Thread: Here's a view I agree with.

There is study upon study demonstrating why the mortgage interest deduction is worthless and nothing but a tax drain. I won't rehash any of the points made in that brief article, but will add another argument against it, which is that it is stupid to incentivize investment in static assets like real estate instead of promoting investment in sectors that actually drive the economy.

Originally Posted by mcsquared

But wait, we are discouraging people from borrowing any money.

If we don't subsidize something, we're discouraging it? I suppose relative to the alternative (subsidizing), but what an odd point of view. I look at it more as remaining neutral.

People aren't going to stop wanting to own their own home just because the mortgage interest deduction is eliminated. I only skimmed the article and don't know for sure whether this was addressed, and haven't thought this through at all, but it seems entirely plausible that they end up paying no more to own a house than before, as prices go down to reflect the removal of the subsidy.

Home ownership is a good thing, in my view, but so are a lot of things that I think the government has no business encouraging or discouraging.

Edit to add - I'm down with Tim on his points. I wasn't particularly taken with that article (I didn't read it very carefully, though). I just think this is not a behavior the government needs to attempt to encourage (there may not be more homeowners anyway, only homeowners owning more expensive houses - it may just be a gift to home sellers) by subsidizing it.