"The GOP is secretly trying to kill off the mortgage interest deduction, except for the wealthy," liberal writer Jordan Weissmann warns on Twitter. Those Republicans are always out to screw the poor and help the rich!
"Own a Home? Then You're Gonna Hate The Republican Tax Plan," his headline at Slate.com declares. GOP populism LOL, Amirite?
Weissmann leads the piece invoking "the real estate crash that plunged the world into economic calamity ..." Trumpocalypse! Dr. Krugman was right about Republican rule!
What is the wretched mechanism of this devious plan to enrich the rich, impoverish the poor, screw homeowners, and bring back the 2008 collapse?
"GOP leaders are quietly contemplating a proposal that would indirectly curtail the mortgage interest deduction," Weissmann explains.
Those bast — wait. What? Isn't the mortgage-interest deduction a giant drain on the treasury that only cuts taxes for those who can afford homes, particularly in more expensive areas? Isn't it a sacred cow of the home builders, the realtors, and the mortgage industry?
And wait, what does "indirectly curtail" mean?
What the heck is this evil GOP tax plan?
Ah! A hundred-sixty words into the piece I've found the dangerous policy: "the plan would render the mortgage break useless for millions of families by roughly doubling the standard deduction available to all taxpayers, from $12,600 to $24,000 for a married couple."
The crisis-invoking Republican plan to tank the housing market, favor the rich, and screw middle-class home owners is to nearly double the deduction everyone can take?
That means a married couple who rents (or owns a modest house, say, less than $225,000) making $70,000 would probably see their federal income taxes fall by 25 percent. Some lower-income families — including homeowners — would have their federal income tax liability wiped out. Middle-class families who currently itemize their deductions (because they spend more $12,600 a year on mortgage interest and charitable giving) would have their taxes go down, and their tax-filing simplified.
This is literally what Weissmann is objecting to: Middle-class people would get their taxes cut and simplified by a tax break that moots a smaller, more complicated tax break.
Will this lower home prices? Probably yes, because the value of this deduction gets priced into homes. That is, this deduction wasn't really helping homeowners anyway. Who was the deduction helping? Mortgage lenders and homebuilders mostly, also realtors. These are the special interests who created and who fight tirelessly to save this deduction.
Removing an economic distortion that has inflated home prices will create some losers, sure, but that doesn't make it bad. Inflated home prices have stultified mobility, delayed family formation, increased household debt, and otherwise tied up families' assets.
Liberal econ writers are perfectly free to defend distortionary tax breaks, tax complexity, and favors for the bank lobby while opposing big middle-class tax cuts. I don't think this is how liberals like Weissmann see it, though. I think they just see it as something Paul Ryan supports, which makes it bad.
Timothy P. Carney, The Washington Examiner's senior political columnist, can be contacted at firstname.lastname@example.org. His column appears Tuesday and Thursday nights on washingtonexaminer.com.