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Thursday, November 29, 2012

Mortgage-interest deduction is on chopping block during fiscal cliff talks. Good.

The much protected mortgage-interest deduction, which can apply to a house as expensive as $1 million, including a second home, might be on the chopping block during the fiscal cliff talks.

Good. It should. It must. It is a big giveaway in the tax code - about $100 billion a year - that goes primarily to the folks who don't even need it. If there was no deficit to contend with, I wouldn't have a problem with it remaining. Chopping it to the first $500,000 and only on first homes makes much more sense. We can raise a ton of revenue that way, even without raising overall tax rates. And it makes the deduction more focused on what it was supposed to be focused on, encouraging middle-class members to buy homes. It wasn't supposed to become a subsidy for the already-wealthy.

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