Reconsidering and Improving Existing Tax Subsidies for Housing

8 Pages Posted: 25 Mar 2013 Last revised: 27 Apr 2013

See all articles by Dennis J. Ventry

Dennis J. Ventry

University of California, Davis - School of Law

Date Written: March 25, 2013

Abstract

This testimony was given before a Joint Informational Hearing of the California Assembly Committee on Housing and Community Development and Committee on Revenue and Taxation on March 18, 2013 to provide a framework to assist the Committees in thinking about the advantages and disadvantages of using the tax system to subsidize aspects of housing policy in California.

Chief among his recommendations, Professor Ventry urged the committees to redesign all of the state’s tax expenditures purporting to promote homeownership. In particular, he advocated (i) abandoning federal adjusted gross income (AGI) as the starting point for determining state income tax liability, a move that would add billions of dollars in revenue to California’s coffers; (ii) eliminating usage of tax deductions as a delivery mechanism for housing tax benefits; (iii) restricting basis step-up on inherited property to cases of hardship; (iv) limiting the exclusion for capital gains on home sales by accounting for built-in gains due to inflation (in order to tax only real gains and not nominal gains); and (v) enacting a “Homeownership Tax Credit” in lieu of both the mortgage interest deduction and the property tax deduction.

Suggested Citation

Ventry, Dennis J., Reconsidering and Improving Existing Tax Subsidies for Housing (March 25, 2013). UC Davis Legal Studies Research Paper No. 335. Available at SSRN: https://ssrn.com/abstract=2239216 or http://dx.doi.org/10.2139/ssrn.2239216

Dennis J. Ventry (Contact Author)

University of California, Davis - School of Law ( email )

UC Davis School of Law
400 Mrak Hall Drive
Davis, CA 95616-5201
United States
530-752-4566 (Phone)

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