Home Mortgage Tax Break May Be Vulnerable After All

Nearly every politician says they want tax reform, but it's hard to imagine many having an appetite for curtailing today's biggest tax expenditures -- particularly the home mortgage interest deduction.

Or maybe that's wrong.

A recent poll by the Pew Research Center found that limiting tax breaks for home mortgages was one of the most popular solutions to lowering the deficit among respondents. Big caveat: like most options offered by the pollsters, it wasn't very popular: Just 47 percent backed the idea, while 43 opposed it.

What's notable, though, is that limiting the deduction was the third most popular option, behind raising taxes on affluent earners and closing tax loopholes for corporations.

Interestingly, going after the home mortgage deduction was a more popular way to reduce deficits than cutting defense spending, raising the Social Security retirement age, or messing with Medicare. This option was even slightly more popular than raising taxes on investment income.

So maybe the home mortgage interest deduction is not the third rail of tax reform politics after all. Maybe it's more vulnerable than commonly imagined. That would be a good thing, because this tax expenditure disproportionately benefits affluent homeowners who have the biggest mortgages. Millions of low-income Americans don't even own a home.

Of course, though, the numbers reported by Pew do not reflect the influence of tens of millions of dollars spent on PR in defense of the home mortgage interest deduction -- which is exactly what we'd see if this tax break really ends up in the crosshairs of Congress. The National Association of Realtors, the mortgage industry, and the construction industry -- all major players in Washington -- won't just roll over on this one. They'll fight to the death.

And my guess is that, if such a fight occurs, the home mortgage interest deduction will emerge largely intact.