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Testimony of the
American Homeowners Grassroots Alliance
Submitted to the
House Ways & Means Committee
Hearing on
Challenges Facing Middle Class Families
January 31, 2007
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The American Homeowners Grassroots Alliance (AHGA) is a national
consumer advocacy organization serving the nation’s 75 million
homeowners. The Alliance thanks the House Ways and Means Committee
Chairman Charles Rangel and the other committee members for holding this
hearing on challenges facing middle class families. The financial
wherewithal to own a home may be the best way to define membership in
the middle class. Home ownership contributes significantly to our
nation’s social stability, and home equity is the biggest source of
saving for most homeowners.
The American home is becoming more important to our society.
Increasingly homes are serving the much broader function they provided
our forefathers. At its founding ours was an agrarian nation, and the
workplace of homeowners was on their own property. Health care was
provided by doctors at the patient’s home and nursing was provided by
the patient’s family in the home. Most elder care was provided in the
home by family members.
In many ways American homeowners are returning to this home-centric
lifestyle. The number of home-based businesses is growing rapidly – some
10 million individuals earn a part time or full time living as eBay
sellers. Teleworking is also rapidly growing in popularity as more
employers, including the federal government, are facilitating the
ability of employees to work from their homes either part or full time.
The trend towards a home-centric lifestyle is increasingly reflected in
new home design and remodeling. More new homes are being built and
existing homes remodeled with two home offices as well as floor plans
and features that enable seniors with mobility challenges to age in
place in their own home, rather than being forced to move to health care
facilities. New wearable wireless medical monitoring devices now under
development will also allow many of the nation’s 7 million chronically
ill and many seniors with medical challenges to remain in their homes
while their health can be monitored remotely 24/7 via computer modems.
These are important trends from many perspectives. Not only do they
improve the quality of life and allow homeowners to better connect to
their community, they also have other tangible benefits. A person who
works at home does not need to commute to another workplace, which
reduces demand for gasoline and global warming. By reducing the number
of commuters, rush hour traffic in urban and suburban areas is also
lessened. There will be fewer traffic jams and slowdowns for those who
continue to commute to work, thereby reducing the gasoline consumption
and air pollution from their vehicles and pressure on our transportation
infrastructure. Federal and state government health care subsidies and
medical insurance costs will also be reduced by homeowners who will be
able to remain in their own homes rather than forced into the far more
expensive alternative of moving to long term care facilities, hospitals,
or other medical facilities.
The House Ways and Means Committee has already taken steps that both
facilitate home based businesses and teleworkers and the reduction of
home energy consumption. Recently enacted tax credits that encourage
home energy efficiency and the construction of energy efficient new
homes are helping the environment and saving homeowners money. The
deductibility of private mortgage insurance will help more low and
moderate income homeowners to afford to buy a home. We urge the
committee to permanently extend these current laws.
Other legislation already under consideration in this new Congress will
also help most homeowners. AHGA also supports the committee’s commitment
to adjust and index the alternative minimum tax to exempt middle class
homeowners. And the budget prudence reflected in Congressional “paygo”
rules is also appreciated by American homeowners, who typically have no
other choice but to pay as they go with the amount left over after their
monthly mortgage payment. The amount left over is often insufficient to
cover other substantial costs facing most homeowners, such as healthcare
and college education for the homeowners’ children. For that reason we
appreciate the committee’s support for reducing the cost of prescription
drugs and the expansion of student loan programs.
More needs to be done however. The appreciation of homes in recent years
has placed home ownership out of the reach of growing numbers of our
citizens. We need to do more to get those at the lower end of the
economic scale on the road to home ownership sooner. To expand home
ownership we recommend that first time home buyers be allowed a tax
credit of 10% of the home’s price, capped at $6,000. An affordable
housing tax credit should also be enacted to create more homes for low
income taxpayers and a national housing trust fund should be established
to build rental housing for the lowest income families.
We also urge the committee to consider other steps to increase savings
and/or home ownership in the U.S., such as modifying ERISA to permit
investments by retirement plans in principal residences of children and
grandchildren who are buying their first home, increasing IRA, 401K and
other retirement savings plan contribution limits, and taxing annuity
payments at the same rate as dividends.
Additional steps are needed to encourage the healthy migration back to a
home-centric lifestyle. Health insurance is very expensive and is rising
rapidly. We urge the committee to consider tax incentives to make health
insurance less expensive for home based businesses and other homeowners
who lack employer sponsored health care plans. Homeowners and/or their
employers should be encouraged through additional tax incentives to
invest in the technology used for the purpose of telecommuting.
Telecommunications technology is also critical to teleworking and home
based businesses. It is also a powerful research tool for students and a
critical element for the implementation of future home-friendly medical
technologies. We urge the committee to consider tax incentives that will
facilitate faster and wider deployment of the ultra high speed broadband
required to support many these applications, particularly to more rural
communities and to the economically disadvantaged.
There are other important issues affecting homeowners and home ownership
outside the scope of the Ways and Means Committee oversight, and we hope
that committee members will support legislation in those areas as well.
There is a need for Congress to step in to address serious barriers to
competition and other problems in the real estate services sector,
including real estate brokerage services, mortgage lending, and title
and other insurance. There is a need to improve the protection of
consumer privacy, particularly as it relates to technology, and to
assure that homeowners and other consumers can fully benefit from
technology’s increasingly important role in facilitating our nation’s
return to a home-centric society. A greater commitment to energy
research and tax incentives for clean energy will also benefit future
generations of homeowners.
These and other issues that have significant economic impact on
homeowners and home ownership are described in more detail in AHGA’s
2007 Issue Guide for Federal and State Policymakers, which is located at
www.AmericanHomeowners.org.
We again thank members of the committee for their commitment to address
challenges affecting middle class families, and pledge our support for
your worthy efforts.
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