A Federal Housing Policy That Favors the Wealthy

Vox: Federal and state “tax deductions tend to be larger for rich people, who tend to have more expensive houses. And rich people are also in higher tax brackets, making every dollar deducted worth more. As a result, these tax breaks provide the biggest financial benefit to the wealthiest taxpayers. The Urban Institute’s John McGinty, Benjamin Chartoff, and Pamela Blumenthal have created a helpful chart showing just how big these tax breaks get.”

Housing tax breaks for rich people are larger than housing subsidies for poor people.

“The blue bars show the value of these tax breaks for different income brackets … As you can see, the tax breaks provided to the richest Americans, on a per-person basis, dwarf the value of housing subsidies provided to those with low incomes.”

“Most households in the middle of the income distribution are too wealthy to qualify for federal housing subsidies. At the same time, they tend to have relatively small houses and be in low tax brackets, so they don’t get much benefit from housing-related tax breaks.”

1 Comment

  1. One possible solution would be to cap all real estate deductions at, say, $500K of value. That would prevent the wealthiest from seeing such huge gains on property and save government a lot of revenue. It would likely also have a dampening effect on real estate prices, particularly in larger, popular cities.

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