Professor Ventry Comments on Mortgage-Interest Deduction for NPR, SF Chronicle, Wichita Business Journal
Professor Dennis Ventry commented on the impacts of the mortgage-interest tax deduction for media including National Public Radio, the San Francisco Chronicle, and the Wichita Business Journal. Ventry has written extensively on the advantages of eliminating or modifying the deduction, a subject that has drawn increasing attention as lawmakers have struggled to address the federal government's budgetary shortfalls.
In an interview with Danielle Karson broadcast on National Public Radio's Hourly Newscast on December 30, Professor Ventry said that eliminating the deduction (or replacing it with a tax credit that applied equally to all mortgaged homeowners) would not necessarily cause housing prices to fall, at least not in the long-term nor as dramatically as the housing industry has been predicting. In fact, in a world without the deduction, Ventry explained, "positive effects on homeownership rates from lower home prices could more than offset any negative effects on homeownership from loss of the deduction-particularly in high-priced, space-constricted markets such as San Francisco where the price effect would provide opportunities to jump into the market, and, over time, raise home prices as demand outpaced supply."
In an interview with the Wichita Business Journal, Ventry states that the mortgage-interest deduction distorts the housing market and offers the biggest incentives to the wrong people. "If, in fact, we want to promote homeownership as a national policy, the mortgage-interest deduction is the absolute wrong way to do it," he said. It disproportionately benefits high-income taxpayers who would buy homes with or without the incentive, Ventry explained, which distorts the housing market, artificially raises home prices, and induces wealthy taxpayers to buy bigger and more expensive homes. For these reasons, Ventry favors a tax credit over a tax deduction for homeownership that would provide the same dollar-for-dollar benefit to all mortgaged homeowners, regardless of their income level.
Speaking to a reporter from the San Francisco Chronicle, Ventry explained that some people overestimate the value of the mortgage-interest deduction, which is really only the amount by which interest payments, when added to other itemized deductions, exceed the standard deduction, multiplied by the marginal tax rate.
Professor Ventry is an expert in tax policy and legal ethics. His research interests include tax expenditure analysis, family taxation, professional responsibility and standards of care, tax filing and administration, tax compliance, public finance, and tax and legal history. In addition, he was recently added as a co-author on the casebook, Legal Ethics and Corporate Practice.
San Francisco Chronicle