Contextbot: Mankiw's Tax Fact

10/28/2012 09:32:00 PM
Mankiw cites the New York Times, saying
[T]he people who tend to derive the greatest dollar benefit from the mortgage interest deduction are households earning \$100,000 to \$500,000 a year. 
and adds that
These numbers compare the status quo to a system without any mortgage deduction at all. If instead we lowered the size of the mortgage eligible for this deduction from the current \$1 million to, say, \$250,000, the base broadening would have an even smaller effect on middle-income housholds
Let me offer a Contextbot:
Mankiw is the economic advisor for Mitt Romney, whose platform includes a proposal to cut taxes by \$4.6 trillion over ten years, paid for by "base broadening" reforms that won't raise taxes on the lower or middle classes. Romney has mentioned, but refuses to commit to, elimination of the mortgage interest deduction for upper-income households as one example of this base-broadening. Including all income brackets, the mortgage interest deduction costs about \$100 billion per year, or about a quarter of the cost of Romney's tax cuts. That may sound like it goes a long way to paying for Romney's tax cuts, until you look at Mankiw's proposal to insulate the middle class from the tax hike--he wants to keep the mortgage interest deduction for the first \$250,000 worth of a household's mortgage, which is the vast majority of the value of all the mortgages in the economy.

In other words, Romney's economic advisor wants to keep almost all of the mortgage interest deduction, making it that much more impossible that Romney can keep his promise to cut tax rates by 20% without reducing revenues or raising taxes on the middle class.