Fifth District Rep. Keith Ellison is proposing to tweak the mortgage interest deduction and put more money toward affordable rental programs in a bid to help middle class and working families.
Ellison announced the “Common Sense Housing Investment Act” on Tuesday. The reintroduced bill would change the existing mortgage interest deduction to a 15 percent flat tax credit on mortgages up to $500,000.
Because the existing deduction requires people to itemize their taxes, only half of homeowners actually claim it, according to the Tax Policy Center. A change to a tax credit would allow 60 million homeowners to claim the benefit instead of the 43 million with the deduction.
The bill would also lower the cap on mortgages from $1 million to $500,000, generating $27 billion in revenue, according to an Ellison news release. The bill would use that money toward increased funding for the Low Income Housing Tax Credit, Section 8 rental assistance and the public housing capital fund. It would also provide a source of permanent funding for the National Affordable Housing Trust Fund.
Ellison argues that the bill would help those who pay a disproportionate amount of their income on housing—such as people younger than 25, the elderly, people with disabilities and low-income families.
“The lack of affordable rental housing is one of the greatest economic challenges of our time,” a news release quoted Ellison. “Millions of renters are unable to find affordable rental housing. In my home state of Minnesota, one-third of the population spent more than 30 percent of their income on housing in 2009. Affordable housing is about more than just rent; it’s about ensuring that we maintain the ladder that makes America a land of opportunity.”