Filed under Fat Chance: Eliminating The Mortgage Tax Deduction

by Alex Stenback on November 21, 2005

Flying_pig A few months ago, the Presidents Tax Reform panel recommended a reduction floated a "deniable trial balloon" aimed at reducing the mortgage interest deduction.  It’s been our opinion that reducing this tax break in any sort of meaningful way would never happen – there are just too many people (every American homeowner) and well-financed interests that have skin in this game. 

Today, Barry Ritholtz, of the now A-list Big Picture Blog gives us a great discussion of the economics behind the proposal.  Here’s the Money Quote:

The home mortgage deduction is so ingrained into the economic fiber of the country, that the potential consequences of altering this are ginormous. The risk to overall economy, if this were to be even slightly mishandled, would be devastating. As is, the impact would be very significant, given Real Estate’s contribution to the economy.

The mortgage interest deduction, as David Smith (who posted a fascinating analysis of the same topic) puts it, is "The Holiest of Real Estate Holies."  Politically hard + economically risky is not a formula for change, so we wouldn’t worry about this one going anywhere soon.
· Ramifications of Eliminating The Mortgage Tax Deduction [Big Picture]
· Floating a Mortgage Interest Trial Balloon [AHI Blog - David Smith]

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