If the National Association of Realtors were to back the repeal of the mortgage interest tax deduction, it could do three very patriotic things: It could reduce the debt load on all Americans, help consumers make wiser use of their money — and get itself off the dole!

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

I had thought I had said my piece yesterday about the move to repeal the mortgage interest tax deduction as a means of reducing the federal deficit, but today I feel I have not said enough.

Here’s what I would add: The National Association of Realtors should lead the charge to rid the nation of the pestilential subsidy. Very far from being a good thing, it is an undiluted evil.

How so? Two reasons. First, it rewards homeowners by raising taxes on everyone else. This is true of every sort of tax deduction, tax credit or direct subsidy, but the mortgage interest tax deduction is especially pernicious in that it tends to reward the wealthy at the expense of the poor. Frankly, any sort of governmental favoritism is vile, but the NAR is doubly vile in this instance, since poor people are being despoiled not even to benefit the rich, but to benefit Realtors themselves.

Consider this, written in response to a defense of the tax deduction:

Defending mortgage interest deductibility (based on the current tax establishment) is very much in my favor as a consumer.

This is the seen and the unseen, classic Bastiat. You see a tax deduction and regard it as being to your immediate pecuniary advantage. You don’t see all the other taxes that are raised to make up for that deduction.

Worse, you don’t see that the NAR is not seeking your interests but its own: The deduction causes you to value housing above other investments, contrary to market forces, which results in your buying a home when you could and probably should be making more productive use of your surplus income. The goal? Commissions for NAR members, not your interests at all.

Still worse, you don’t see that the recession we are going into was caused, fundamentally, by overvaluing housing as a market good by means of tax deductions, credits, exclusions and deferrals. In five years you could be walking around shoeless, dining out of garbage dumpsters, but at least your mortgage interest will be tax-deductible.

In other words: You are a consumer in your every economic transaction, not just when you are paying your mortgage. Past lobbying by the NAR and CRA groups will result, at a minimum, in the pillaging of your retirement accounts. How is that “very much in [your] favor as a consumer”?

My second argument is encapsulated in that quotation: The mortgage interest tax deduction skews investment. It seems, to consumers, to make housing more profitable as an investment, while making other profit-seeking uses of money seem less lucrative. By inducing consumers to “invest” in their homes, as against investing in securities, in a business or in their own or their children’s education, the NAR throws the entire investment marketplace off balance — resulting in the economic recession we are living through right now.

If the NAR were to put its lobbying weight behind the repeal of this pernicious tax deduction, it could do three very valuable, very patriotic things:

1. It could help to make a big dent in the federal government’s epidemic of over-spending.
2. It could encourage consumers to think twice about how best to invest their discretionary income.
3. It could begin the long and painful process of weaning itself from the taxpayer’s tit — which is about to dry up anyway.

The NAR won’t do this, of course. It’s a vampire cult, and all of the vampire cults of the Rotarian Socialist kleptocracy won’t stop sucking at the body politic, ever more corpselike, until it is completely exsanguinated.

That’s sad. But here’s your takeaway: You will know that the National Association of Realtors has resolved to reform its century of criminality when it does get behind the repeal of self-serving legislation like the mortgage interest tax deduction.

In the mean time, you might drop a note on your congresscreeps, letting them know that you stand for justice for all consumers, despite your unfortunate membership in the NAR.