With respect to the efficacy of the MID in promoting economic mobility, the authors state:
“Mortgage interest deductions are also positively related to intergenerational mobility.”
“In sum, there is some evidence that CZs (commuting zones) with larger mortgage interest deductions as a fraction of AGI are more economically mobile”
Summarizing their statistical findings the team writes:
“…we find evidence that the tax expenditure components of mortgage interest deductions, state income taxes, and state EITCs each have individually positive effects on intergenerational mobility. The progressivity of overall tax expenditures and state income taxes also have a robust, significant relationship with higher intergenerational mobility. Overall, these results suggest that tax expenditures aimed at low-income taxpayers can have significant impacts on economic opportunity. Hence, the short-term fiscal gains from reducing such expenditures must be weighed against the potentially large long-term costs of reduced income growth for low income individuals.”
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