In an audit that insiders decried as political, Oregon Secretary of State Shemia Fagan (D-Portland) said that the "home mortgage interest deduction as a deeply inequitable and regressive tax policy." One former legislator described her comment on her audit as "using public office to promote socialism." The mortgage interest deduction allows some, but not all, homeowners to reduce their taxable income by the amount of interest paid on mortgages up to $750,000.

Fagan continued, "While houselessness and the lack of affordable housing impact communities all over the state, auditors found the state’s largest housing subsidy mostly benefits wealthy and white Oregonians in urban counties. Fagan, herself, is a white Oregonian from an urban county. Additionally, the mortgage interest deduction receives no state-level evaluation as to whether it is meeting its purpose, limiting accountability for its inequitable outcomes."

“The affordable housing crisis is squeezing families across Oregon while the state’s largest spending on housing primarily flows to wealthy homeowners in the metro area. That is indefensible,” said Secretary of State Shemia Fagan. “Every dollar spent keeping seniors and working families in their homes or helping renters stay housed has been scrutinized and debated by lawmakers. Meanwhile billions of dollars just walk out the backdoor with no questions asked. I can’t think of a worse example of waste and systemic inequality than that.”

The mortgage interest deduction has been law in Oregon since 1923. This biennium alone, the deduction is expected to save taxpayers over $1.1 billion. Auditors analyzed the benefits of the mortgage interest deduction by income, geography, and race and found a disproportionate share of the benefits flow to the wealthiest taxpayers.

A D V E R T I S E M E N T

A D V E R T I S E M E N T

Despite record revenue growth in state tax revenue in recent years, auditors recommend the Legislature identify a clear purpose for the mortgage interest deduction in statute and determine if changes are necessary to ensure the purpose is met. Auditors also recommend the Legislature identify a state agency to be responsible for regularly evaluating the policy.

While the Department of Revenue is responsible for administering Oregon tax law, changing this policy would require legislative action.


--Staff Reports

Post Date: 2022-03-16 19:46:07

Last Update: 2022-03-16 19:57:50