Knock down the value of the largest homes and you cause a landslide of prices at all levels.  In so doing, you steal equity from every homeowner in the country  - while at the same time, you force lenders to change the ratios they use to allow mortgage loans.

But that is not all:  you make housing less valuable than other alternative investments....causing an irrational movement of dollars toward other investments.

By eliminating the deduction, you would be deciding to tax home ownership more heavily - calling forth less of it - at a time when it is already at historic lows.

Local governments already tax real estate a never ending annual "after-sales" tax of about 1.5% annually.....year in and year out - reaching well over 50% of market value over the life of a 30-year mortgage.  That is quite enough tax.