Following up on last week’s post about the claim that Congress is considering reigning in the home mortgage interest deduction:  Deborah Geier (Cleveland State) offers an international perspective:

More than a year ago, the Wall Street Journal reported that Britain had phased out its home mortgage deduction over a 12-year period and that home prices did not fall but rather kept rising at a good clip. The Institute on Taxation and Economic Policy estimates that nearly 80% of the benefits from the home mortgage interest and property tax deductions (combined) go to the top 20% of taxpayers in terms of income, while only 5% goes to those in the bottom 60%–the very taxpayers struggling to own a home. Because of the upside-down nature of the subsidy, price declines (if any) should be concentrated at the top end. But it’s difficult to get this message across to the general public. It’s a sacred cow. The best chance is to go slow in a phase-out, as did Britain. Turning it into a credit may also be sellable and clearly right in terms of both fairness and economic policy (as most economists, who fail to agree about most anything, agree that the home mortgage deduction shifts investment dollars from more valuable uses in the economy to homes, which don’t add nearly as much punch to the economy as would risk capital and infrastructure spending).