DCJ doesn't say it explicitly, but in general, it is mostly people in and near the major coastal cities (mostly the blue congressional districts) which reap the benefits. But he -- rightly -- comes close to pointing out that the benefits flow not to buyers of such homes, but to the sellers.
Imagine you make $50,000 to $75,000. Statistically you would save $75 a month in federal income taxes if you bought a house, the congressional study shows. Now which option would you prefer?
• Pay $300,000 for your house, the median for Sacramento in late 2013, and save $900 annually on your federal income tax by deducting the mortgage interest?
• Pay $200,000 for your house, but without being able to deduct your mortgage interest?
Assuming you borrowed the entire purchase price at 4 percent interest the initial mortgage interest savings would be $4,000 per year. Not only would you have more than $250 more cash in your pocket each month, you would have a much smaller debt to pay off. Of course, if you own that home, this is not such a good deal, which is why Camp proposes to phase in his modest change over several years, a change that would only affect new mortgages of more than $500,000.
Which brings me to a larger point. Suppose that, instead of paying $300,000 for your home, of which $150,000 is for the site, and $150,000 is for the home itself, under the tax design this blog proposes, you would pay the seller the $150,000 for the depreciated home and then pay your community approximately 5% of the $150,000 selling price of the site each year -- and that would be INSTEAD of paying income or sales taxes, and there would be no tax on the value of the building.
The downside? None of us would be treating our home as an "investment" or a "savings account" or an ATM machine. Offset that with the many benefits, including the reduction or elimination of the land-based ~17 year boom-bust cycle we are currently stuck with.
(In Bermuda, as I understand it, when young couples buy a home, both work two jobs for a few years to pay off the mortgage, and then live mortgage-free thereafter.)