A report released by non-profit firm, Tax Foundation, reveals the scariest statistics about consequences of ending Mortgage Interest Deduction. MI deduction has always been the hot topic for debate and an end to this can have some serious consequences. According to the report from Tax Foundation, the end to MI deduction can cause the economy to shrink by $254 billion that will result into a loss of at least 659,000 jobs along with 1.1% drop in wages. The loss of deduction is being considered as the primary factor that will lead to this situation. It will reduce the spending power and growth by a considerable number.
Tax Foundation Fellow, Dr. Michael Schuyler says, “The mortgage interest deduction is a controversial provision and there are legitimate policy arguments beyond just its impact on revenue for whether it should be retained or eliminated. For the purposes of our estimate, however, we’ve set aside questions of encouraging home ownership or unequal investment treatment and focused on the impacts on economic growth.”
A balanced situation has to be reached in order to make the elimination of Mortgage Interest Deductions sensible. The loss in economic growth would have to be compensated by aligning it with other tax cuts. According to them, an income tax cut of 6.8% across the board and new equipment write-offs at small businesses are the only way to compensate for the growth loss.
Are you in the favor of elimination of Mortgage Interest Deductions? Let us know with your comments and solution for the same.