The Benefits of the Mortgage Interest and Property Tax Deductions (Article/Tax Facts)
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The benefits of itemized deductions for mortgage interest and property taxes vary by income and demographic characteristics. The two deductions increase after-tax income most for high-income families, particularly those with children, while low-income households hardly benefit at all. On average, homeowners in the highest quintile see a 1.4 percent rise in after-tax income, compared with just a 0.3 percent increase for those in the middle quintile and virtually no gain for those in the bottom two quintiles. Within each income quintile, families with children experience the largest income boost, while elderly households benefit the least.
Evaluating Broad-Based Approaches for Limiting Tax Expenditures (Research Report)
|Posted to Web: August 27, 2013||Publication Date: August 26, 2013|
This paper evaluates six options to achieve across-the-board reductions to a group of major exclusions and deductions in the income tax: (1) limiting their tax benefit to a maximum percentage of income, (2) imposing a fixed dollar cap, (3) reducing them by fixed-percentage amount, (4) limiting their tax saving to a maximum percentage of their dollar value, (5) replacing them with fixed rate refundable credits, and (6) including them in the base of the existing Alternative Minimum Tax (AMT). We discuss issues of design, implementation, and administration, and simulate the revenue, distributional, and incentive effects of the various options.
Options to Reform the Deduction for Home Mortgage Interest (Research Report)
|Posted to Web: July 10, 2013||Publication Date: July 10, 2013|
Taxpayers can currently deduct interest on up to $1 million in acquisition debt used to buy, build, or improve their personal residences and interest on up to another $100,000 of home equity loans. This brief estimates the effects on revenue and the distribution of the tax burden of proposals that would replace the current mortgage interest deduction with a non-refundable interest credit of either 15 or 20 percent of interest and reduce the ceiling on the amount of all eligible mortgage debt to $500,000. We also estimate the revenue effect of phasing in the proposals over five years.
|Posted to Web: March 18, 2013||Publication Date: March 18, 2013|
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