Paging Max Baucus

Well Put Clive:

The current [homeowner mortgage] deduction costs nearly $80 billion a year in forgone federal revenues. It is available only to the minority of households—typically affluent— that itemize their taxes. Households at the margin of choosing between renting and owning are not, for the most part, itemizers. The deduction has no effect on their choice, and thus does almost nothing to promote homeownership. What it does promote, studies show, is spending on housing—that is, people who would have been owners anyway pay more for their houses. Prices are higher than they would otherwise have been, and mortgages are bigger. As many owners have learned abruptly, this can worsen economic insecurity.

$800 billion over ten years is a lot less than I thought the mortagage deduction was costing, but it’s still nearly enough to fund a certain government program that’s getting a lot of attention lately.  Combine it with a ‘sin tax’ based on overlarge home square footages (which have negative environmental and land use externalities) and we’d be  talking real money…

(via Matt Zeitlin)

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