Monday, August 27, 2012
Matt Yglesias looks at the insane size of houses in America:
One thing you're seeing here is the home mortgage interest tax deduction at work. This is often described as a program to encourage homeownership, but the homeowner/renter margin is a pretty small element of the impact. A much bigger impact is that it encourages every homeowner in America, at the margin, to buy a slightly larger house than would otherwise be the case and therefore encourages homebuilders to build slightly larger houses. There's nothing wrong with big houses, but it's far from clear why you would specifically want the tax code to encourage big houses rather than fancy cars or expensive rugs or whatever else people might buy in a neutral environment.