This paper contributes to the on-going federal income tax debate by bringing to light the consequences of the tax laws and regulations under which our economic system operated during the post-Regan era. Specifically, this study offers a federalist perspective on one of the largest personal federal tax expenditures - the deduction for home mortgage interest (HMI). Discussion also includes background, current status, and proposed changes to the tax code for of the HMI deduction. This paper analyzes current national political rhetoric from a federalist perspective (i.e., with consideration given to the right of states to equal treatment). The distribution of the HMI deduction tax benefit between states is introduced here as a possible missing consideration in the national level political debate that dominates current discussion of the HMI deduction.
Household Leverage and the Deductibility of Home Mortgage Interest: Evidence from UK House Purchasers
