Last year's tax reform bill seriously curtailed the mortgage interest deduction, despite its reputation for untouchability. Perhaps lawmakers should get rid of it entirely.
In the Tax Cuts and Jobs Act of 2017, Republican lawmakers substantially reduced the mortgage interest deduction. Jordan Weissmann writes, "The benefit for homeowners was once considered a politically untouchable upper-middle-class entitlement, but the GOP aggressively curtailed it in order to pay for cuts elsewhere in the tax code."
The change is predicted to more than halve the deduction's effects. Weissmann cites a recent report from Congress’s Joint Committee on Taxation. "The report predicts that just 13.8 million households will subtract mortgage interest from their 2018 returns, down from 32.3 million in 2017. The total cost of the deduction will fall from $59.9 billion to $25 billion—a drop of about 58 percent."
While fewer homeowners will take the deduction, its benefits will be skewed toward the well-off to an even greater degree. "The MID has long been criticized for being a large giveaway to well-off blue staters with expensive homes. Going forward, it will be a smaller giveaway but an even more regressive one."
Weissmann argues that given the chance, Democratic lawmakers could probably kill off the deduction with few adverse effects, especially given a robust housing market.
FULL STORY: Republicans Gutted the Mortgage Interest Deduction. Democrats Should Finish It Off.
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