I have covered the problem with eliminating the mortgage interest deduction. It won’t work. Only the rich will be able to work around it, the middle class will get screwed. That is because interest costs are deductible on businesses, LLCs..etc. Wealthy people have good/expensive tax advisers that can show them how to wrap their house in an LLC.

On the other hand, the RE capital gains exemption only rewards those that can own real estate or already have real estate. The capital gains exemption can also be gamed, particularly if you are already in real estate as a broker (can reduce the commission cost to 1/2). There is no real purpose in this one and really should be eliminated. It also helped lead to the speculation that occurred in the RE market, leading to the current mess.

[quote FormerSanDiegan]What about the $70 Billion subsidies to big oil companies ?
Let’s cut that first.[/quote]Sounds like a good one to cut.