The mortgage interest deduction was enacted to help middle-class homeowners afford their own house by allowing them to write off the interest on their home loans, Rep. Tim Walz said.
He argues that should not be used as a tax write-off for boats large enough to accommodate a bed, bathroom and kitchen.
Walz has re-introduced a bill, “The Ending Taxpayer Subsidies for Yachts Act,” that would eliminate the deduction for boats used as second homes. He said it would save $500 million a year.
He calls it an “egregious loophole” that is effectively a handout for the super-rich.
“These are not your pontoons or weekend bass boats,” Walz said Friday. A yacht typically costs about $40,000 a foot, meaning a 50-footer will set you back a few million, he said.
Given those prices, buyers don't purchase a big boat based on the mortgage subsidy, he said. That's an important argument because the boat-building industry is likely to oppose this measure on the grounds that it will cut jobs.
Walz said he was a little surprised after this measure failed to get a hearing in the Republican-controlled House in 2011. But he hopes more pressure will build on Republicans this time around.
In the larger context of reform to make taxes simpler and fairer, Walz views this measure as a “very easy” first step.
“We just need to get some wins,” he said.
He's willing to talk about changing the mortgage interest deduction on second homes, which also benefits those wealthy enough to afford two homes.