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"The problem is that this penalizes first time homebuyers out of the gate. Even those of us who live in modest homes will have their deduction reduced from 27% to 15%. For those of us in the early years of a 30-yr mortgage, only a sliver goes to paying down principle, and the tax refund goes a long way to cushioning the blow."

May I suggest that income taxes should have never been used for social engineering. A tax deduction for doing something the government APPROVES of is insidious.

Yes, I own my house, and yes I have used the deduction because that is the way the game is played. It does not have to played that way nor, IMO, should it.

Tax for the legitimate functions of the government (as the Founding Fathers instructed) and leave the social engineering to the Church.

what you say is well and good, but how do you feel about changing the rules of the game midstream for some 50 million people or thereabouts who made investment decisions based on the rules that are allowed? remember, real estate is long term, not short term.

May I suggest that income taxes should have never been used for social engineering. A tax deduction for doing something the government APPROVES of is insidious.

If all the goobermint wanted was the revenue, they would switch to a flat tax tomorrow. But with the code as it is, they get both the revenue and the ability to manipulate private behavior, effectively bribing the public with their own money.

Of course, as long as Congress has power to tax income without limit, that stuff which you call "your money" really isn't.