I’ve been in the mortgage business in since 1978, so the following will astound my friends. It will also enrage two million real estate agents. They’ll adjust.
- Congress should repeal the income tax deduction for mortgage interest. Phase it out over three years to wean the housing industry away from this subsidy. People don’t borrow money to buy houses for the interest deduction, anyway.
- Congress should immediately eliminate the income tax on FDIC-insured savings accounts. This isn’t a big incentive but it sends a good message. Everyone should save a little more and spend a little less. For the long-term health of our economy, we need more savers.
We tell our kids they should save some of their paycheck for a rainy day. The grownups (at home and in Washington, D.C.) spend and borrow and spend some more. What kind of example is that?
The credit markets are tight because the lenders no longer believe our promises to repay. The rapidly rising number of defaulted loans and credit cards confirms their suspicion.
It is time to move from a spending society to a savings society — starting now. Call your representatives.
Steven B. Chase