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Costly, Regressive, and Ineffective: How Sensitive Is Public Support for the Mortgage Interest Deduction in the United States?

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  • Brian J. McCabe

Abstract

Although the mortgage interest deduction enjoys broad public support, critics argue that the policy disproportionately benefits wealthy households, fails to expand homeownership opportunities to households on the margins, and costs the federal government an extraordinary amount of money in foregone tax revenue. Drawing on data collected through an online experiment, this analysis tests the sensitivity of public support to these critiques. The findings reveal that support for the mortgage interest deduction declines when respondents are presented with information about the cost, effectiveness, or distribution of benefits associated with the deduction. Support among renters is more sensitive to framing effects than that among homeowners. Republicans are less sensitive to framing effects than Democrats when the deduction is framed as distributing benefits unequally, but more sensitive to these effects when the issue is framed as costly. However, all groups register their lowest level of support when told that the mortgage interest deduction is not an effective tool for expanding ownership opportunities.

Suggested Citation

  • Brian J. McCabe, 2018. "Costly, Regressive, and Ineffective: How Sensitive Is Public Support for the Mortgage Interest Deduction in the United States?," Housing Policy Debate, Taylor & Francis Journals, vol. 28(6), pages 963-978, November.
    • Handle: RePEc:taf:houspd:v:28:y:2018:i:6:p:963-978
    DOI: 10.1080/10511482.2018.1494025
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    References listed on IDEAS

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    1. Congressional Budget Office, 2013. "The Distribution of Major Tax Expenditures in the Individual Income Tax System," Reports 43768, Congressional Budget Office.
    2. Congressional Budget Office, 2013. "The Distribution of Major Tax Expenditures in the Individual Income Tax System," Reports 43768, Congressional Budget Office.
    3. James Poterba & Todd Sinai, 2008. "Tax Expenditures for Owner-Occupied Housing: Deductions for Property Taxes and Mortgage Interest and the Exclusion of Imputed Rental Income," American Economic Review, American Economic Association, vol. 98(2), pages 84-89, May.
    4. Congressional Budget Office, 2013. "The Distribution of Major Tax Expenditures in the Individual Income Tax System," Reports 43768, Congressional Budget Office.
    5. Congressional Budget Office, 2013. "The Distribution of Major Tax Expenditures in the Individual Income Tax System," Reports 43768, Congressional Budget Office.
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    Cited by:

    1. Maxence Valentin, 2024. "Subsidizing housing with deductions," Journal of Economic Surveys, Wiley Blackwell, vol. 38(4), pages 1490-1515, September.

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