Congress Gunning for Home Tax Deduction Favored in Bethesda, Gaithersburg

A report by Pew Charitable Trusts found some areas in the Washington, DC, suburbs benefit more from a controversial tax credit than any other place.

A home ownership tax credit favored by the wealthy disproportionately benefits residents of Bethesda, Gaithersburg and Frederick, a report from Pew Charitable Trusts found.

Some members of Congress, however, are working to cut the mortgage interest deduction from the tax code.

More than 40 percent of tax filers in those areas claim the mortgage interest deduction, the largest percentage in the country, Bloomberg BusinessWeek reported. Nationally, only 22 percent of filers claim the deduction, Bloomberg reported.

The deduction is typically filed in wealthy areas with high rates of home ownership. 

Rep. Dave Camp (R-MI), chairman of the House Ways and Means Committee, is looking to simplify the nation's tax code and eliminate breaks, Bloomberg reported last week. Camp is pushing for his committee to approve a bill this year. 

Pew's report highlighted the effects on some local economies if the tax deduction were eliminated:

Policy makers should be aware of the geographic implications of changes in federal tax policy as debates over federal deficit reduction and tax reform move forward.  

Tax filers in certain states, or areas within a state, would pay higher, or lower, federal income taxes than under current policy.This could affect economic activity both across and within states, and indirectly affect state and local revenues. The actual impact on any given area would depend on how any changes were structured.

About 37 percent of Maryland tax payers file the deduction, higher than the national average. (See a map from Pew, attached to this article.)

jag May 08, 2013 at 03:28 AM
YES, PLEASE. Inflating home prices = bad. Subsidizing the wealth = bad. Racking up govt deficits = bad. Encouraging people to take on more house then they can afford = bad.


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