And what about old people that have owned their own house for decades? If the local economy goes up, increasing the land value tax, they either leave or go bankrupt. And the kicker is that their investment into their home is now worth a lot less.
Poor people don’t benefit from the mortgage interest deduction. With todays low interest rate, you have to have a mortgage of over $300,000 to have more than the $120000 standard deduction in interest.
With the median household income being $60,000 a year, it would be nearly impossible to come up with a scenario where many would itemize deductions after mortgage interest, state taxes and property taxes.
The mortgage interest deduction overwhelmingly benefits households earning over $100,000 per year. Only one in five tax filers take the mortgage interest deduction, the extreme majority are in that $100k+ income bracket.
The substantially increased standard deduction is far more important than the MID for the middle class. Cutting the MID tax break for the top 1/3 of earners, is what will help pay for raising the standard deduction that is a huge benefit to the bottom 2/3 of earners.
https://www.cnbc.com/2017/08/31/that-beloved-mortgage-deduct...
"Mortgage Interest Deduction Saves Middle Class Taxpayers All Of $51/Month"
"Most of the MID 2012 tax benefits went to people making six figures or more. Households earning over $100,000 in 2012 claimed 77.3 percent of the total MID tax savings, essentially the same as in 2010. And just looking at those making $200,000 or more, we found the very top earners claimed 34.6 percent of the total MID benefits and saved $5,021 on average for 2012."
https://www.forbes.com/sites/realspin/2013/12/18/mortgage-in...
You do have a point, but there seems to be another side as well.
My point about the banks was, we can't expect low end houses to be built if they can't be sold (because banks are less likely to finance them.) I'm not suggesting artficial support. I'm curious to know if the void in this segment in housing is fed by a void in bank support.
I would think that other states have similar programs.
1- http://www.agriculture.pa.gov/Encourage/farmland/clean/Pages...
The second part of the solution is to convert all property taxes into Land Value Taxes, so that idle and vacant land is taxed at exactly the same rate as land containing well maintained houses. Local governments would no longer get higher payouts for zoning for high end housing, they would only get higher payouts if they raised the net desirability of all land within the borders of their city as a whole.
The land value tax would also free up vacant, idle and underutilized land for actual use and improvement, by making land unattractive as an asset for investment or speculation. This would greatly increase the competitiveness of the housing market, because if it is no longer profitable to hold onto a vacant building, a parking lot, or a strip mall in a high demand area after the carrying cost applied by the land value tax, the vacant lot might be split up and sold to smaller owner-operators, the parking lot might be replaced by several smaller town houses, and the strip mall might be replaced by a mixed used development with additional housing units builtin above the shops, increasing average quantity of housing units per city block or per area unit measure.
> How willing are banks to issue loans at the lower end?
Focusing on banks and subsidizing loans is what is fueling this problem. The solution is not to make loans easier to get, it is to drastically lower the price of land and increase the efficiency at which land is used. When the price for land is cheaper and closer to a market price rather than a monopoly price, far fewer people will have to bother with loans or mortgages in the first place. Lower end housing can be made substantially more affordable even if all mortgage assistance schemes are eliminated.