Within minutes after The National Commission on Fiscal Responsibility and Reform had released its thoughts, interest groups from here to Kingdom Come lined up in opposition. Indeed, co-Chairman Erskine Bowles joked that he and his colleague Alan Simpson might have to enter a witness protection program.
Notwithstanding the merits or drawbacks of the individual proposals, one revenue raiser caught my eye: the elimination of the home mortgage interest deduction. Why do we need this middle class entitlement? If the interest deduction is eliminated by 2012, it will save the federal treasury more than $100 billion.
There is no good reason I can see to keep this vestige from 100 years ago. It contributes to the deficit and distorts the real estate market by encouraging people to buy homes that they could otherwise not afford, thereby driving housing prices up for everyone.
You could make a pretty good case for not eliminating the interest deduction immediately because it might increase the current foreclosure rate and throw more people out of their homes. But the deduction could either be phased out or grandfathered in for current mortgage holders and eliminated for new mortgages going forward.
I'm a homeowner with a mortgage who takes advantage of this deduction. I'm not sure how much it saves my family because my wife takes care of our finances. But I can tell you one thing: I would be willing to give it up if everyone else does.
How about you?
It is a stupid deduction which places a burden on lower income people who cannot afford to buy a home!!
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