Affordable Housing, Reports and Publications

Brief Examines Asset-Building Tax Subsidies and Who They Help

National Low Income Housing Coalition

A new brief from the Urban Institute - Who Benefits from Asset-Building Tax Subsidies? - examines how tax expenditures that promote wealth building are distributed by income.

Last year, a third, $384 billion, of the $1.2 trillion federal tax expenditures – roughly the amount raised by the individual income tax -- went toward asset building. This includes subsidies for homeownership, retirement and life insurance, higher education, and small business development.

But that amount does little, says the brief, to help the vast majority of households build wealth, especially low- to moderate-income households. Of the tax subsidies that include mortgage interest and property tax deductions, about 70% went to the top 20% (measured by income) of taxpayers, and another 20% went to the fourth-highest quintile.

Less than 10% of the homeownership tax subsidies benefited the bottom 60% of all taxpayers. The brief found that homeownership tax subsidies mostly encourage people to buy larger homes and incur more debt.

The National Low Income Housing Coalition’s United for Homes Campaign has proposed converting the current mortgage interest deduction to a 15% non-refundable tax credit, and reducing the size of mortgage eligible for a tax break from $1 million to $500,000. 

Click here to read the brief.


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