Mortgage Deduction Limit Gaining Traction


When we first covered John Dingell's proposal for a carbon tax limit on mortgage interest deductibility, nobody took it very seriouslly, because of his reputation as a defender if the auto industry and years of fighting against its regulation. Most in the movement questioned his motives.

But environmentalists are paying attention now; according to SF Gate, a number of scientific and environmental organizations think Dingell's proposals represent a gutsy first effort not only to cut consumption of carbon-based energy products, but to focus on energy usage and efficiency in the residential arena.

Lexi Shultz, Washington representative for climate policy of the Union of Concerned Scientists, says "the residential part of the (climate change) problem is very significant," ranging from excessive carbon-based energy consumption in homes to sprawl development of primary and secondary homes requiring long commutes and more highways.According to Erich Pica, director of economic policy for the environmental group Friends of the Earth says Dingell's plan "overall is good," and applauds its focus on residential real estate.

"The mortgage interest deduction was meant to be an incentive for people to buy and afford a home, but now we see it has significant energy impacts" - subsidizing development of ever-larger first and second homes in subdivisions far from the urban core. Although Pica says the choice of 3,000 square feet as a cutoff point "may be a little arbitrary, the intent is right."

Charles Komanoff, co-director of the Carbon Tax Center, an energy-policy think tank, says, "We think Dingell's idea is terrific - the carbon tax would give important incentives to minimize energy consumption," and would discourage sprawl over the long term.

Under the plan, owners of 3,000- to 3,199-square-foot homes would be eligible for only 85 percent of the mortgage interest deductions they now receive. Homes of 3,600 to 3,799 square feet would lose 60 percent of the interest deductions, homes of 4,0200 to 4,199 square feet would lose 90 percent and homes above 4,200 square feet would get no deductions. ::SF Gate