6 ms·
Doing that would absolutely wreck the economy. Like, black swan systemic failure wreck. The mortgage tax deduction provides a huge amount of what turns out to
by mark242 13y ago
Doing that would absolutely wreck the economy. Like, black swan systemic failure wreck.
The mortgage tax deduction provides a huge amount of what turns out to be disposable income for the middle and lower-middle class. Take that away, and the ripples in the economy would be massive. Similarly, all current house prices would be trimmed by at least 20%, and most likely more than that due to how the tax deduction is able to help with principal payments. If we have another 20% trim of house prices across the board, you're looking at -- at the very least -- a return of the great recession. As mortgage rates are already at their lowest point, there's not much further down they can go to compensate for the sudden lack of demand that will occur.
Spending money gone. House price chopped in half, sending more people underwater. Mortgage interest rates nowhere to go. That's a trifecta of disaster.
- krapht 13y agoYou'd have to have a pretty sizeable home before you start itemizing for mortgage interest and not take the standard deduction. I disagree.
- bethling 13y agoThe standard deduction for a single filer is "only" $6,100. It doesn't take a very large mortgage to combine with real estate taxes and other potential deductions (State Income tax/Sales Tax) to move you out of the standard deduction category. When I've had a mortgage, I've never taken the standard deduction. When I've not had a mortgage, I've never itemized.
- greenyoda 13y agoEspecially in states with high state income taxes, like NY or CA.
- gnoway 13y agoNot really, because you can take a sales tax deduction if you itemize. Sales tax deduction + mortgage interest deduction probably gets you over the hump. If you're in a state with property taxes you can deduct those as well when you itemize.
- eru 13y agoOh, they could just calculate the average amount every person benefits from the mortgage interest rate deduction, and pay that out to everyone. More than half the people will be better off than before (because the median mortgage is smaller than the average mortgage).