The New York Times has a feature, Big Gifts to G.O.P. Groups Push Donor to New Level, about Bob Perry, a wealthy home builder from Texas, who funded the Swift Boat attacks against Kerry and is a major funder on the right. Perry created Perry Homes, a high-end custom home company out of Houston.
Your gut reaction is probably that the home mortgage interest deduction and other housing subsidies go primarily to lower income people purchasing cheaper homes, people on the margin between owning a home and not owning a home. That’s the exact opposite of what really happens. Research has found that the tax deduction does little to increase home ownership. Other research has found that the tax savings for households earning more than $250,000 is 10 times the tax savings for households earning between $40,000 and $75,000 a year.
You can see how regressive the current system is when you look at this graph from the Urban-Brookings Tax Policy Center document 2005 How to Better Encourage Homeownership, which includes multiple means we subsidize housing:
The businesses who benefit the most from this system are those in the business of building high-end custom single-family detached homes. And the homeowners who benefit the most from this system are, well, probably not you. Keep this in mind as the Deficit Commission might end up doing a good thing and recommend removing highly regressive giveaway of the home mortgage interest deduction.
We’ll get to the influence of the real estate wing of finance and the right-wing conservative movement more in the next post.