August 27, 2007
The Honorable John Dingell
Chairman, Energy and Commerce Committee
2125 RHOB
U.S. House of Representatives
Washington DC 20515
By fax: 202-225-2525
Dear Chairman Dingell:
We are writing to express our concerns over reports that you intend to
introduce legislation that will "impose a stiff tax on carbon, increase the
tax on gasoline, and remove the mortgage interest deduction on 'McMansions,'
-- homes over 3,000 square feet." Although reducing home energy consumption
is a very laudable objective, we believe that eliminating the mortgage
interest deduction on mortgages on larger homes is a flawed, albeit well
intended, solution to the problem. We believe that there are better ways to
reduce home energy consumption. Among them are making permanent, and perhaps
expanding, tax incentives for home builders to construct energy efficient
homes and for homeowners to retro-insulate and to make other energy
reduction efforts on existing homes. These tax incentives will soon expire
unless extended by Congress.
Creating an arbitrary limit on mortgage interest deductions is unfair
because it discriminates against larger/extended families who need
additional living space. A family of 6 in a 3,100 square foot home uses
substantially less square footage per occupant than a single occupant of a
2,900 square foot home, and the larger home could easily be the more energy
efficient of the two as well. As it is described, your proposal would also
have no impact on those among the super wealthy who choose to pay cash for
their very large homes because there is no mortgage interest for them to
deduct.
If enacted, your proposal could also invite other legislators to propose
further reductions of the mortgage tax deduction to generate even more
federal tax revenues in the future. For example denying the mortgage
interest deduction to homeowners with homes of 2,500+ square feet or more
would produce huge amounts of new federal tax revenue. Such an approach
could thus create a significant temptation to other politicians to gradually
eliminate the mortgage interest deduction in the future, a few hundred
square feet at a time.
There are many other profligate wastes of energy that could be addressed by
modification of tax laws. For example, the owners of private jets and yachts
consume vastly more energy per capita than those of us who can only afford
to fly in commercial airlines or take an occasional vacation on a cruise
ship. In some cases the energy use difference can be a hundredfold per
passenger mile. One way to get a very high return on energy reduction
legislative efforts would be to substantially increase taxes on those kinds
of properties. The new tax revenues generated as a result could then be used
to fund the aforementioned tax incentives to reduce home energy consumption
and to expand federal research on new and more energy efficient technologies
to reduce home energy consumption.
We urge you to consider these suggestions as an alternative to provisions
that would remove the mortgage interest deduction on homes of over 3,000
square feet.
Sincerely,
Bruce N. Hahn
President
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