Many critical of legislation targeting homeowner deductions

Oregon lawmakers are looking to homeowners and changes to the tax breaks they receive as one potential solution to the state’s budget shortfall, much to the chagrin of many;

“These bills that the state Legislature is going to be debating potentially will impact every homeowner in Central Oregon,” Lynnea Miller, owner of Bend Premier Real Estate. said Wednesday. “One of the impacts is for property tax deduction, the other is mortgage interest deduction.”

Both homeowners and real estate agents in Central Oregon, are unhappy about the proposed change.

“We rely a lot on second homes and vacation properties here. The determination here is that if this bill passes, all mortgage interest deducted for vacation homes will be eliminated altogether,” Miller said.

And that’s regardless of how much money the homeowners are making.

“We’re against it. Those families who work hard, pay the bills, obey the rules, we stand against this extreme agenda,” said state Rep. Mike McLane, a Powell Butte Republican and the House GOP leader.

On the eve of a hearing by lawmakers on Thursday, McLane said it’s up to Oregonians to unite together to fight this bill.

“People need to make their voices heard, because in Salem, you’re either at the table or you’re on the menu. And we need to make sure we are at the table,” McLane said.

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Earlier story:

Oregon House Democrats have scheduled public hearings on two bills this week that Republican leaders say have the potential to significantly raise taxes homeowners pay each year.

HB 2006 would eliminate the mortgage interest tax deduction for certain homes, while HB 2771 would increase the overall tax burden for Oregon homeowners with an annual income above $50,000. Both measures were introduced anonymously as committee bills.

“Last month, we saw House Democrats introduce ridiculous ideas like the now infamous coffee and used car taxes,” House Republican Leader Mike McLane (R-Powell Butte) said in a news release.

“But I was shocked when I heard Democrats were seriously considering moving forward with these new proposals targeting homeowners. At a time when housing affordability is already a major concern in our state, HB 2006 and HB 2771 would only make it more difficult for Oregon families to pay their bills. We should be looking for ways to make homes more affordable, not less.”

HB 2006 will receive a public hearing on Thursday in the House Human Services and Housing Committee. HB 2771 will be heard on Tuesday in the House Revenue Committee, the same committee that introduced the coffee and used car taxes earlier this session. Having been introduced anonymously as committee bills, neither proposal lists a member of the Legislative Assembly as a sponsor.

“The fact that these bills were brought forward via the committee bill process only underscores how toxic they really are,” McLane concluded. “I hope both proposals are quickly abandoned by the majority party.”

Here’s the supporting group, the Oregon Opportunity Network’s media advisory on one of the bills and its aim to “fix Oregon’s biggest housing giveaway”:

Lively debate is expected in Salem this Thursday, as housing and community advocates from around the state turn out in force to push for reform to Oregon’s biggest housing subsidy — the mortgage interest deduction (MID). At over $1 billion per budget period, the MID primarily benefits homeowners at the upper end of the income scale who do not need a subsidy from the state to be homeowners.

There is wide agreement among economists and other observers that the mortgage interest deduction fails to promote homeownership, its purported goal, the group claimed.

“In this time of statewide housing crisis, now is the moment to reform Oregon’s biggest housing subsidy to make it more equitable and effective,” said Ruth Adkins, policy director for the Oregon Opportunity Network (Oregon ON). Oregon ON and many other organizations are calling on the Legislature to reform the MID to make it work better for Oregonians by enacting House Bill 2006.

Speaker Tina Kotek (D – North Portland) has placed HB 2006 in the “Speaker Series,” which traditionally includes up to 20 noteworthy House Bills selected by the Speaker in each long legislative session.

“All options must be on the table to help Oregon turn the corner on our housing crisis,” Speaker Kotek said.

HB 2006 would allow most Oregon homeowners to continue to deduct up to $15,000 a year in mortgage interest for their primary residence on their state taxes; would eliminate the subsidy for high-income homeowners; and would eliminate the ability to deduct interest on a vacation home. Because HB 2006 only deals with the state mortgage interest deduction, it leaves untouched the much larger federal mortgage interest deduction.

“The vast majority of homeowners in Oregon will not be impacted by this common-sense reform,” said Adkins. “HB 2006 is a well-crafted bill that rightly limits the tax subsidy for the more well-off homeowners who don’t need the help of the state to afford a home.”

Adkins said HB 2006 will free up significant revenue for Oregon to invest in proven programs to support affordable homeownership, the development and preservation of affordable rental housing, and homelessness prevention.

The hearing will take place during the House Human Services and Housing Committee’s 8:00-10:30 a.m. meeting in the Capitol, hearing room E, on Thursday.

For more information on the effort to reform Oregon’s MID, visit www.ocpp.org/mid-remedy/

Meanwhile, at the federal level, Sens. Ron Wyden and Jeff Merkley, D-Ore., said Tuesday they are co-sponsoring a bipartisan bill that would target the affordable housing crisis by strengthening and expanding the federal low-income housing tax credit.

“This legislation provides a solid foundation for the major remodel that America’s housing policy needs in response to the lack of affordable housing for people of all ages,” said Wyden, ranking member of the Senate Finance Committee. “Building on the proven success of the low-income housing credit ensures that more Americans can have a roof over their heads where they can be safe.”

“I’ve heard from Oregonians who have to dedicate the majority of their income to housing or who are forced into homelessness because they simply can’t meet rising costs of housing,” Merkley said. “This legislation will begin to address the housing costs that have spiraled far beyond workers’ wage increases, and provide permanent homes for more American families.”

The Affordable Housing Credit Improvement Act would strengthen and expand the low-income housing tax credit by 50 percent. The legislation would help create or preserve about 1.3 million affordable homes over a 10-year period – an increase of about 400,000 units than is possible under the existing program.

The bill also includes key reforms that would allow an estimated 58,000 students nationwide experiencing homelessness to take advantage of the affordable housing units created with the low-income housing tax credit. And the legislation would expand development opportunities in rural and Native communities while providing flexibility to developments so they can better tailor their units to people experiencing homelessness.

The low-income housing tax credit has provided financing for more than 37,000 affordable homes in Oregon since the credit went into effect 30 years ago. Nationwide during that same time period, that credit has helped to finance the development of nearly 3 million affordable homes.

In addition to Wyden and Merkley, the bill introduced by Senate Finance Committee Chairman Orrin Hatch (R-Utah) and Sen. Maria Cantwell (D-Wash.) is co-sponsored by Sens. Charles Schumer (D-NY), Cory Booker (D-NJ), Dean Heller (R-Nev.), Patrick Leahy, (D-Vt.), Lisa Murkowski (R-Alaska), Brian Schatz (D-Hawaii) and Todd Young (R-Ind.)