Past FDIC Chairman Sheila Bair

“We should also recognize that there is a difference between promoting home ownership and promoting home finance. Canada has no mortgage interest deduction, yet it has a comparable rate of home ownership and fewer leveraged home owners. My first preference would be to get rid of the mortgage interest deduction and use the $100 billion in savings to reduce tax rates and pay down the national debt, while providing some transition time in fairness to those who bought their home in reliance on the deduction. A simpler tax code with lower rates would spur economic growth and additional tax revenue. But if we want to use the tax code to promote home ownership instead of subsidizing interest on debt, perhaps we should give home owners a tax credit based on how much of their original mortgage principal they pay down each year. The credit could also be extended to a down payment up to a certain cap, say $5,000. Such a credit could stimulate housing demand while providing incentives for home owners to build equity in their homes.”

Excerpt From: Bair, Sheila. “Bull by the Horns.” Free Press. iBooks.

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