposed eliminating the home mortgage deduction; it also proposed limiting the deduction to mortgages of $500,000 or less (down from $1 million), eliminating the deduction for home equity loans, and prohibiting people from deducting interest on a second home.
According to a November 2011 story in the New York Times (where CL obtained other information contained in this report), the Congressional Joint Committee on Taxation estimated that the deduction cost $90 billion last year, and would cost $484 billion from 2010 to 2014.
Jennifer Doerfel, Executive Vice President of the Tampa Bay Builders Association, said, "We can't afford to do anything to jeopardize the overall economy, and housing is a big part of it. "
A year ago, Massachusetts Democratic Representative Barney Frank dismissed the idea that the mortgage deduction was going away anytime soon, saying the sun would disappear first.
But he did add that, "If I were starting a new country, I would not have it. I do not think it is ideal tax policy," Frank said. "Given the extent to which people's legitimate, vested interest include that, trying to abolish it now, even if we were in a wonderful economy, would be unfair."
Doerfel says, "We can't take for granted that everything is going to be the way that it was, because there are so many things that are now on the table that haven't been before. Many people have said it. There are no sacred cows."
Hillsborough Commissioner Chairman Ken Hagan blasted Washington lawmakers for considering taking away the mortgage tax deduction. "Don't even think about taking away our home deduction," he said. "Stop wasting time even discussing such ridiculous ideas," he said, adding that such "schemes" would only hurt young people and first-time home buyers.
Mayor Buckhorn was at his most intense, saying that the federal government needs to "get out of our lives." Saying that there are foreclosures all over the city of Tampa that occurred because some people never should have received loans, Buckhorn said, "A foreclosed house is like a cancer."
In addition to the NAHB, the rally was co-sponsored by the Tampa Bay Home Builders Association and the Florida Home Builders Association.
The NAHB will next take their traveling rally tour to Detroit on July 20.