[CamB]

The mortgage one is interesting (we don't have it, unless it is a rental. We also don't have state taxes - just a local property tax generally <0.5% of the value of the property pa)....

So - assuming revenue neutrality at the federal level (and I think you're right to assume that revenue neutrality will get abused), what will happen?

- there are less deductions, so the federal rate goes down.
- those using the deductions (unfortunately you) have less taxable income - the house buying populace (within that deductions scope) are less able to afford housing, so house prices go down, right?
- but, what about those who are renting - they now pay less tax (lower federal rate), so can pay more in rent, so house prices go up right?

I'd pick the prices would go down (renters less likely to want to spend tax saved on housing, plus landlords probably pay tax on the income from those renters), but maybe not by as much as expected. I would expect a shift to more landlords and less home ownership, mostly because there would no longer be a federal tax subsidy in favour of home ownership.

The problem as I see it is that the mortgage deduction is so deeply factored into house prices that there would be huge pain in its removal...