This ain’t my fight. But this reader makes an interesting point:
Dear Jonah:
Before you folks all blow gaskets on the mortgage interest deduction trial balloon, two facts:
1. The UK used to have a mortgage interest deduction. Now it is does not. UK prices did not crash.
2. Rather than introduce a ceiling cold turkey, the appropriate action is a phaseout/ phase down. That is in fact what the UK did, and what has been done in other US contexts. A phaseout over 5-10 years would cushion
Andrew Stuttaford is correct that the 1986 Tax Reform Act was a direct de-stimulus to the real estate market, and contributed indirectly but very powerfully to the S&L crisis and its subsequent bailout. (Guess who had a lot of real estate loans?) So the case for a gradual rather than an abrupt withdrawal of a tax advanteg is strong.