It was a collapse of the housing market, along with unregulated financial practices, that got us into this mess. We are unlikely to seeing substantial growth in jobs or wages until the housing market recovers.
That’s why Congress should keep its hands off the mortgage interest deduction in the tax code … for now.
This tax credit has helped millions of Americans afford the pleasures of homeownership. It has encouraged families to buy homes, creating the spin-off of billions of dollars in home furnishings, appliances, landscaping, repairs and maintenance, not to mention the real estate sales industry.
Eliminating the mortgage interest deduction now would wipe out the recent inklings of housing recovery. The tax bill for homeowners would suddenly spike by thousands of dollars, throwing more homes into foreclosure.
It could cause hardship for cities and counties, too, if homeowners surviving on a thin financial edge defaulted on property tax payments.
It may make sense someday to shift this tax credit away from mortgages in order to incentivize other priorities; for example, achieving a certain level of energy efficiency in home heating and air conditioning.
But with the economy still teetering and more foreclosed homes to run through the system, now is not the time for a change that could have disastrous results.
