Wednesday, August 7, 2013

Mortgage Interest Deduction, regressive and another perk for the wealthy.

The home mortgage interest deduction may not be the so important to home sales as previously thought.
Bruce Bartlett: The sacrosanct mortgage-interest deduction. “[T]here is surprisingly little hard evidence that the mortgage interest deduction has encouraged home ownership. The Harvard economists Edward L. Glaeser and Jesse M. Shapiro have found that it has only a trivial impact. A major reason is that the deduction has long been capitalized into the prices of homes. That is, home prices are higher than they would be without the deduction. Thus to the extent that the deduction encourages home ownership, it is exactly offset by the extent to which high prices discourage home ownership.” Bruce Bartlett in The New York Times.
If you're as surprised as I am, Ezra Klein explains with the help of a great panel on last nights All In with Chris Hayes:

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