National Association of Home Builders working hard to make sure only their customers get tax relief

This is how the swamp works, and it's one of the reasons it's so difficult to do what most serious people understand needs to be done with the tax code. Loading up the code with special favors for certain constituencies makes no sense. Using the tax code to incentivize people to buy homes, or two live in high-tax states, is not what the code is sofr. It's for raising revenue to fund the government, period, and to do so in the least burdensome and most equitable way possible. So the current proposal that would raise the standard deduction but eliminate special breaks is exactly the direction we need to take. It would lighten the tax burden of everyone just for being alive, rather than lighten it for some people because they fall into certain categories, and thus place a heavier burden on others. It gets the government out of the business of deciding certain behaviors are more desirable, and worthy of more favorable tax treatment, than others.

---

But guess who is vowing to stop this from happening. Of course. The special constituencies who benefit from the special breaks built into the current code. And that especially includes the National Association of Home Builders, who want to keep the mortgage interest deduction in place:

Over the weekend, the National Association of Home Builders vowed to defeat the tax bill, saying it would double the standard deduction to $24,000 for married couples and sharply reduce the number of middle-class homeowners claiming the mortgage interest deduction, raising home ownership costs.

Now let's think about this. Under current law, married couples get a $12,000 standard deduction, which means the first $12,000 of their income is nontaxable. Under the Trump plan, that doubles to $24,000, which means you get an additional $12,000 of your income exempt from taxation. You don't start paying taxes until you earn Dollar No. 24,001 under the Trump plan. How much does your mortgage payment have to be in order to have to give that back in mortgage interest? I ran the numbers on Zillow.com's mortgage calculator, and what I found is that even if you bought a $400,000 house, your total principal and interest payments would only total $1,673 per month. Now it's true that in the early years of the mortgage the interest payments could top $1,000 per month, so during that period you might only break even with the Trump proposal. But that's only true if you buy a very swanky house, and even then it's only true for the early years of the mortgage. If you're already 10 or 15 years into the mortgage, the balance has probably already swapped in favor of principal and you're coming out ahead.

---

---

In case you hadn't noticed, the tax code remains a tangled mess

So for the vast majority of people paying on a mortgage, the Trump proposal has you better off on balance. What the home builders are concerned about is that the tax code will no longer help them to subsidize the very high-priced new homes they want to sell to younger couples who might otherwise not be able to afford their mortgage payments. The resulting impact on the market might be that they have to reduce the price on the homes to make the sales. That's too bad for them, I guess, but it could be very good for the buyers. And at any rate, it's not the job of the federal government to prop up high real estate prices, nor is it the job of the federal government to ease the burden of high tax rates imposed by state and local governments. But this is why it's so difficult to simplify the tax code. Well-heeled interests like the NAHB give plenty of money to politicians in the hope of buying influence so they can keep their most-favored status, and when the time comes that they need to protect their special benefits, they are sure to remind the honorables of who helped them get elected. That's when our elected representatives have to decide between doing what's best for the nation or taking care of the people who paid for their last campaign. In case you hadn't noticed, the tax code remains a tangled mess. I guess you can figure out what they typically choose. Maybe this time it will be different.

---