While many recent evaluations of the effects of housing subsidies in the tax code focus on the choice between renting and owning, this paper examines the distribution and effectiveness of various changes to these subsidies. Specifically, we examine several revenue-neutral reforms that would level out the current U-shaped curve of housing benefits and deliver ownership subsidies more equitably and efficiently to lower-to-middle-income households. Implementing reform requires careful design, administrative, and behavioral considerations. Appropriately done, converting home-related tax deductions into refundable, capped credits could encourage homeownership at lower incomes and curtail government subsidies for ever greater amounts of home borrowing.
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