Comment

Fiscal battle over mortgage deduction

1
lostlakehiker11/27/2012 8:48:12 am PST

People who bought houses acted in reliance on the government’s more-or-less promise that mortgage interest would be deductible. Same as people making retirement plans acted in reliance on another governmental more-or-less promise.

In neither case is the government bound by law to follow through. In both cases, changing the rules now would leave millions of people in situations that will go on for decades, playing out worse than they expected, and stuck with a situation they could not have planned for.

Perhaps there is no way around this kind of governmental default. But let’s not play make-believe. Any adverse change to either of these provisions of the current law will be one that runs into the same “fairness objection”.

In neither case does any serious player propose to make a change that works against the poor or the near poor, or even the next couple of rungs up. Social security benefit reductions would apply to the fairly well off and not to others, and canceling home mortgage interest deductions would not affect the mass of people who have too few deductions to itemize anyhow. It would not much affect those who have only barely enough deductions to itemize.