It's an old principle too often forgotten in discussions of economic policy:
"If you want less of something, tax it; if you want more of something, subsidize it."
We've learned in America that when you don't limit welfare in some way, you'll get lots more people on it. And tax people too much like we did in the 1970s, and you'll proliferate money in tax shelters.
What we need more of right now in America is home sales. 18.4 million dwellings sit vacant in the US, and homeowners all across the country who want to sell and scale down or sell and move up can't, because of the housing slump. Properties go unsold season after season, and people are stuck.
Jonathan Swift put it this way a long time ago:
"Money, the lifeblood of the nation,
Corrupts and stagnates in the veins,
Unless a proper circulation
Its motion and its heat maintains."
Logic tells us that we should subsidize housing through tax policy even more than it already is, but the Obama regime, and a bunch of misguided libertarians, want to do the opposite: recover the "tax loss expenditure" created by the mortgage interest deduction.
In other words, they want to tax home ownership, in the name of tax neutrality, handing the advantage to landlords who can still deduct their mortgage interest, along with the maintenance and depreciation which homeowners cannot deduct. It almost sounds like planned crony capitalism.
If Obama and company succeed, we'll have even less home ownership than we have now, and even lower values, but lots of new politically favored slumlords.
The following is an excerpt from John C. Weicher's "Repealing the Mortgage Interest Deduction? Hold the Applause!," found here, which touches on some of these issues:
The President’s budget for 2012 proposes to take a small but significant step in the same direction. The value of the deduction would be reduced for families with incomes above $250,000. These are the same taxpayers for whom Mr. Obama wanted to raise taxes back in December - “the rich.”
But the deduction isn’t a particular benefit for rich people. ... they only account for about 20% of all mortgage interest reported on tax returns, according to the IRS.
Most of the benefit of the mortgage interest deduction goes to households who are not “rich,” households with incomes between $75,000 and $200,000. These are middle-class families, reasonably well off, but working, and working hard. ...
Repealing the mortgage interest deduction will make it harder for young families to become homeowners. Repealing the capital gains exclusion, another Commission recommendation, will make it harder for older families, when they want to move to a retirement home or move to be near their children and grandchildren.
