Let’s stop rewarding bad behavior

E.J. "Mike"...Interesting concept. Full Support on NOT rewarding bad behavior; somehow I don't think that it will fly in some quarters though; we seem headed to repeat the past Fa.M.& Fr.M. mandates.  We have zero mortgage. The fear that somehow receiving a 1% credit will be a debit rather than a credit gives me chills.  Have a great weekend--it appears that we in the North Mid-west may dodge the snow-ice bullet once again.

Barb & Sal

While I fully support a movement against rewarding bad behavior, I don't think the mortgage interest deduction does that in and of itself. How does having low equity in your home automatically constitute bad behavior? There are lots of reasons why some people have less equity that have nothing to do with fiscal irresponsibility.Maybe they just bought their home recently, or qualified for a lower down payment because they have excellent credit (i.e. rewarding good behavior).

I think the tax credit permits responsible homeowners to build equity in their home more rapidly; it also stimulates the economy by giving newer buyers more cash to furnish their homes and buy other goods.  While people with more equity may incur a slightly greater tax liability under this scenario, they can also borrow against the equity of their home, refinance, and avoid paying other penalties like mortgage insurance; these are the rewards of equity.

Maybe the current tax deduction isn't an equitable tax among homeowners as you have described it, and there may be other solutions. But I don't think the tax deduction is rewarding bad behavior, but rather giving new homeowners a leg up on the long road to equity in their homes.

Mike, I think you have to separate the policy from people who choose to abuse it. There is a huge risk in stripping one's equity in that manner, and the tax break to me hardly seems worth it. Some people simply behave irresponsibly; that doesn't mean the policy is wrong, necessarily. Maybe what it needs is revision, rather than removal. But my original point is that I don't feel it's rewarding bad behavior inherently; in my case, it's doing quite the contrary. But people will always find a way to buck the system.

I know others who would argue the ability to borrow against the equity to remodel or buy other goods stimulates the economy. I agree this may work short-term, but I fear the long-term consequences are becoming all to clear in today's economy. Perhaps we agree on that.

Came across this article today - an interesting read. http://www.taxfoundation.org/blog/show/1382.html