Steve Landsburg largely agrees with Scott Sumner’s assessment of the current G.O.P. tax-reform proposal. A slice from Steve’s post:
Scott mentions the fact that fewer taxpayers will now be deducting mortgage interest, but omits the retention of the mortgage interest deduction from his lists of the good, the bad and the neutral (perphaps intentionally, perhaps by oversight). I’m of two minds on this one. If you believe, as I do, that interest income should not be taxed, and if you nevertheless feel compelled to tax interest income for the lender, then you should at least offset the damage by making all interest payments deductible for the borrower. The mortgage interest deduction does this for some interest payments (i.e. mortgage interest payments) but not all (i.e. interest on non-mortgage loans). Thus it eliminates one distortion (insofar as every tax on interest is a distortion) but introduces a new one (by making some interest-bearing investments taxfree but not others). Whether that’s on balance a good or a bad thing is unclear to me.