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Another shocking news headline! A new report by Trulia claims that the long-standing mortgage interest tax deduction available to all homeowners is mostly a benefit to white male homeowners (Inequality). Women and minorities are not getting the same benefit.
The report goes on to show how a larger percentage of whites own homes (almost 63%), with the percent of those in all other groups of immigrants and minorities combined having a homeownership rate at only about 38.4%. Since the report clearly shows that more whites own their homes, it would seem logical that this group would reap the most benefit from the mortgage interest tax deduction.
The other factor is a homeowner having sufficient income to itemize their tax deductions; otherwise, the mortgage interest paid by them has no direct bearing on the income taxes paid. Usually, those not making the higher incomes and don’t itemize deductions are paying their income taxes at a much lower rate. So, such a deduction would not provide the same benefit as it might to a homeowner in a much higher tax bracket.
Further, let’s face it; white males have been at the homeownership game much longer than any other group. Until relatively recently they have been considered the head of the household even though now in many cases the woman of the house contributes as much, if not more, to the total household income. This allows the household to take advantage of itemization of their deductions, including the mortgage interest and real estate taxes paid on their home. However, this would show up as a white male owner getting the tax advantage.
So, is it that the tax deduction is fueling inequality or that because of the way this has historically been handled women and minorities just haven’t caught up yet. The real question is: “Do they have the opportunity to achieve an income level that would allow them to take full advantage of these type deductions?” “Do they have access, and do they take advantage of, the education needed to obtain employment that pays a higher wage.” The report does indicate that in some cities certain minorities and women do fare much better. So, maybe things are starting to change.
This is something for the housing policy and equal employment advocates to address. I believe the answer isn’t to eliminate, or further modify, the tax deduction but to determine how more women and minorities can become homeowners. What needs to be done for them to have the opportunity and education to obtain jobs that pay the higher wages?
Jobs are the key that drives the economy. The more people working and earning a decent wage, the more people will buy and own homes, and then more will get the opportunity to take advantage of all available tax breaks, including the mortgage interest deduction.
Remember, there are more advantages to owning your own home than getting a break on your income taxes for the interest and real estate taxes paid. A homeowner gets to build equity, something a renter doesn’t. They also put down roots in a place where they can raise a family and become part of a community. It’s not all about the money.
I know that regardless of gender, race, color or creed, mortgage lenders are working hard to come up with programs to assist more people to realize the American Dream of homeownership. All they need is a little help, or relief, from the government to create a climate where businesses can grow and thrive. Thus creating more job opportunities so those who wish to own and maintain a home have an equal opportunity to do so.
Is it really the mortgage interest tax deduction that creates the inequality?
