Nothing says “American dream” like buying a first home.
That’s especially true in the Hispanic community, where homeownership is soaring – up a whopping 47.5% in recent years. In the 20-plus years since I founded the Florida State Hispanic Chamber of Commerce, the biggest smiles I’ve seen have come from workers and business owners who just closed on their first house.
But under President Joe Biden’s tax plan, the front door to this dream could be slammed shut by a domino effect of consequences that amounts to a “New Home Tax.”
That’s because nearly every home needs insurance, and the Biden tax plan goes after the insurance industry. One type of insurance is private mortgage insurance (PMI), which gets added to monthly mortgage payments for any new homebuyers (and plenty of others) who don’t have 20% to put down in cash. This is essentially insurance to protect the lender against default.
Lenders then buy their own insurance on these loans, often from the international market. This “reinsurance” is what’s under attack by the Biden tax plan, which aims to increase the minimum tax for these types of transactions.
We all know how this works – whenever taxes on a business go up, it’s the consumer who eventually pays the cost.
In this case, it’s estimated that the tax plan could add hundreds of dollars a year to mortgage payments. That increase could be just enough to deny Hispanics and other minority families the chance to buy that first home. That’s just not right.
Florida’s housing market has already seen record-breaking increases, and home prices have gone up more than 15% in the past year alone. This rapid jump in home values, coupled with the looming increase in the cost of insurance if the Biden tax plan is passed, would, unfortunately, put homeownership out of reach for many. For those who have purchased a home with PMI in the past several years, you’re likely to see your mortgage payment rise too – effectively a tax increase on homeownership.
Biden’s promise to not raise taxes on anyone making under $400,000 surely rings hollow when the direct impact of a tax increase impacts that very group.
Consider this: The median home price in Florida this year is around $315,000. That means if you own a home and can’t make a down payment of $60,000 or more, this tax increase will directly hit your wallet.
In addition, this proposal also negatively impacts the state’s property insurance market. Floridians have already had to endure rate increases on their homeowners insurance due to storms and fraud, and this proposal could pile onto those costs.
What makes all of this worse is that Florida is already experiencing a housing crisis, with minority communities disproportionately impacted. Black homeownership, for example, is at a lower rate than when the 1968 Fair Housing Act was signed into law. The New Home Tax would be a step backward for Black homeownership.
It’s up to Congress to stop this provision. We need Florida’s Congressional delegation – Republicans and Democrats alike – to step up and help stop this New Home Tax. Let’s keep the door open so Hispanic families – and all Floridians – can continue to fight for their part of the American dream.
Julio Fuentes is president and CEO of the Florida State Hispanic Chamber of Commerce.