Document Type

Article

Language

eng

Format of Original

17 p.

Publication Date

12-2007

Publisher

National Tax Association

Source Publication

National Tax Journal

Source ISSN

0028-0283

Abstract

In this paper we examine the economic implications of several policy options for capping the mortgage interest deduction (MID). We extend the standard user–cost model of owner–occupied housing to include a cap on the mortgage size receiving tax–favored status. Our user–cost estimates for taxpayers with mortgages above the current–law cap are 4.41 percent higher than estimates from a model without the cap. We simulate the share of mortgage dollars that would be subject to three alternative cap policy variants and summarize the distributional impacts of each proposal, computing the share of mortgage dollars impacted across U.S. Metropolitan Areas.

Comments

Published version. National Tax Journal, Vol. 60, No. 4 (December 2007): 769-785. Publisher link. © 2007 National Tax Association.

Andrew Hanson was affiliated with Syracuse University at the time of publication.

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