Economic Growth Package Includes Smith Amendment Making
Homes More Affordable
Washington, DC – Later tonight, the U.S. Senate is expected to pass an economic growth package containing over $350 billion in much needed tax relief. The legislation also includes a provision granting $20 billion in fiscal relief to the states. Senator Gordon Smith (R-OR) worked to insert this provision when the Senate Finance Committee considered the legislation last week.
"The slow economy, budget crisis, and high unemployment have all taken their toll, but this growth package gives us some hope," Smith said. "It will help create jobs, keep more money in the pockets of Oregonians, and bring over $216 million in direct aid to the state."
The $20 billion provision is modeled after legislation Senator Smith introduced with Senator John Rockefeller (D-WV) in January. The funds will be divided between the Federal Medical Assistance Percentage, which dictates the federal share of the Medicaid program, and direct assistance to state and local governments. If the bill is enacted, the Oregon Health Plan stands to receive $100.3 million over the next 18 months. In addition, Oregon state and local governments will receive $116.3 million in direct aid. Of that aid, $69.8 million will go to the state, while local governments will receive $46.5 million.
During Committee consideration, Smith was also successful in passing an amendment that would make homes more affordable for 137,000 Oregon families by making mortgage insurance tax-deductible for the vast majority of homeowners.
"Realizing the dream of homeownership is one of the greatest moments in a lifetime. It provides safety and stability not only to families but to entire communities," Smith said. "Over 12 million American homeowners are going to benefit from this deduction in the first year alone. Even more importantly, it's going to make it easier for families in the future to buy their first home."
Mortgage insurance is paid by most home buyers when a down payment of less than 20% is made. While mortgage interest is tax-deductible, insurance is not and often costs over $1000 annually. Smith's bill would make the insurance deductible for those whose incomes do not exceed $106,000 per year – making approximately 90% of Oregonians eligible.
The deduction will be of particular assistance to minority individuals and families as 57% of African-Americans and Hispanics who hold mortgages pay this insurance. In addition, 54% of loans made to borrowers below the median income level are covered by mortgage insurance. Estimates indicate that this deduction will help add 300,000 American families to the ranks of homeowners annually.
The mortgage insurance deduction is supported by a broad coalition including the National Urban League, National Taxpayers Union, National Education Association, Citizens Against Government Waste, National Conference of Black Mayors, and the National League of Cities.
