Mortgage deductions could use a ceiling

It wisely wants to lower the million-dollar ceiling on the mortgage interest deduction to the size of an average mortgage in any region of the country. In today's market, the ceiling would range from about $170,000 in many rural areas to a high of $412,000 in high-priced housing areas such as Southern California. This is just good common sense, and fair.

The commission also wants to turn the deduction into a tax credit. (Specifically, the credit would be 15% of eligible mortgage interest.) Remember that tax credits are subtracted directly from the income taxes otherwise due. So anyone with a $100,000 mortgage, for example, would be able to subtract the same amount from their taxes, regardless of their incomes. Also sensible and fair.

Together, these proposals would extend the tax benefit for homeownership to most middle-class and lower-income Americans. The only people who would lose the benefit are wealthy Americans who don't need it to begin with.

So the Treasury saves billions of dollars, average Americans get more help with their housing and the government's hidden housing subsidy to the rich is finally ended.

The only problem is that these sensible ideas are probably dead on arrival. Realtors, mortgage lenders and home builders are already screaming bloody murder. To them, any limit on the mortgage interest deduction marks the end of civilization as we know it. The only way this proposal gets enacted is for the White House to spend lots of its dwindling political capital on it. Don't hold your breath.

Still, good ideas for tax reform often take years to take hold. They slowly worm their way into Washington's collective brain until they seem almost obvious. With any luck, this one is on its way.

So let's give praise where praise is due. The administration deserves at least two cheers for floating a very good idea.