Ditch the Home Mortgage Deduction?

Ed Glaeser says it’s time to do away with the home mortgage interest deduction. His five reasons are:
Problem #1: Subsidizing interest payments encourages people to leverage themselves to the hilt to bet on housing markets.
Problem #2: The deduction pushes up prices in places where the supply of new homes is constrained, as it is in many coastal markets.
Problem #3: The deduction is wildly regressive.
Problem #4: The deduction encourages people to buy larger, single-family detached homes, and that increases carbon emissions and pushes people out of cities.
Problem #5: The home mortgage interest deduction is poorly designed to encourage homeownership, which is, after all, the alleged desideratum.

Posted by on February 25th, 2009 at 12:10 pm


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