The Republican tax framework leaves the deduction for mortgage interest in place, not because it’s good policy but because it’s politically untouchable. That’s not good enough for the National Association of Realtors, which is concerned that the tax break will be less important in a reformed tax code. Because the framework expands the standard deduction, fewer people will have a reason to take the mortgage-interest deduction. The realtors treat this indirect threat to the deduction as a calamity. The Wall Street Journal has a good editorial on this today.
If the realtors’ lobby followed the logic of its position through, it would also oppose cutting tax rates. The deduction is more valuable the higher the tax rate against which it is applied. The lobbyists are smart enough to grasp this point, and smart enough to avoid pressing it too.