Blog

The Progressive Fix

Let’s Kill the Mortgage Interest Deduction and Replace It With This

The Atlantic highlights PPI’s proposal to create “HomeK” accounts for home buyers to aid in the purchase of new homes. The article further suggests that such accounts could replace mortgage interest deductions.

The mortgage interest deduction probably isn’t going anywhere soon. Voters are far too fond of it, and politicians are loathe to nix a popular sort-of-kind-of-middle-class entitlement. But while the tax break might be beloved by the people who actually show up on election day, it’s also a highly regressive giveaway to the top 20 percent of American households, who reap 75 percent of the benefit, as my colleague Matt O’Brien wrote yesterday.

So let’s say policy wonks could wave a magic wand and make the mortgage interest deduction disappear. How could we replace the thing? Even though everyone has sobered up a bit about it thanks housing bust, home ownership still has a lot of economic virtues we should want to encourage. For instance, it’s one of the few ways a large portion of this country actually saves. And we really don’t want Americans saving any less than they already are.

Read the entire article HERE.


Leave a Reply