If Economists Ran For Office

by Stuart Shapiro

Well the short answer is that they would lose (unless they were Jed Bartlett).  The video above is a fake ad from a fake candidate explaining one of the most popular policies among economists — eliminating the home mortgage deduction from income taxes.  The problem with this plan is that people hate it, as the makers of this video discovered:

We tested out one of our key ideas — eliminating the mortgage-interest tax deduction — on a focus group. They hated it.

“Three quarters of your mortgage goes to interest, so if they eliminated that deduction it would be like you were throwing your money out the window every month,” someone said.

But getting rid of the deduction would make homes cheaper, the moderator said.

“If housing prices go down lower, this is going to be very dangerous,” someone else said.

Eliminating the home mortgage deduction is one way to make the numbers on Governor Romney’s tax plan add up.  Maybe that’s one of the “loopholes” he’s thinking about closing.  If so, it’s no wonder he won’t admit it (not that it would get through Congress anyway).

By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.