46
Table 5
Change in Income Tax Liability from Eliminating the Mortgage Interest Deduction (dollars)
Age of House-
hold Head
Annual Household Income
<40K 40-75K 75-125K 125-250K 250+ All
No Portfolio Adjustment
25-35 212 571 1,801 3,468 7,711 1,132
35-50 244 747 1,525 3,534 6,575 1,639
50-65 161 491 1,034 2,095 5,741 1,194
> 65 21 178 329 981 1,322 166
All 109 542 1,262 2,697 5,408 1,066
Portfolio Substitution with Non-transaction Financial Assets
25-35 188 535 1,619 3,328 5,654 1,024
35-50 229 698 1,351 2,842 4,479 1,356
50-65 130 414 844 1,586 3,876 901
> 65 16 134 169 676 643 104
All 95 488 1,083 2,149 3,641 858
Portfolio Substitution with Total Financial Assets
25-35 187 529 1,590 3,256 5,375 1,004
35-50 226 687 1,339 2,845 4,814 1,363
50-65 130 412 846 1,618 3,990 914
> 65 17 145 207 708 739 115
All 94 484 1,079 2,162 3,812 864
Portfolio Substitution with Non-Retirement Non-Housing Assets
25-35 168 388 1,064 1,753 879 637
35-50 161 405 934 1,841 2,041 846
50-65 79 308 292 670 2,089 435
> 65 5 107 19 184 695 52
All 64 321 632 1,197 1,822 493
Portfolio Substitution with Non-Housing Assets
25-35 168 388 1,064 1,753 879 637
35-50 161 405 934 1,841 2,041 846
50-65 79 308 292 670 2,089 435
> 65 -48 -90 2 110 531 -29
All 37 285 630 1,190 1,797 472
Portfolio Substitution with Total Financial Assets with Returns Between After-
tax and Pre-Tax Mort
a
e Interest Rate
25-35 207 566 1,710 3,363 5,677 1,071
35-50 243 728 1,411 3,108 5,377 1,472
50-65 144 451 939 1,814 4,505 1,021
> 65 20 161 241 707 825 126
All 104 520 1,161 2,363 4,270 943
Notes: Averages are weighted using the SCF’s replicate weights. See the notes to Table 3 for the
asset category definitions and imputed returns. We assume that households draw down their
assets in order of returns and that non-itemizers, who would face no change in their tax
treatment, would not make any portfolio adjustments.