The federal mortgage interest deduction (MID) promotes racial and economic inequality by distributing the lion’s share of tax benefits toward wealthy, white households, according to a new report.

While African Americans and Hispanics each account for 13% of the nation’s households, they receive only 6% and 7% of the tax benefits from the MID. White households receive nearly 78% of the deduction’s benefits, according to findings released by the National Low Income Housing Coalition (NLIHC) and the Institute on Assets and Social Policy (IASP) at Brandeis University’s Heller School.

The MID is an annual federal expenditure of $71 billion that primarily goes to higher-income homeowners. White households are more likely to benefit from the MID because they are more likely to own a home, have larger mortgages, and earn higher incomes. Renters receive no benefit from the MID, and many lower- and moderate-income homeowners do not benefit from the mortgage deduction because they claim the standard tax deduction.

Recent estimates show that nearly $55 billion of the MID benefit goes to homeowners with annual incomes of more than $100,000, and $10.5 billion goes to households with incomes in the top 1%.

Report authors make the case that the housing policy serves to consolidate benefits among households that are already relatively financially secure while reinforcing enduring economic disparities by race.

Misdirected Investments: How the Mortgage Interest Deduction Drives Inequality and the Racial Wealth Gap comes at a time when the MID is receiving increasing attention as policymakers consider tax reform. NLIHC and others are calling for the MID to be overhauled so federal housing investments are more fairly balanced.

“The U.S. needs to redirect its housing budget to promote greater housing security and prosperity,” says the new paper. “Without a major redirection of our housing investments, the nation will continue to spend billions of dollars annually to subsidize the housing of well-off households, while leaving many housing insecure and with no support.”

NLIHC leaders have long been calling for changes to the MID.

“We spend billions of dollars a year providing federal housing assistance to higher-income households who would be stably housed without that subsidy while we spend far too little helping low-income renters struggling to pay the rent,” said NLIHC president and CEO Diane Yentel in a statement.

The report proposes several reforms, including converting the deduction to a tax credit, which would provide all mortgaged homeowners with tax relief regardless of their income and lowering the cap on the amount of a mortgage eligible for a tax break from $1 million to $500,000. The significant savings from these two reforms—an estimated $241 billion over 10 years—should be reinvested in housing for the lowest-income households most in need of assistance through solutions like the National Housing Trust Fund, according to the report.