Capping the Mortgage Interest Deduction
AbstractIn this paper we examine the economic implications of several policy options for capping the mortgage interest deduction (MID). We extend the standard user–cost model of owner–occupied housing to include a cap on the mortgage size receiving tax–favored status. Our user–cost estimates for taxpayers with mortgages above the current–law cap are 4.41 percent higher than estimates from a model without the cap. We simulate the share of mortgage dollars that would be subject to three alternative cap policy variants and summarize the distributional impacts of each proposal, computing the share of mortgage dollars impacted across U.S. Metropolitan Areas.
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Bibliographic InfoArticle provided by National Tax Association in its journal National Tax Journal.
Volume (Year): 60 (2007)
Issue (Month): 4 (December)
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- Hanson, Andrew, 2012. "Size of home, homeownership, and the mortgage interest deduction," Journal of Housing Economics, Elsevier, Elsevier, vol. 21(3), pages 195-210.
- James M. Poterba & Todd M. Sinai, 2008. "Income Tax Provisions Affecting Owner-Occupied Housing: Revenue Costs and Incentive Effects," NBER Working Papers 14253, National Bureau of Economic Research, Inc.
- Greenhalgh-Stanley, Nadia, 2012. "Medicaid and the housing and asset decisions of the elderly: Evidence from estate recovery programs," Journal of Urban Economics, Elsevier, vol. 72(2), pages 210-224.
- Andrew Hanson, 2012. "The Incidence of the Mortgage Interest Deduction: Evidence from the Market for Home Purchase Loans," Public Finance Review, , , vol. 40(3), pages 339-359, May.
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