Economist Edward L. Glaeser proves he's the biggest tool since Alan Greenspan with his modest proposal to end the mortgage interest tax break.
Okay, here's the thing. Investors can write off interest expenses -- and all other expenses related to maintaining rental housing -- so if you don't allow homeowners to write off the largest expense they'll ever have related to owning a home, you end up shifting the goalposts to benefit investors rather than individuals. If you are an advocate of an elitist oligarchy where 1% of Americans own 99% of America that's a GOOD thing, but if you are someone who believes that such an inequality of distribution of wealth is toxic both to the economy and to democracy itself, taking actions that will result in further redistribution of wealth from the consumer class to the investor class is contraindicated.
I might point out that we *already* have too much in our economy that is favoring the investor class over the consumer class, and it is literally killing our economy. The current economic crisis is a crisis of consumption, not a crisis of investment. We are literally drowning in investment capital, which has run up one bubble after another over the past three decades searching for something, anything, worth investing in, and accomplishing nothing but running up real estate prices into a bubble that collapses (twice!), running up an Internet bubble, and otherwise being malinvested because there is more capital available than there is demand to justify its investment. This is an inevitable result of the reworking of our tax codes during the Reagan Administration to favor the investor class over the consumer class, and it has resulted in economic stagnation compared to the tax policies of earlier eras that better balanced taxation between the investor class and the consumer class.
In short: Doing away with the mortgage interest tax credit a) will benefit the investor class at the expense of the consumer class, b) further hurt consumption, during a time when we are in a crisis of consumption, and thus c) is contraindicated both from an economics point of view and from a public policy point of view.
-- Badtux the Economics Penguin
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