[quote=FormerSanDiegan]
…Regardless of the mechanism, it is naive to believe that the Government will recover the amount of dollars they anticipate by enacting this change. People will react and adapt to the changes in a way that reduces the overall take of the government.

I don’t disagree that in the long run the removal of this subsidy would make the economy more efficient, it’s just that the reaosn for doing so (to generate more revenue for the Government) may not come to pass.[/quote]

I think government will recover the revenue. As capital allocation moves away from non-productive investment like housing and real-estate, it should move into more productive investments that will generate tax revenue. At least that is what I hope happens.

As a side note while I benefit from the mortage interest deduction, I still feel that it is one of the worst regressive taxes. Mortgage interest deduction should be capped based on an area’s (state/city) medium household income.