Relative to the world's other advance democracies, Americans get off easy on tax day. Of the 35 richest countries, the U.S. ranks 32nd in total tax burden.
T.R. ReidMortgage is one of the most popular deductions. It costs the Treasury about $103 billion a year. Now that's money we could use to treat wounded veterans or reduce the deficit or fill the border. Instead, we give it a subsidy to homeowners, and it goes mainly to the richest homeowners in America, because only one third of Americans itemize their deductions. It doesn't work. Many countries have gotten rid of the mortgage interest deduction. Almost all of them have higher homeownership rates than we do.
T.R. ReidThe higher the rate, the more interest there is in avoiding the tax. Either you move or you shift your profits overseas, as American corporations have proven very good at doing.
T.R. ReidWe have the most expensive compliance system in the world. The IRS brags that they spend 35 cents for every $100 they collect. They're very efficient collectors. And the reason is they stick the real cost on you and me.
T.R. ReidAmericans spend about 6 billion hours a year collecting the data and filling out the forms. We spend $10 billion to H&R Block and other preparers. And on top of that, $2 billion in tax preparation software, which still takes hours of work. It's outrageous the burden we put on people, and guess what, you go to Europe, you go to Japan, it's 15 minutes and costs nothing.
T.R. ReidIf you ask any economist, they'll tell you all the mortgage interest deduction does is raise the price of the house. So a couple is out looking at the house, they say, "Oh, we love this house, but we couldn't make the monthly payment." And the realtor says, "Yeah, but you're going to get a tax break." So people pay more than they would otherwise. You take a loss even though you're making a gain.
T.R. Reid