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Comparing Itemized Tax Deductions across States: A Simple Decomposition Applied to Mortgage Interest Deductions

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  • Wodon, Quentin

Abstract

This paper proposes a simple multiplicative decomposition that can help in comparing the levels of mortgage interest tax deductions observed in different states or areas, and some of the reasons leading to different levels of deductions. The key parameters in the decomposition are a state’s population, its number of tax filers, the share of filers claiming a specific deduction, the average taxes paid by filers, and the average deduction among claimants. The idea is that such simple decompositions can be useful for states and local authorities to better understand some of the reasons why they may have comparatively high or low deductions in their state, and whether the levels of deductions observed are as one might have expected given their overall tax receipts.

Suggested Citation

  • Wodon, Quentin, 2014. "Comparing Itemized Tax Deductions across States: A Simple Decomposition Applied to Mortgage Interest Deductions," MPRA Paper 56940, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:56940
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    File URL: https://mpra.ub.uni-muenchen.de/56940/1/MPRA_paper_56940.pdf
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    References listed on IDEAS

    as
    1. Cole, Adam J. & Gee, Geoffrey & Turner, Nicholas, 2011. "The Distributional and Revenue Consequences of Reforming the Mortgage Interest Deduction," National Tax Journal, National Tax Association;National Tax Journal, vol. 64(4), pages 977-1000, December.
    2. Joseph Gyourko & Todd Sinai, 2003. "The Spatial Distribution of Housing-Related Ordinary Income Tax Benefits," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 31(4), pages 527-575, December.
    3. 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.
    4. Poterba, James M, 1992. "Taxation and Housing: Old Questions, New Answers," American Economic Review, American Economic Association, vol. 82(2), pages 237-242, May.
    5. Poterba, James M. & Sinai, Todd, 2011. "Revenue Costs and Incentive Effects of the Mortgage Interest Deduction for Owner-Occupied Housing," National Tax Journal, National Tax Association;National Tax Journal, vol. 64(2), pages 531-564, June.
    6. Peter Brady & Julie-Anne Cronin & Scott Houser, 2003. "Regional Differences in the Utilization of the Mortgage Interest Deduction," Public Finance Review, , vol. 31(4), pages 327-366, July.
    7. Hanson, Andrew, 2012. "Size of home, homeownership, and the mortgage interest deduction," Journal of Housing Economics, Elsevier, vol. 21(3), pages 195-210.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Tax deductions; Mortgage interest; District of Columbia;

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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