patrick.net

That's a great quote, and totally true. It also comes at a cost to owners that don't carry mortgage debt. In other words, the tax system treats you like a sucker for paying off your house. Now be a good American, suck out the equity and spend!

Mankiw: "Economists have long pointed out that tax subsidies to housing, together with the high taxes on corporations, cause too much of the economy’s capital stock to be tied up in residential structures and too little in corporate capital.'"

Mankiw is talking his politics here by tying two independent issues to make his point.

What no economist is willing to recognize is that since the mortgage interest deduction is nothing more than a direct subsidy to homebuyers -- it does not make houses "more affordable", it simply makes them more expensive. This is entirely orthogonal to the corporate tax rate, which does not strike me as too high or too low, really.

Mankiw here is being dishonest:

"Those in the top 1 percent of the income distribution enjoy about twice that gain. Progressives who are concerned about the gap between rich and poor should be eager to scale back tax expenditures"

But if we progressives are worried about tax breaks going to the upper %s we *could* also just phase them out more so they would not be available to high income households. Funny Mankiw doesn't mention that.

This is all really about fighting against that 39.6% top margin that Clinton and the Dem Congress of 1993 rammed down their throats. Our national overlords don't want to pay that rate ever again, and they are doing their utmost in this fight.

http://www.nytimes.com/2010/10/10/business/economy/10view.html

Meanwhile, the rich are getting richer and the poor's standard of living is under great pressure. "Broadening the tax base and lowering tax rates" isn't going to reverse this trend . . . hello Brazil

If you want to "broaden the tax base and lower tax rates", tax rents and land values. This option is, AFAICT, intentionally banished from the policy playbook.

http://homepage.ntlworld.com/janusg/coe/cofe00.htm