- By Kenneth R. Harney, Special to the Times |
WASHINGTON — In the contentious debate over whether to reduce or eliminate the home-mortgage interest tax deduction — or leave it alone — one fact has been virtually unchallenged: The popular write-off used by millions of American owners costs the government massive amounts of revenue, somewhere in the range of $100 billion a year.
This adds to the federal deficit and debt, and has ranked the deduction high on the hit list of most tax reformers’ agendas. President Obama himself called for limiting it throughout his first term in office, and ran on a platform to pare down its costs in his re-election campaign. The compromise congressional tax package that ended the “fiscal cliff” crisis Jan. 2 also contained a limitation on the mortgage write-off, targeted at high-income taxpayers.
How much does allowing owners to deduct the interest they pay on their home loans really cost the government? Congress’ technical experts have new estimates that should figure into congressional deliberations expected later this year on overhauling the federal tax code. Their findings: The mortgage write-off costs tens of billions of dollars less than the government previously believed.
The nonpartisan Joint Committee on Taxation published revised estimates indicating that because of changes in the economy and tax legislation, the cost of the deduction for fiscal 2013 will be $69.7 billion.
That’s a dramatic reduction from the committee’s own earlier numbers. In a projection released in January 2010, it said the cost of the mortgage write-off in fiscal 2013 would hit an all-time high of $134.7 billion. Under the revised estimates, costs will slowly rise into the $70 billion-plus range over the coming several years and will only exceed $80 billion in fiscal 2017, when they hit $83.4 billion.