The Mortgage Interest Deduction: Revenue and Distributional Effects

Research Report

The Mortgage Interest Deduction: Revenue and Distributional Effects

Abstract

Conventional estimates that do not fully account for this rebalancing overstate the increase in revenues associated with eliminating the MID and will also overstate the progressivity of eliminating the MID, because households with higher levels of non-residential assets might respond by selling their taxable, non-residential assets. This paper builds on previous work that estimates the consequences of removing the MID using a framework that allows for the possibility of portfolio rebalancing.

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