It's a combination of both. MID intersects with home values, it's deeply regressive and before the standard deduction was increased in 2017, California took about 20% of that $70B tax break, which then got priced into higher housing values. http://realestate.wharton.upenn.edu/wp-content/uploads/2017/03/436.pdf …
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On the flipside of that, the federal government only spends $3-5B/year on homelessness, when it was de facto propping up CA upper middle class homeowners with MID deductions worth probably $14B...
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(Homelessness is also more of a federal issue than voters perceive it to be.)
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Replying to @prestonjbyrne @rabois
If you federally subsidize homeownership to upper middle class households at a time when real wages for the median household haven’t moved for 40 years, and you throw token dollars at the flip side of that policy, rising homelessness is a consequence of that.
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Homelessness is not really ideally funded or taxed at the municipal level since there’s regional/local sorting among people who receive services and then also among the entities/people that are taxes to provide those services.
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You can see it in SF and the Bay Area, where the city ends up bearing the cost burden for all the surrounding suburban areas that deliberately don’t fund homelessness services
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Replying to @prestonjbyrne @rabois
By your very same argument, the mortgage interest deduction isn’t in the Constitution so maybe we shouldn’t have something that distorts that national housing market. https://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=1561&context=lcp …
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By your very same argument, the GSEs aren’t in the Constitution either, so maybe they shouldn’t exist and we can see if national housing markets go back to pre-Great Depression behavior where most needed 50% down.
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