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EconoMeter: Should mortgage interest deduction be eliminated?


Sunday, November 21, 2010

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Kelly Cunningham

Although it should be done because the credit is unfair and distorts the market, Congress cannot pull the rug out from homebuyers particularly now in an already besieged housing market. The deduction should also not be removed without making adjustments in tax credits for everyone’s housing costs, and therefore would not be effective in reducing the deficit.
The opposite of a regressive tax, the interest deduction gives proportionally greater subsidies for higher costing homes and unfairly provides benefits only to homeowners that all taxpayers subsidize. Also, no link (between the credit and) to greater homeownership has ultimately been shown in economic research.