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Hugh Hewitt’s Phony Budget Accounting in Defense of the Mortgage Interest Deduction

Ike Brannon

Among the various columns decrying the current state of tax
reform over the last few days, Hugh Hewitt’s Tuesday might be the
very worst. His column in the Washington Post is a
dishonest amalgam of half-baked ideas and inane suggestions colored
by an obvious bone thrown to a powerful lobbying group.

His premise is that the current iteration is politically
untenable—a point that’s plausible—and suggests that we
begin by restoring every single thing that the real estate lobby
wants. At this point I’m not sure if Hewitt is simply ill-informed
or else merely a shill for Big Housing. The reality is that we
can’t give up $2 trillion in tax revenue over a decade subsidizing
wealthy people’s homes and still lower everyone’s tax rates.

The reality is that we
can’t give up $2 trillion in tax revenue over a decade subsidizing
wealthy people’s homes and still lower everyone’s tax
rates.

But Hewitt has an idea as to how to raise revenue—first,
by repealing the individual mandate. In a flash, Hewitt goes from
obsequious to partisan hack unmoored by reality. Doing such a thing
would, of course, blow up the exchanges—which I’m sure is his
goal—but it would also cost reform a half dozen votes in the
Senate that the bill can’t afford to lose, so it’s completely
unrealistic.

His other big revenue idea is to increase the gas tax. The
conservative argument would be to move to a vehicle miles fee,
which would create something that would function more like a
market, but I’m pretty sure Hewitt would reflexively oppose such a
thing. However, we only get $35 billion a year from the gas tax
now, so doubling it would only get us another $350 billion over ten
years at most—much less than he wants to return to the
Realtors and wealthy home owners. In fact, quadrupling it still
won’t be enough to do what he wants to do.

He also wants to impose a 5% convenience tax on everything we
order online. That would raise about $20 billion this year and
maybe $250 billion over the next decade if online sales keep
growing. That is real money but it’s still not enough to replace
the tax breaks he wants to maintain for upper income homeowners.
And of course his tax revenue proposals are much more regressive
than reducing the housing tax breaks, but—again—I doubt
that maintaining the current progressivity in the tax code is a
priority with him.

America needs to have an honest conversation about taxes and
decide whether we want to maintain enormously expensive tax breaks
that go overwhelmingly to well-off homeowners and do nothing to
increase home ownership. The cost of maintaining these, honest men
and women would acknowledge, is an inability to achieve anything
close to what we might consider to be fundamental tax reform.

Hewitt wants to pretend we can keep all of those in place by
throwing out a couple of small tax breaks that are political
non-starters. It’s sloppy and dishonest, and the Washington
Post
should stop publishing such tripe.

Ike Brannon is
a visiting fellow at the Cato Institute and president of Capital
Policy Analytics, a consulting firm in Washington DC.