Tuesday, October 18, 2005

CSM calls for cutting the mortgage interest deduction

The deduction for mortgage interest is the "third rail" of tax reform. President Reagan tried to get rid of it in 1986, but real estate interests stopped him. Now, President Bush's tax advisory commission suggests limiting its use. Good idea, I say, and good luck.

The mortgage-interest deduction is bad economic policy. It encourages consumption, rather than saving. People take out big mortgages to free up spending money. (They convince themselves not to worry about all the borrowing because the interest on the loan can be tax-deductible.) An unhealthy economic incentive, the deduction is also expensive. It cost the Treasury $63 billion last year in needed revenues. The entire budget of the US Department of Housing and Urban Development was $35 billion.

Read more (and weep) in today's Christian Science Monitor.

http://lawprofessors.typepad.com/elder_law/2005/10/csm_calls_for_c.html

Property Management | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef00d8355601fa69e2

Listed below are links to weblogs that reference CSM calls for cutting the mortgage interest deduction: