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The Distributional And Revenue Consequences Of Reforming The Mortgage Interest Deduction

  • Cole, Adam J.
  • Gee, Geoffrey
  • Turner, Nicholas
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    The mortgage interest deduction (MID) is costly, and half the benefits accrue to the top 10 percent of taxpayers. This paper analyzes how five modifications to the MID would affect federal individual income tax revenue and the distribution of the tax burden. Under full repeal, federal individual income tax revenue is estimated to increase by up to $1.3 trillion, equal to 0.7 percent of GDP, between 2012 and 2021. Converting the deduction to a 15 percent non-refundable credit could increase federal individual income tax revenue by up to $599 billion, equal to 0.3 percent of GDP, over this period.

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    File URL: http://www.ntanet.org/NTJ/64/4/ntj-v64n04p977-1000-distributional-revenue-consequences-reforming.pdf
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    File URL: http://www.ntanet.org/NTJ/64/4/ntj-v64n04p977-1000-distributional-revenue-consequences-reforming.html
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    Article provided by National Tax Association in its journal National Tax Journal.

    Volume (Year): 64 (2011)
    Issue (Month): 4 (December)
    Pages: 977-1000

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    Handle: RePEc:ntj:journl:v:64:y:2011:i:4:p:977-1000
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    1. Christian A. L. Hilber & Tracy M. Turner, 2010. "The mortgage interest deduction and its impact on homeownership decisions," LSE Research Online Documents on Economics 31759, London School of Economics and Political Science, LSE Library.
    2. Martin Gervais & Manish Pandey, 2008. "Who Cares About Mortgage Interest Deductibility?," Canadian Public Policy, University of Toronto Press, vol. 34(1), pages 1-24, March.
    3. Steven C. Bourassa & Ming Yin, 2008. "Tax Deductions, Tax Credits and the Homeownership Rate of Young Urban Adults in the United States," Urban Studies, Urban Studies Journal Limited, vol. 45(5-6), pages 1141-1161, May.
    4. Patric H. Hendershott & Gwilym Pryce, 2005. "The Sensitivity of Homeowner Leverage to the Deductibility of Home Mortgage Interest," NBER Working Papers 11489, National Bureau of Economic Research, Inc.
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