In his book about the mortgage crisis, Wall Street analyst Barry Ritholtz exonerated the mortgage interest deduction from blame. His reasoning was that the deduction had been around for a long time without causing a crisis. While that's true, it's also true that you used to be able to deduct all sorts of interest until the 1986 overhaul. As Congress debates so-called tax reform, the mortgage deduction is on the block. The deduction is fairly regressive in that it benefits the rich the most. If you own a $1 million Manhattan apartment, you get hit twice. Not only do you pay more in taxes, but your property is worth less because the selling price will be set without a government subsidy.
If Congress really wants to help the poor, it should consider axing the mortgage deduction and replacing it with an auto finance deduction.