The Mortgage Interest Deduction: An Example of an Upside Down Federal Government Housing Subsidy

  • Frank W. Woodruff
Keywords: mortgage interest deduction, housing subsidy, homeowners, renters, tax code, inequity


Federal housing subsidies overwhelmingly benefit homeowners over renters and wealthier Americans over poorer Americans through the US tax code. A better balance in both areas is needed to encourage equitable economic growth. The mortgage interest deduction is the primary driver of this imbalance and is by far the federal government’s largest investment in housing. Further, no evidence exists that the mortgage interest deduction encourages renters to become owners. Rather, its documented effect has been to encourage those who would purchase homes to buy bigger homes. Modest reforms to the mortgage interest deduction are necessary because of its size and inequitable nature. Any and all savings achieved through reforms must be used to balance housing subsidies by providing more resources for low- and moderate-income renters and owners.

Author Biography

Frank W. Woodruff

Frank W. Woodruff received a Master’s Degree in Public Policy from the George Washington University in 2014, focusing on community and economic development. He also holds a BA from the University of Wisconsin-Madison. Currently, Frank serves as executive director of the National Alliance of Community and Economic Development Associations (NACEDA), located in Washington, DC. Through his work at NACEDA, Frank also serves as co-chair of the United for Homes campaign, a broad coalition of housing advocates calling for funding of the National Housing Trust Fund through modifications to the mortgage interest deduction. Frank considers himself an NFL owner, as he owns a share in his beloved Green Bay Packers, major professional sports’ only community-owned team. In his free time he enjoys physical activity, particularly SCUBA diving, and never turns down an opportunity to read a good zombie novel.

Frank thanks the Trachtenberg School of Public Policy and Public Administration and the Policy Perspectives editorial team: Tanya Harris Joshua, Andrew Kim, and Brandon Kruse. A special thanks goes to Professor Gregory Squires for his pointed draft reviews and for encouraging submission of this concept for publication. Frank’s appreciation extends to his colleagues at NACEDA and the United for Homes Campaign as the most intelligent, passionate, and collaborative collection of individuals in the country. Finally, the author thanks his parents for instilling in him a good work ethic, a critical mind, and a strong sense of justice. He shares the achievement of publication with Natalie Nguyen, without whom he would not have the support to attain success.