Personally speaking, if it went away entirely, my tax bill would dramatically increase. It makes about a $2000 difference on my tax return. It would definitely hurt me, and I'm middle class America. But, I like the idea of capping it for square footage. Since I don't ever plan on owning a 3000 square foot house, that doesn't bother me at all.

Please see my other comment on the previous "development" post for more of the same, but as you read this, remember to ask:

1. What is the penalty for the poor that the Mortgage Interest Deduction causes?
2. What is the penalty for renters?
3. Apparently the deduction "may once" have encouraged home ownership, but no longer does... is that true? Do you own a home?
4. Is the home ownership rate in Canada really higher than that of the US? Some easily google-able studies show differently...
5. Does Canada have an equivalent or related tax rebate in place? Like the GST Tax Housing Rebate on the tax paid at sale which cost Canada approx. $850M back in 2001?

1. What is the penalty for the poor that the Mortgage Interest Deduction causes?
2. What is the penalty for renters?

the poor disproportionately rent. a person who rents gets no tax relief; a person who owns does. why favor one over the other?

3. Apparently the deduction "may once" have encouraged home ownership, but no longer does... is that true? Do you own a home?

I phrased this badly, the point of it was to encourage home ownership and it still does, but it also makes it easier to buy bigger and more expensive.

4. Is the home ownership rate in Canada really higher than that of the US? Some easily google-able studies show differently..

I did not say it was higher, I said it was just as high.
.
5. Does Canada have an equivalent or related tax rebate in place? Like the GST Tax Housing Rebate on the tax paid at sale which cost Canada approx. $850M back in 2001?

it has a partial GST credit on new construction only up to the first $250,000 of the purchase price. I am in favor of a cap here as well as in the deductability.

and I own a house, live in Toronto where the mortgage interest is not deductible.

It is a ridiculous assertion that the mortgage interest deduction hurts the poor and that they get no such corresponding benefit as do homeowners. The truth is every person in the US who rents a home benefits from a mortgage interest deduction. Mortgage interest is deductible for income producing property. To say that the poor don't get a benefit for mortgage interest deduction(for the homes they live in) is to also suggest they don't pay property tax for the homes they live in. Owning income property is a business and the ultimate cost (expenses-tax benefit) associated with the residence is passed on to the renter. That said, I agree, we should get rid of the mortgage interest deduction. Actually, we should get rid of all deductions. Going one step further we should get rid of the current federal income tax system in favor of the Fair Tax. Modern income taxation is a violent coercive practice that has the authors of the constitution rolling in their graves.

The Mortgage Interest Deduction doesn't cost a hundred billion dollars per year. In fact it doesn't cost anything. Property taxes might cost that much or even more, and a great many other taxes cost much more, but the MID costs nothing because we, the people, don't pay out our money because of it.

Wow, I sound just like a libertarian. Thing is, in this case they're right.

Going one step further we should get rid of the current federal income tax system in favor of the Fair Tax. Modern income taxation is a violent coercive practice

Libertarians - small in number, but loud in voice.

If you think of the mortgage interest deduction as tax dollars not collected - and thus housing subsidies - then you can look at total housing subsidy dollars and you will find that the mortgage interest deduction (housing subsidy) dollars total up to far more dollars than other housing subsidy dollars (Section 8 waivers, tax credits, etc). Thus, the wealthier people are getting more housing subsidy dollars than poor people.

The mortgage interest deduction saves you more tax dollars as you buy a larger and more expensive house, and have a larger mortgage (thus you are paying more interest). Also being in a higher tax bracket saves you more cents per dollar on your taxes when taking the deduction. Thus, the wealthier you are (or more leverage you can achieve), the more tax dollars you save. It is very difficult for poor people get large mortgages, they tend to be in lower tax brackets, and they do not have the wealth to create leverage.

It is my understanding that there is a cap on how much mortgage interest you can deduct when coupled with high incomes already. I read this article as being about stopping McMansions rather than being about fairly distributing housing subsidy tax dollars and making housing more affordable for poor people. I think this is unnecessary. Global warming may well result in Americans having to pay high prices for energy, which might result in some wealthy people deciding to skip the McMansion as it is an energy hog.

Communities can deal with McMansions at the local level using zoning codes, and already existing tool.

Keeping the money I earn to spend as I choose (on a mortgage perhaps, whatever, It's my body, my choice, I did the work) is not subsidizing me.

FYI - the cap on interest deductions is capped if your house is more than $1M; which if you live on the east coast NYC / Boston area may eliminate many of the McMansions we're discussing..

If you're really interested http://www.irs.gov/pub/irs-pdf/p936.pdf

'If you think of the mortgage interest deduction as tax
dollars not collected - and thus housing subsidies -
then you can look at total housing subsidy dollars and
.... Thus, the wealthier people
are getting more housing subsidy dollars than poor
people.' - Anon
Here's another quote along the same lines
"From each according to his ability, to each according
to his need" - Communist Slogan popularized by Marx

Yes, another person who wants to redistribute the wealth. Look I'm not against helping people out. But, the section 8 subsidy program has failed, miserably, in giving people a leg up where home ownership has succeeded on a massive scale. Almost every self-made millionaire who started from "nothing" used real estate to pull his/her self (their families and future generations) out of poverty. I'm sure that concept falls deaf on the ears of Anonymous.
Oh by the way, I have a friend who lives in a 3100 sq ft house with a finished basement. I think at last count including adopted children and foster children their household count was 10. I guess Dingell would suggest that they should be penalized for having too large of a carbon footprint. Ridiculous!
Ps... If I could get the same subsidy that section 8 renters get I would sell my big house and rent. Again, ridiculous, but I don't think Anon is really concerned with what's fair.
Pps..If there was not mort tax deduction no one would by my big house. They would by a 2900 sq ft house with perhaps a guest house detached. My point is the the income tax system is flawed, too many deductions, and too many loopholes. Ditch it and go with the Fairtax.

Ppps..The size of the house does little to impact the environment as compared to the size of the yard.

Seem to me like just another attemp to fund the cauffers for another minority group. The people who fund the largest portion of the federal government. When will it stop? My guess is when we are all equally poor.

Something to think about. Every minority and special interest group keeps comming to the government for special treatment and handout. The one silent minority group, the top 15% of tax payers who pay the top 15% of the taxes just keep giving and giving but who speaks for them. This has got to stop.

TJ is right. It is capped at $1 million, but it is still a solid idea. Any house over 3,000 square feet is surely to be hugely inefficient and should be discouraged.