Fix Oregon's biggest housing subsidy

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Oregon’s biggest housing subsidy does nothing to alleviate Oregon’s housing crisis. Instead, it wastes over $1 billion mainly subsidizing homeownership for the most-well off Oregonians — those who least need help affording a home.

It’s time to fix this upside-down housing subsidy. Tell Oregon lawmakers to support Senate Bill 852 — a common-sense, equitable reform of the Oregon mortgage interest deduction.

The pandemic poured gasoline on the fire that is Oregon’s housing crisis. The number of homeless school children is near a record level. Tens of thousands of families that rent could be thrown out in the streets, should an eviction moratorium end.

Does Oregon’s biggest housing subsidy, the mortgage interest deduction, help these struggling Oregonians? Not one bit.

To qualify for the deduction, you have to be a homeowner with a mortgage. If you are a renter, you don’t even get in the door. Also, to take advantage of it, you have to itemize your deductions. If you claim the standard deduction, as do most low and moderate-income Oregonians, you’re out of luck.

Those who can take advantage of the mortgage interest deduction can deduct interest payments on a mortgage worth up to $750,000, including debt on a second home. At a time when many children are homeless, taxpayers are subsidizing vacation homes for the wealthy.

The mortgage interest deduction exacerbates racial inequities. Because of past exclusionary housing policies, people of color are much less likely to own a home, and thus are less likely to benefit from Oregon’s biggest housing subsidy.

The deduction is also inequitable to rural Oregonians. Nearly nine out of 10 mortgage interest deduction dollars flow to urban areas.  

The mortgage interest deduction fails to promote homeownership, its purported reason for being. That’s because the deduction mostly helps those who do not need help affording a home.

Senate Bill 852 enacts a common-sense reform of this costly, inequitable, and ineffective housing subsidy. It phases out the mortgage interest deduction for the richest 5 percent of homeowners and ends it for vacation homes. This saves nearly $200 million in a single budget period. The bill invests these savings in homeownership opportunities and homelessness prevention.

Tell lawmakers to support an equitable reform of Oregon’s biggest housing subsidy, so that our state can make serious investments in affordable housing.