Mortgage Interest and the Middle Class

For indispensable reporting on the coronavirus crisis, the election, and more, subscribe to the Mother Jones Daily newsletter.

Is the mortgage interest deduction a “middle class” benefit? Sort of. Based on data from the Tax Policy Center, Ezra Klein offers the chart on the right, which shows how much it saves various income groups. If you’re low-income, the average benefit is 0-0.1% of your income. If you’re smack in the middle of the income range, the benefit is about 1% of your income. If you’re at the top of the income range — but not in millionaire land — the benefit is about 1.6-1.7% of your income.

The reason for this is obvious. Lower income people are unlikely to own homes or have big mortgages, so they get no benefit. Median earners are more likely to own homes, but their mortgages are still small. High earners nearly all own homes and all have big mortgages. The result is a tax break that doesn’t merely rise linearly with income. Even in percentage terms it’s actively more beneficial the more money you make.

So what if you wanted to make it a little less plutocratic? Some ideas are here, but probably the simplest would be to reduce the cap. Currently the mortgage interest deduction can be taken on loans up to $1 million. If you cut that to, say, $250,000, the middle class would largely keep the same benefit it has now and the upper income brackets would get a benefit about the same or a bit lower (in percentage terms). Plus it would reduce the artificial incentive to buy ever bigger houses. Seems like the least we should do.

DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily bluster—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily bluster—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate