I disagree. Even without the mortgage deduction advantage a sales tax puts in a better advantage to buying a house:
Income: 40,000
Income tax: none
20% sales tax one time on 100,000 house: 20,000
sales tax on 700/mo. rent over 20 years:33,600
A family taking home 40,000 can afford a 120,000 house as easily as a family taking home 32,000 can afford a 100,000 house. Plus, they save in taxes (discounting for time would reduce the advantage ,but increasing to 30 or 50 years would add to the advantage).
I don't know where YOU live; however, a $100,000 house / apartment , in the areas that I am familiar with, are SHACKS !
I disagree. Even without the mortgage deduction advantage a sales tax puts in a better advantage to buying a house:
Income: 40,000
Income tax: none
20% sales tax one time on 100,000 house: 20,000
sales tax on 700/mo. rent over 20 years:33,600
A family taking home 40,000 can afford a 120,000 house as easily as a family taking home 32,000 can afford a 100,000 house. Plus, they save in taxes (discounting for time would reduce the advantage ,but increasing to 30 or 50 years would add to the advantage).
Also, you are forgetting one thing. Mortgages are based off of 10 year interest rates. 10-year treasury is currently about 4%. However, the income from coupon payments is taxable. Let's look at yield of a 10-year municipal bond that is not-taxable... It is 3.45%. All non-municipal bond yields would go down, because they would all be non-taxable. Your mortgage rate would drop by the appropriate percentage. You don't need a deduction.
In fact, the whole reason for the deduction in the first place is that the person receiving the interest from your mortgage payment must pay income tax on it. Therefore, it is unfair to collect income tax on the interest twice. Almost all business income is deductable. We as consumers get screwed because we cannot deduct interest income on cars, credit-cards, etc. They are double-taxed.
To sum up, interest rates would drop, so your mortgage rate would drop. Also, companies can borrow money cheaper. This is a good thing.
Undeniable Logic