The Granddaddy of Sprawl Subsidies, Illustrated

See the white pinpoints where central cities are? That's where the federal mortgage interest deduction is helping people the least. Meanwhile, residents of sprawling suburbs are raking in the subsidies. Image: ##http://www.pewstates.org/research/reports/the-geographic-distribution-of-the-mortgage-interest-deduction-85899471375##Pew Center on the States##

Despite the ruinous housing crisis just a few years ago, the federal government still keeps the suburban sprawl machine humming.

About 85 percent of federal subsidies for housing flow to single family homes, according to a recent report from Smart Growth America, though only about 65 percent of Americans are homeowners and the majority of renters live in multi-family housing. The ultimate sprawl subsidy just might be the mortgage interest deduction. Not only is this baby completely regressive — the vast majority of subsidies flow to households with incomes greater than $200,000 — as you can see in the above map, this money tends to flow to areas where everyone is dependent on a car.

Network blog West North writes:

See those donut holes? Inner-city areas with low rates of homeownership, low incomes (and thus fewer residents who itemize deductions), and relatively lower property values are receiving far less of America’s fattest housing subsidy — the mortgage-interest personal income tax deduction (see previous discussion) — than their better-off suburbs. The sprawl subsidies continue apace.

The bigger picture is that this is a subsidy that overwhelmingly benefits wealthy people who have expensive houses, and big mortgages to match — and thus benefits “coastal elites” more.

Elsewhere on the Network today: Human Transit reports that Google Maps is planning some big improvements to its transit directions feature. Mobilizing the Region reports that New Jersey is the newest state to consider reducing speed limits to 20 miles per hour in residential areas. And Better Institutions comments on a unorthodox new plan to shore up the federal infrastructure bank.

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Just How Regressive is America’s Federal Housing Policy?

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(ed. note. Please welcome contributor Chris Bradford, author of the economics blog Austin Contrarian.) As this recent Congressional Budget Office (CBO) report reminds us, the answer is "very regressive." Even in lean economic times, the average rent in San Francisco (above) is close to $2,000/mo. (Photo: BinBin.net) The disparity between the federal government’s support for […]