patrick.net

I think the mortgage deduction will stay because

1. It lets banks write bigger loans for higher origination fees and servicing charges to consumers who base maximum home purchase price on what it does to their cash flow.

2. The National Association of Realtors members can sell more homes (to buyers with an emotional attachment to the tax deduction they don't get as renters) and more expensive homes with bigger expensive commissions with the deduction in place. As of 2005 their PAC was the largest in the country and #3 donor to political campaigns.

Being nice to current mortgagees and bad for future buyers is just a side effect of funneling money which would be paid as taxes into the banking and real-estate industries and getting agents' a bigger share of the housing buy.

C Boy says

Texans are allowed to deduct the State sales tax paid for the year from their Federal taxes(whether or not you own or rent). You may either use a standard amount or if you bought a large ticket item (car) actual amount paid.

Sure, but that's not nearly as much unless you're a big consumer. If you're one of the people who buys a new car frequently enough that this makes a difference, then you can probably afford losing the deduction too. Even if you made $4000/month in consumer spending (which implies you earn quite a bit, since that would exclude rent and utilities, various services, and any number of other things that aren't subject to sales tax), with the highest possible sales tax of 8.25%, that only totals around $4000/year in sales tax to deduct. And Texas excludes groceries and medicine from sales tax, has sales tax holidays for clothes items under $100, and cars are taxed at 6.25% only (no local/county). It doesn't boost things into the stated range unless you are very well off.

drew_eckhardt says

Being nice to current mortgagees and bad for future buyers is just a side effect of funneling money which would be paid as taxes into the banking and real-estate industries and getting agents' a bigger share of the housing buy.

Yes, it's a handout largely to banksters and realtors. For everyone else, housing prices just rise to compensate. They have better lobbyists than us other folk.