A budget neutral way to help low-income Americans pay for their rent or mortgage
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The tax proposal released by Republican leaders leaves out one way to spur economic growth and help Americans struggling to meet their rent or mortgage: directly reforming the mortgage interest deduction and reinvesting the savings into affordable rental housing for those with the lowest incomes.

The mortgage interest deduction (MID) is a $70 billion tax write-off that primarily benefits higher income households. Experts across the political spectrum agree that the MID is a wasteful use of resources that does not incentivize homeownership. Instead it encourages higher levels of debt, increases costs for everyone, and mostly benefits those with high incomes who do not need federal assistance to live in a stable home.


Lowering tax rates for millionaires and corporations without addressing the affordable housing crisis should be a non-starter. If our leaders are serious about boosting the economy and helping families thrive, they should use savings from tax reform to increase the supply of housing for those who need it most.

According to research from my organization, the National Low Income Housing Coalition, every state and community – rural, suburban, and urban – has a severe shortage of affordable rental homes for people with the lowest incomes. Nationally, there are only 35 homes affordable and available for every 100 extremely low income renters. A full-time worker earning minimum wage can afford a modest, one-bedroom apartment in only 12 counties.

As a result, 71 percent of the lowest income households –seniors, people with disabilities, families with children struggling to get by—pay more than half of their limited incomes on rent and utilities, with little left over for other basic needs, like food, health care, or savings for retirement or their children's education. These families are at a high risk of eviction, which destabilizes families and communities, and, in worst cases, results in homelessness.

Despite the clear need, three out of four of the poorest families eligible for housing assistance are turned away due to underfunding, and half a million people in America have no homes at all. While millions of the lowest income and most vulnerable households are experiencing homelessness or on the cusp, taxpayers spend $10.5 billion a year through the mortgage interest deduction to subsidize the homes of the top 1 percent of earners in the country – some of the wealthiest people in the world.

Our United for Homes campaign, which has been endorsed by more than 2,300 national, state and local organizations and government officials, calls for reducing the portion of a mortgage eligible for a tax break from $1 million to $500,000 - impacting fewer than 6 percent of mortgage holders nationwide - and converting the deduction to a non-refundable credit. These changes would give additional tax relief to 25 million lower income homeowners and save over $240 billion over 10 years. We propose using the savings to invest in affordable housing for the lowest income renters. By changing our housing priorities, we can help end homelessness and housing poverty without adding any costs to the federal government.

The Republican proposal to raise the standard tax deduction makes it especially imperative to reform the mortgage interest deduction. While increasing the standard deduction could provide a larger tax break to middle income families, it would also make the MID even more regressive, benefiting only the very highest-income households with the largest mortgages.

Affordable rental housing is essential to economic prosperity for all Americans. The lowest income families can more easily climb the economic ladder when they live in areas connected to good schools, jobs, health care and transportation. Children who live in stable homes have better health and education outcomes and greater access to economic opportunities, significantly increasing their chances of economic success as adults. The shortage of affordable housing costs the U.S. economy $2 trillion a year in lower wages and productivity and slows GDP growth, and every dollar invested in affordable housing opportunities for the lowest income people creates jobs that cannot be outsourced.

It is now up to Congress to turn this tax reform proposal – which opens the door to direct changes to the MID - into legislation. We call on leaders in the House and Senate to seize this once-in-a-generation opportunity to address one of the biggest barriers to economic success for families struggling to get by: the lack of decent, accessible and affordable homes for the lowest income people.

Diane Yentel is president and CEO of the National Low Income Housing Coalition.