Ellison Wants to Change Mortgage Deduction, Invest in Affordable Housing

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.”