A Better Lure for Cities

As America faces the fiscal cliff, the impossible becomes conceivable. Finally, we face the possibility of reducing the home mortgage interest deduction. Such a reform is long overdue, because the long-entrenched deduction has serious flaws. Yet eliminating the deduction altogether would create its own problems — disproportionately harming high-cost, high-wage areas like Massachusetts. Making it less attractive to live in America’s most economically productive areas would be a mistake. Any adjustment to the mortgage interest deduction must take account of this pitfall. Though politically popular, the deduction is, rightly, the subject of criticism from many quarters. It encourages Americans to buy and build bigger homes, which use more energy. If we want to keep carbon emissions or energy prices down, we should want Americans to live in smaller homes, not bigger ones.