Reply #19: It may be imperfect [View All]

[zipplewrath]

The primary effect of the deduction is to increase the price of homes. It does that of course because it increases the size of the market, and the price they're able to pay.

The purpose and intent of the deduction is to adjust income taxes on the basis of actual expenses. They guy who makes 50K but lives in a high cost housing market doesn't really have as much "income" as the guy who makes 50K in a small market.

A better approach of course would be to adjust the deduction as a function of various factors. And to some extent the deduction should "decrease" in some sense as the income (and really wealth) grows. As it currently is configured, it is less than perfect. I'm not sure that's a reason to get rid of it entirely. Second homes, and to a great degree second mortgages, should be exempt. But in the end, what we really need to do is to tie taxes to WEALTH, not merely income.