Monday, November 30, 2015

Washington Post and Housing Tax Breaks

Not to be outdone by the NY Times, the Washington Post has come out for limiting the mortgage interest deduction. 

I would go a step or two further.  There is no good reason for the mortgage interest deduction at all.  It should be totally eliminated, not capped, as suggested in the WP article. The tax free capital gains up to $ 500,000 for married, $ 250,000 for single for home sales should also be scrapped.

A much fairer and more straightforward tax system would see the total elimination of the two big housing tax breaks -- mortgage interest deduction and (capped) tax free home sales.  Add to that the total elimination of the charitable deduction and you can begin to see the emergence of sanity in the personal income tax code.

Eliminating these unnecessary tax breaks, mostly of benefit to those with extreme levels of income and wealth,  would permit a move toward a flat tax with very low rates (20 percent or less) and a system that is much more transparent and much fairer than what we have now.

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