End of Mortgage Interest Deduction Favor Renting Over Homeownership? Good idea?
Does homeownership result in a more stable family, neighborhood, city, or nation? Is owning a home a benefit for owners financially, socially, psychologically, or otherwise? If it is a benefit, to what extent should it be the governments's business to incentivize ownership over renting? Answers to these three questions would already require a huge, potentially book length subject, to consider. We will leave it to a later post to contemplate whether the current incentive is an incentive at all, or whether there might be better ways to achieve the goal, should the goal turn out to be a worthy one.
What are the social benefits of homeownership?
Benefits generally cited include:
✓ Neighborhood stability
✓ Less crime in the neighborhood
✓ Pride in ownership results in better maintenance of personal and public property
✓ More civic involvement
✓ Student of owners do better in school and have fewer behavior problems
✓ Forced savings vehicle results in financial stability
✓ Excellent financial investment. Wealthy population better.
The biggest argument against the benefits listed above is that while those results are clearly related to home ownership, they are not necessarily causative. In other words, it may be that the kind of people who are more likely to own a home are also more likely to be stable, have pride, be more involved, and have kids who do better. That argument makes sense in that younger, unmarried adults and those with low paying and more transient jobs are more likely to rent. Those demographic characteristics would seem to also point to the opposite of the virtues noted in the list.
We will address the financial aspect in another post.
What are the social benefits of renting?
✓ More flexible work force - can move more easily
✓ More flexible investing population
✓ Renters use less resources
✓ Time saved on chores can be used for other things
✓ Less stress in financially or job related stress situations
✓ No risk of capital
The biggest societal issue would seem to be the stability vs flexibility issue. There is no question that a workforce that rents is much more likely to uproot and move to where the jobs are and to live closer to the job. There is also reasonably good evidence that owners as a group are "better" citizens.
Should the US Government incentivize homeownership through mortgage tax policy?This leaves open the issue of whether the government should be encouraging one over the other. Maybe we are better off with a workforce that can move to where the jobs are. Maybe there should be studies to determine if home ownership and the obvious stability that goes with it, has a causative relationship to lower crime and better students. How do you come down on these issues? Should government just get out of the way? Should we study the effects of both more? Do you believe that owning or renting is significantly better for society?
- Shocking Unintended Consequences if Mortgage interest Deduction is Eliminated
- Schedule A Cap Another Way to Increase Tax Revenue Through Tax on the Rich
- Government and Mortgage Holders Fight Over $100 Billion Per Year Tax Advantage
- Options to Change or Replace Mortgage Interest Deduction
- President Obama News Conference: Tax Increase Still On for Rich to Fix Fiscal Cliff
- More on the Fiscal Cliff and Your Mortgage Interest Deduction - Diana Olick of CNBC
- 9 Reasons to Eliminate the Home Mortgage Interest Tax Deduction
- 10 Benefits to Taxpaying Homeowners of Mortgage Interest Deduction
- 7 Social Benefits of Home Ownership and 6 Social Benefits of Renting