As America faces the fiscal cliff, the impossible becomes conceivable. Finally, we face the possibility of reducing the home mortgage interest deduction. Such a reform is long overdue, because the long-entrenched deduction has serious flaws. Yet eliminating the deduction altogether would create its own problems — disproportionately harming high-cost, high-wage areas like Massachusetts.
Making it less attractive to live in America’s most economically productive areas would be a mistake. Any adjustment to the mortgage interest deduction must take account of this pitfall.
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Eliminating the mortgage deduction would correct itself very quickly. The mortgage deduction is just one small factor that creates the more important cost of housing/cost of living for a specific region. This cost is driven more by supply & demand than anything else.
If the deduction were to be eliminated, then it should be done in a way that would boost our whole economy: If the current deduction for all current mortgages were grandfathered and if it were announced that the deduction were going to be phased out over a couple of years, this would add an incentive to the RE market. Someone could lock in a large tax deduction over the next 30 years. (The incentive of having a $150,000 benefit or not should create RE activity.) (After 3 or 4 years, the market would adjust without the deduction. (When the credit card interest deduction was eliminated it was decried as killing the industry - did everyone throw out their credit cards because that deduction was eliminated?))
Phasing out the mortgage deduction could be a great job creator and boom to the current economy.
Someone get this man to Washington!
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Why should affluent federal taxpayers who live in New Hampshire or Wyoming subsidize affluent taxpayers who live in New York or California?
Nobody would turn down the deduction, but there's no evidence that it promotes home ownership. On the contrary, the evidence is that it does not. In the U.S., the home ownership rate is 67%.
Ownership is comparable in many developed countries without such a deduction: Canada (68%), United Kingdom (69%), Australia (69%), Singapore (88%), Israel (71%), and many others.
One of the few European countries that allows the deduction, the Netherlands, has an ownership rate of only 49%.
Simply not persuasive. I am a Democrat. There is no reason that taxpayers should subsidize homeowners. especially wealthy homeowners. A Harvard professor living in a million dollar Concord home will not up and move to Kansas if this deduction is eliminated. Eliminate this deduction, please.
Actually, the Harvard professor espousing the virtues of city living himself lives in Weston, on a 7-acre wooded parcel on a dead-end road valued at $1.7 million