As various groups mobilize to oppose the Republican tax plan and preserve their lucrative tax breaks, one camp stands out: the real estate lobby. Its efforts are instructive when it comes to identifying how the tax code has become a cauldron of special-interest rent-seeking designed to enrich the well-connected.
The Wall Street Journal reports that real estate professionals “have deployed personalized digital advertisements” to cow the GOP Congress into preserving write-offs for mortgage interest and property taxes. The National Association of Realtors has spent $32 million on lobbying efforts this year, the Journal notes, and is typically among the three biggest-spending groups on Capitol Hill.
It’s no surprise, then, that the industry has long benefited from tax provisions that allow homeowners who itemize their returns to deduct mortgage interest and property taxes. These loopholes make it more attractive to buy a home, thus helping to line the pockets of those in the real estate business who use the tax perks as a selling point.
The House Republican plan would almost double the standard deduction, meaning far fewer filers would itemize. It would also lower to $500,000 the amount of mortgage debt eligible for the deduction and cap property tax write-offs at $10,000. These reforms are intended to simplify the tax code and reduce the market distortions created by providing special treatment to homebuyers.
Real estate groups argue this could harm the middle class, burden the economy and discourage homeownership. In fact, their primary goal is to protect their own bank accounts. Tax relief will give families of modest means more money to spend — maybe even on housing — while the effect of paring back write-offs will fall most heavily on the wealthy. In addition, Canada doesn’t offer tax deductions for mortgage interest but has a homeownership rate similar to that of the United States.
“We don’t consider ourselves Republicans or Democrats,” Linda Jay of a central California Realtor association told the New York Times in defense of efforts to preserve the status quo. “We’re the Realtor Party.”
And make no mistake: The Realtor Party’s overarching goal is to protect its own self-interests and keep the crony capitalist racket afloat in the D.C. swamp. The Senate is expected to vote this week on its tax bill. It should ignore the special pleading from the well-heeled real estate lobby.