[Congressional Record (Bound Edition), Volume 150 (2004), Part 18]
[Senate]
[Page 24234]
[From the U.S. Government Publishing Office, www.gpo.gov]




                      MORTGAGE INTEREST DEDUCTION

  Mr. SMITH. Mr. President, I rise today to address a topic we have all 
been contemplating lately, one important to the American people, and 
one that I hope we will address in the 109th Congress, tax 
simplification and reform.
  As we begin to put our ideas together to simplify Federal income 
taxes for American individuals, families and small businesses, we 
should be careful not to remove incentives for investment. While many 
investment opportunities exist today, perhaps none provides more 
benefits for individuals, families and communities than the purchase of 
a home. That is why we must continue to allow taxpayers to deduct the 
interest paid on home loans from their Federal income taxes.
  The mortgage interest deduction is a vital component of our Tax Code. 
After State taxes, it is the most common deduction. The tax savings 
individuals and families receive from financing a home factor strongly 
into the economic decision people make to buy a house or apartment. In 
fact, studies have shown that the deduction is critical to young 
families trying to become homeowners.
  According to the Mortgage Bankers Association, the average homeowner 
has $121,000 in net equity in their home, which represents half of 
their net worth. Equity in a home is not only a major source of 
household wealth, but it can also be leveraged to finance goals such as 
higher education or startup costs for a small business. Children of 
homeowners are better educated, less likely to drop out of school, and 
less likely to be arrested. For these reasons and more, people often 
tell me that buying their house or apartment is the best investment 
they have ever made for themselves and their family.
  Benefits also extend beyond the homeowner. Due to positive social 
effects, promoting homeownership has been a bipartisan public policy 
objective in this country since the 1930s. Regardless of income or 
other factors, homeowners are more likely to vote, a critical activity 
to the health of democracy. Studies have shown that municipalities with 
higher homeownership rates spend more on schools and streets and less 
on social welfare. Homeowners have a direct stake in the quality of 
their neighborhoods, work harder to make their community a good place 
to live, driving out crime, drugs and blight, and attracting investment 
in cultural, retail and commercial development.
  Our Nation's homeownership rate reached a record 69.2 percent in the 
second quarter of this year. The number of homeowners reached 73.4 
million, the most ever. And for the first time, minority homeownership 
rose above 50 percent. Despite this success, however, homeownership 
opportunities are not equally available to everyone. For example, while 
minority homeownership rates have increased, Hispanics and African-
Americans still lag significantly behind non-Hispanic whites and Asian-
Americans.
  As we bring the 108th Congress to a close, I urge my colleagues to 
give careful thought to America's longstanding tradition of encouraging 
homeownership. With prudent tax polices we can continue to help 
citizens on the path to homeownership and in pursuit of the American 
Dream.

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