The analysis is the same. The tax-deduction is a subsidy to the <equity> holders, of whatever asset class. So, for homes, the subsidy accrues to the equity hold

The analysis is the same. The tax-deduction is a subsidy to the <equity> holders, of whatever asset class. So, for homes, the subsidy accrues to the equity holder. For business, the same thing. Policywise, housing is consumption (luxury, in particular) and business capital structure is investment. Subsidizing the latter has a far stronger policy rationale per-se but the capture technique (components of cost or net profit) is arbitrary. Analytically, see: http://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theorem#With_taxes http://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theor....