A Flat Tax & Home Mortgage Deductions
Over at RealClearPolitics, J. McIntyre, makes the following claim,
On the other hand, a flat tax with ONE and only ONE deduction for your home would vastly improve the current federal income tax and with serious support from the President could get through Congress. I don’t know what allowing for a deduction for your home mortgage does to the numbers and what rate would be needed to make the plan revenue neutral. But not allowing the home ownership deduction would make the reform extremely vulnerable politically, and could be a fatal stumbling block towards getting any plan passed.
I don’t see what is so magical about the home mortgage deduction? Sure it is a big deduction, but why wouldn’t a flat tax with large deductions based on the size of the family work just as well? Further, a flat tax rate on all income with a generous personal allowance would address the issue of progressivity and not unduly burden the poor. It might also possible to incorporate some sort of negative income tax for those at the low end of the income distribution. However, gutting the current welfare system would have to occur for the latter provision to be included. This would also have the benefit of getting rid of those wasteful bureaucracies that produce nothing and are involved merely in the redistribution of wealth (mostly to the pockets of the government bureaucrats). Further, those bureaucrats would have to look for new jobs…jobs that are actually, you know…productive.