JOHN LINDER: “Realtors would come in my office and say, we need the deductibility of home interest to calculate if they can afford to…”

“Realtors would come in my office and say, we need the deductibility of home interest to calculate if they can afford to buy a house. My response has always been a little bit flip. I say, well, if you think that the deductibility of mortgage interest sells your houses, double the interest rate and you will sell twice as many houses. Well, it does not work that way. In fact, two-thirds of America uses a short form and does not use deductions anyway. Secondly, what really sells houses is whether an individual has enough take-home pay at the end of the month to make that house payment. Currently, according to our studies, 28 percent of the cost of a new house is the embedded cost to the IRS. There are thousands of business entities that touch all the products that go into a new house, and each of them has tax costs. We think that 28 percent of the cost of that house is the embedded cost to the IRS. Under our system, it would be 23 percent of the cost of a house, so the house would be less expensive. Secondly, if you are making $60,000 a year, you are currently taking home $3,800 a month to make the payment. Under our system, you would take home $5,000 a month, so you could make the payment easier. We also believe, our studies show that interest rates would decline by about 30 percent. So for that one-third of us that uses deductibility of home interest, you lose that, but you will not have anything to deduct against, because you will not have any income tax.”