The housing market is on an upswing and mortgage interest rates are low, making now the perfect time to tweak the mortgage interest tax deduction, Mark Calabria, director of financial regulation studies with the Cato Institute, said when testifying in front of the House Committee on Ways and Means.

Owning a home is an essential part of the American Dream, but several panelists debated just how much a tax break on mortgage interest should play into making homeownership dreams come true.

The benefits of the tax subsidies go to high-income families, said Phillip Swagel, professor of international economic policy at the University of Maryland School of Public Policy.

The Joint Committee on Taxation estimates that 34 million returns claim the mortgage interest deduction and 76% of the value of the deduction is taken by households earning over $100,000, Calabria noted.

He expanded saying the tax code reflects a bias, and instead, it needs to be focused more carefully on the people who need it.

Currently, the mortgage interest deduction is heavily helping the people that would buy a house with or without a MID, and as a whole, only one third of people use the mortgage interest deduction.

Additionally, there are a lot of options floating around on what would replace the MID and proposals on eliminating it all together.

Eric Toder, co-director of Urban-Brookings Tax Policy Center, mentioned several options ranging from replacing the mortgage credit with a tax credit to limiting the deduction to a principal residence.

However, one key factor the committee needs to take into account is what is the goal they are trying to reach. Calabria explained that different solutions could create adverse consequences.

Instead, he suggests, “If we care about home ownership, we should not be tying it to a mortgage. We should be tying it to homeownership.”

Meanwhile, panelist discussed when it would be the best time to transition the MID.

While all suggested the transition should be slow to not hinder the housing market, the exact details are still up for debate, with some suggesting the transition taking no more than 7 years.

“Any reform should take account of short term adverse effects on the housing market,” said Toder. “There will be some immediate impact, but it will be very variable across markets.”

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