The Pros And Cons Of Tax Reform

People say that the only two things that are guaranteed in life are death and taxes. Most people see taxes as a necessary evil that everyone has to pay in order to have a functioning government and county, but not everyone agrees the amount we should be taxed and what we should be taxed on. Numerous economists from all sides of the political spectrum come to common ground on some of these tax reforms that our country should keep or do away with. The one that they almost all agree on is the home mortgage income deduction. To understand what this tax deduction is and why it should be gotten rid of, the spectrum of viewpoints regarding this tax reform as well as hard numbers should be consulted in order to make an accurate conclusion about this loophole. The main reasons to get rid of this loophole are the cold, hard numbers, and the lack of supporting evidence with the people who want to keep this tax deduction, and the support from almost economists from all political spectrums.

Created in 1986 as part of the Tax Reform Act at the time—prior to this the interest on all personal loans, including credit card debt was deductible—mortgage income deduction is the ability to write off the interest from one’s mortgage spending from one’s total taxable income (Home mortgage interest deduction, paragraph 14). This means that if someone in the “33% tax bracket has a $500,000, 30-year mortgage at 4.5% interest, the mortgage income deduction would save that person around $7,000 a year in taxes (Olick, D. 2016, Paragraph 7).” On face, potentially saving $7,000 a year on taxes sounds like a good deal, when paying off a 30-year mortgage, but it leaves behind some chronic problems that would make our country better off without