Wednesday, September 19, 2007

Obama's Tax Plan, Part 1

Here is Obama on the Mortgage Interest Deduction:

"Today, we have a mortgage interest deduction, but it only goes to people who itemize on their taxes. Like so much in our tax code, this tilts the scales toward the well-off. Only a third of homeowners take advantage of this credit."

Ok, I'm with him on that. Tax deductions will always benefit those who are taxed the most, the wealthy. But read on.

"I’ll create a mortgage interest credit so that both itemizers and non-itemizers get a break. This will immediately benefit 10 million homeowners in America. The vast majority of these are folks who make under $50,000 per year, who will get a break of 10 percent of their mortgage interest rate. For most middle class families, this will add up to about $500 each year. This credit will also extend a hand to many of the millions of Americans who are stuck in the subprime crisis by giving them some breathing room to refinance or sell their homes."

How about instead of instituting fairness through more complexity in the tax code do it through simplicity, scrap the mortgage interest deduction. Is subsidizing home-ownership more compelling than say, health care? Or wage subsidies so that people can make their own choice on how to spend their money?

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