Incentivizing Home Ownership and Tax Reform: It’s Personal!
By Tony Capitelli GOVERNMENT AFFAIRS DIRECTOR
On April 26, President Donald Trump released a one-page tax reform proposal. The goals of this proposal are to
Grow the economy and create millions of jobs,
Simplify our burdensome tax code,
Provide tax relief to American families—especially middle-income families—and
Lower the business tax rate from one of the highest in the world to one of the lowest.
Those in the real estate industry who are concerned about possible elimination of the mortgage interest deduction will not find much reassurance in Trump’s brief proposal. It makes only causal mention of these incentives with the words, “Protect the home ownership and charitable gift tax deductions.” Your guess as to what that means is as good as mine.
But more important than focusing on the specific provisions of any proposal is understanding why government policy should incentivize home ownership. As an engaged industry, our purpose is not to obstruct but, instead, to support at all levels of government programs and policies that encourage home ownership and protect real property rights.
There are enough theories about tax reform to keep Congress busy from now on. More important than theories, however, is the proven way in which tax incentives have worked to encourage home ownership and, thereby, to create and preserve the American Dream.
The United States was once a renter society, ruled by aristocratic landowners. Fortunately, unlike any other period in history or any other place on earth, those landowners unselfishly built the lasting mechanisms of liberty and willingly spread the wealth of landowning.
It is difficult for even the staunchest limited-government advocate to deny the correlation between government’s involvement in housing and the increase in home ownership. In the past century, home ownership was responsible for the largest redistribution of wealth in American history. It is the easiest way to move up the economic ladder, and it is the best way for those who have not inherited wealth to build it.
The mortgage interest deduction and other tax incentives are part of a bigger picture. On a national scale, this picture includes not only tax incentives but also the government-sponsored enterprises like Fannie Mae and Freddie Mac and their work in the mortgage market. Locally, home ownership can be discouraged by factors like restrictive zoning and government-imposed building costs and fees.
Whatever the issue, however, our messaging needs to be focused on what’s important to our industry and our clients. For us REALTORS®, this discussion is not theoretical and impersonal but emotional and personal because it affects where we live and how we work. Any decision about the “business” of buying, selling, and taxing homes is personal for us. And it is personal for our clients. Emotions cannot be ignored when the decision being made affects the largest purchase of their lives.
The facts and figures are important, and I would encourage you to educate yourself about the effect of the home ownership incentives in the tax code. But political discourse often devolves into surface-level talking points that neither express feelings adequately nor result in a more meaningful dialog about the facts at hand.
Remember, this time, it’s personal. Don’t just tell lawmakers what you want them to do; tell them why it matters. We cannot let them forget that we are fighting to preserve the American Dream. That message will stick with them long after the numbers have changed and the reasons for those numbers have been forgotten.
As a husband and father, I am thankful that my family has a roof over its head and a solid foundation for economic success. More important than either economic theories or talking points is the proven way in which tax incentives have worked in the real world to encourage home ownership and, thereby, to create and preserve the American Dream.
Disclaimer: The content in this Government Affairs column is intended as a general advisory and is not intended as a substitute for individual legal advice. Advice in specific situations may differ depending upon a wide variety of factors; therefore, readers with specific legal questions should seek the advice of an attorney.