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It's that your NOT paying more in taxes. Since I'm not as familiar as I need to be, I can only speak for my own situation. In my area, here's how it is.
Pat and Chris both make the same amount of money.
Pat pays X in interest on his house and is able to write it off on federal taxes. Pat also pays about X in local taxes. Pat is not able to deduct mortgage interest on his state taxes. His local taxes and his federal deduction are a wash, so he is paying.
Pat = (Total Federal taxes - mortgage deduction) + Total State taxes + Local property taxes.
Since Local property taxes = mortgage deduction he's basically paying his regular Federal and State taxes and the deduction covers the local taxes.
Chris rents. He pays (presumably) the same in total federal and state taxes as Pat. He cannot write off his rent on his federal taxes. In Massachusetts anyway, he can right off a good portion of his rent on his state taxes. As a renter, he is not personally responsible for property taxes. Since his local "property taxes" would be included as part of his rent, and he can deduct that on a state level, he comes out ahead.
Pat = Total Federal taxes + Total State taxes Chris = Total Federal taxes + (Total State taxes - % of Rent)
With their incomes the same (and presumably their initial tax burdens the same before considereing children, property, etc...) Chris will pay more in federal taxes. Pat will pay more in State and local taxes, and in the end Pat the homeowner will pay more in total taxes.
BTW, my 1000th post on DU... Hurray Beer!
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