We’ve heard about the war against homelessness, but the hidden tragedy of second homelessness is something new. A new report from Smart Growth America, an anti-sprawl coalition, finds that federal housing policy subsidizes vacation homes at taxpayer expense. Through the federal Mortgage Interest Deduction, tens of billions of dollars ever year go toward second homes for wealthier Americans:
Created in 1913, the [Mortgage Interest Deduction] costs an average of $80 billion annually, and it’s supposed to help families buy a primary home. But 30 percent of the households claiming the deduction claim it on a second home—like, say, a vacation home. Lower-income families have a harder time claiming the deduction, because it requires itemized taxes.
Via Meadia thinks one federally subsidized home per customer is enough. The U.S. is facing enormous fiscal problems: Social Security and Medicare are going bankrupt, and the ballooning federal deficit can no longer pay pension costs. The corruption of the Mortgage Interest Deduction, a tax break initially created to help Americans buy their primary dwelling, is a perfect example of how good policy can quickly become destructive if it’s not updated to reflect the changing world around us.