Housing Advocates Will Take Aim at Mortgage Interest Deduction In Salem This Week

Democratic lawmakers are testing their mettle this week as they hold a hearing on a sacred cow, the home mortgage interest deduction.

Groups such as the Oregon Center for Public Policy, a left-leaning think tank, and the Oregon Opportunity Network, an association of low-income housing providers, want lawmakers to scale back a tax break that's worth more than $500 million annually, mostly to middle and high income earners.

In a statement, House Speaker Tina Kotek (D-Portland), who has pushed an aggressive housing agenda this session, expressed support for scrutinizing the tax break.

"All options must be on the table to help Oregon turn the corner on our housing crisis," Kotek said.

Advocates point out that about two-thirds of that benefit goes to the top 20 percent of earners. The mortgage interest deduction dwarfs anything the state does to subsidize low-income housing.

House Bill 2006 would eliminate the mortgage deduction entirely on second homes and limit the deduction on primary residences to a maximum of $15,000 annually and steps that number down as incomes increase. Joint filers making over $290,000 a year would get no deduction.

Although the home mortgage interest deduction is big and beloved by those who benefit from it, advocates point out that 10 states do not allow such a deduction.

The proposed legislation would not affect the federal home mortgage interest deduction.

House Minority Leader Mike McLane (R-Powell Butte) slammed the bill in statement, accusing Democrats of "targetting homeowners."

"We should be looking for ways to make homes more affordable, not less," McLane said.