Before You Freak Out, Give This Idea a Chance

Yeah, yeah, politically impossible, yeah, yeah, opposition will make anti-health-care-reform forces look like boy scouts, but Susie Madrak has an idea:

So I've been following the Tea Party objections to the health care reform efforts. They're worried about the deficit, they just want to be left alone without government interference, and they're especially angry at the government singling out some privileged groups for special subsidies. They're proud, self-sufficient patriots and they don't want handouts.

Kids, have I got a proposal for you.

I've discovered a regressive tax break that favors the wealthy and has no good rationalization for its continued use. (According to historians, it was an accident, anyway.) And oddly enough, it costs us about $100 billion annually, or $1 trillion over ten years - exactly the estimated cost of healthcare reform. Really, there's no other word for it but "pork."

It's the mortgage interest deduction.

No, it doesn't seem like a huge deal. (A lot of the people eligible for it don't even bother, because you have to itemize your tax return.) But man, it sure adds up:

But cumulatively, the deduction is a big deal. This year [Ed. note - in 2006, when this was written], it is expected to cost the Treasury $76 billion. And the rewards are greatly skewed in favor of the moderately to the conspicuously rich. On a million-dollar mortgage (the people with those really need help, right?), the tax benefit is worth approximately $21,000 a year. And according to the Joint Committee on Taxation, a little over half of the benefit is taken by just 12 percent of taxpayers, or those with incomes of $100,000 or more.

So clearly, this hits the sweet spot. Why insult people who are already doing well in the free market with this unnecessary and expensive handout?

And what better time to cut it, anyway? While housing prices are already dropping through the floor, this is when phasing out this deduction will have the least negative impact on housing prices. It will lower housing costs down to pre-speculation levels, and that means your paycheck will go farther. And it's something policy wonks on both sides can agree on.

Read the whole thing:

I think Madrak is grossly underestimating the size and power of the special interests protecting the mortgage interest deduction, which despite benefiting the wealthy almost exclusively, is broadly considered a middle-class entitlement on a level with Social Security.

Nevertheless, it's a great idea. So as one of the few non-wealthy who actually benefits personally from the mortgage interest deduction, mostly because I own way more house than I can afford, let me be the first: Even though it will cost me money, I say we do it.