“The mortgage deduction was partially responsible for the mortgage bubble.”
People keep saying this, but I don’t think it is true.
My understanding is that mortgage interest has ALWAYS been deductible. The causes of the housing bubble were the Community Reinvestment Act which coerced banks to lend to unworthy borrowers and also the collapse of the tech bubble which drove investors into real estate. I imagine there were other reasons but I very much doubt that interest deductibility had much to do with it.
One thing mortgage interest deductibility is responsible for is the high rate of home ownership in the US.
But, I was always taught that was a GOOD thing. That it was in fact a big part of the vaunted American Dream.
And, just to add some facts for anyone who doesn’t know currently mtg interest can be deducted on first and second homes only and on mtgs up to one million dollars (with some grandfathered exceptions). Also, deductions are already reduced or eliminated for high income people. In fact my income is not all that high (as I said before I’m a blue state resident) but some deductions are reduced/eliminated for me.
So, despite what many people think millionaires and billionaires are not taking this deduction on their many, many, million dollar homes. I’m sure most of those people don’t even HAVE mortgages.
As for the estate planning of the mega-wealthy that is another category entirely. These tax increases (for that is what they will prove to be) will affect the middle/upper middle class.
As I said on another post somewhere it is amazing that the Republicans, rather than pandering to their base, seem to want to destroy it in order to pander to their enemies.
“These tax increases (for that is what they will prove to be) will affect the middle/upper middle class.”
Medicare, Medicaid and Social Security are going to need an infusion of funds that range in the TRILLIONS. How do you propose it be raised? Should those programs be cut? Good luck with that.
That doesn't change anything. It just means they were pushing home-ownership as a way to appease the laborers unions and the construction industry.
You have to decide what you want; do you want "stimulus" that stimulates the government/corporate/union-complex and help them grow, or do you want stable fiscal policy that keeps prices in line with actual value?
If you prefer special-interest "stimulus," just be honest enough to admit it.
PS - The fact is, not EVERYONE should own a home at all stages of their lives. One of the fundamentals strengths of the American economy has been the mobility of its work force. Tie people down to houses that plummet in value after they sign the loan papers, and you no longer have mobile work force.