Mortgage tax credit could jump-start housing market

Re: “Bernanke calls for more action to revive the housing sector,” Jan. 4

We are becoming a nation of renters. The only glow in the current housing sector is the big jump in apartment construction. Permit applications to build apartments with five or more units increased by 80 percent in 2011. By comparison, building permit requests for single-family homes rose just 3.6 percent. 

Potential first-time buyers have decided to remain renters. They are staying out of the market because they are afraid of the continuing decline in home values and because for most of them there is currently no homeownership tax incentive to offset that very real risk.

There are millions of unsold foreclosed homes, and their numbers will increase in 2012. There are also millions of underwater homeowners who can’t afford to move, homeowners can afford to move up but need to sell their home first. They are unable to sell their home because of the lack of buyers, who in turn have the same problem they do. In the end we’re not going to revive the ailing housing market until first-time buyers return to the market in large numbers.

 To bring first-time buyers back to the market we need to create homeownership tax incentives to offset their legitimate concerns about continued declines in home values. A couple that doesn’t own a home typically takes the “standard” federal income tax deduction, which will be $11,600 in 2011. That’s about the same as the mortgage interest and real estate tax payments on a $130,000 mortgage, which they could itemize if they buy a home. The net result is there is little or no financial incentive for many renters in the lower tax brackets to buy a home. 

Until Congress fixes our very regressive homeownership tax incentives, we are unlikely to see significant recovery in the housing market. The current mortgage interest deduction formula confers a proportionately much greater tax benefit on a wealthy homeowner, who would probably still buy a home even if their tax incentives were slightly less. 

The solution would be to replace the mortgage interest deduction with a flat mortgage interest tax credit — the tax credit would be the same regardless of income tax bracket. The percentage of mortgage payments that could be subtracted from net income tax liability would be the same for younger first-time buyers in lower tax brackets and for older move-up buyers in higher tax brackets.

 A typical homeowner would still get the same net homeownership tax benefits over his or her lifetime. The incentives would no longer be regressive, so they would for the first time actually provide an effective home ownership tax incentive to many first-time buyers. 

From Bruce Hahn, president of the American Homeowners Grassroots Alliance and the American Homeowners Foundation, Arlington, Va.

Drilling in the Arctic poses too great a risk

In Alaska, we know through bitter experience that the price of an offshore oil disaster is the constant risk of environmental devastation. Today if you walk many of the beaches of Prince William Sound you can dig down and still find oil from the Exxon Valdez disaster more than 20 years ago. The economies of those affected fishing villages have never recovered.

We’ve seen similar devastation along the Gulf Coast since the BP disaster. An oil spill like the BP disaster would be catastrophic in the Arctic. The 6-foot-thick sea ice and harsh conditions would make cleaning up a spill impossible. 

Add to that the lack of response capacity — a fact recognized by the Coast Guard — and the probability of a spill irreparably harming this last wild frontier skyrockets.

Yet Alaska’s senators continue to underestimate these very real risks to the people and wildlife of Alaska, simply trusting the oil industry to do the right thing. 

I hope the Obama administration will step in and protect Alaska communities and the natural treasures of the Arctic from dangerous offshore oil drilling.

From Lindsey Hajduk, Sierra Club, Anchorage, Alaska

Tea Party should realize obstruction won’t work

It’s no surprise the Tea Party has gone flat (“Once hot, Tea Party goes cold,” Jan. 17). 

History proves you can’t simply be an obstructionist force in politics. Last summer’s debt-ceiling fiasco underscores this point. Give the Tea Party Republicans an “A” for principle but an “F” for governing. 

Much to the surprise of the House GOP leadership, Tea Party members’ unwillingness to compromise last July not only handcuffed Speaker John BoehnerJohn Andrew BoehnerFormer top Treasury official to head private equity group GOP strategist Steve Schmidt denounces party, will vote for Democrats Zeal, this time from the center MORE, it drove the public’s approval rating of Congress into the toilet — where it still stands seven months later. To make matters worse, these same electeds repeatedly turned a deaf ear to their constituents’ pleas to stop posturing and get back to work.

One-hit wonders rarely stand the test of time.

 I’ll be interested to see just what the congressional Tea Party members have learned over the long holiday recess.

From Denny Freidenrich, Laguna Beach, Calif.