Republicans and Democrats finally agree on something: the cap on mortgage interest deductions proposed in the tax reform bill
Housing and Urban Development secretary during the Clinton administration, Robert Reich, said that the current deduction is far from being fair and that they need to limit it, which is basically what the new GOP plan does.
The policy has been called “the best part” of a tax plan by the American Enterprise Institute.
However, the deduction is not completely a great plan. The tax burden shifts from lowering the deduction cap could be felt disproportionately in states where Republicans seek support to pass a final bill.
Among those who came with strong statements criticizing the bill are real estate agent and homebuilder trade groups.
Presently, Americans can deduct interest payments on their first $1 million of debt. The new bill applies to new mortgages and sets a lower cap of $500,000.
Critics of the lower cap say that it will reduce home values and depress new homeownership. On the other hand, those who support the bill asy that these deductions effectively subsidize bigger or more expensive homes in upscale markets.