Comment on Steven C. Bourassa and William G. Grigsby’s “Income Tax Concessions for Owner-Occupied Housing"

Fannie Mae Foundation - Housing Policy Debate, Volume 11, Issue 3

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Date Published 2000
Primary Author Kerry D. Vandell
Other Authors
Country United States


The article by Bourassa and Grigsby is another in a series of studies evaluating alternatives to homeownership incentives in the Internal Revenue Code. A consensus has emerged that the current structure of tax incentives may not be an optimal way to enhance homeownership, especially among low- to moderate-income or minority households. After evaluating the efficiency and equity of the four existing tax incentives, they recommend that the mortgage interest and property tax deductions be eliminated. I agree with many of the points they raise. However, I argue that they need to incorporate the social benefits of homeownership into their analysis, to further consider allocative efficiency and distributional equity, and to recognize political acceptability as an important criterion for evaluation. I also believe that the administrative costs of compliance would not be especially burdensome, that housing shortages would not be a problem, and that additional homeownership tax concessions may be feasible.

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