Byline: Shari Olefson

Over 75 million Americans weathered the housing bubble and bust and still own their own home; about 75% of them have a mortgage. While only about 30%-35% of all taxpayers in any given year itemize their deductions, more than three-fourths of homeowners utilize the Mortgage Interest Deduction during the period they own their home. According to NAR research, eliminating the MID would cause a 15% decline in home values across the country. So why would Washington even consider changing or even eliminating the Mortgage Interest Deduction and other tax policies that support homeownership?

For those who need a quick refresher, the MID can be traced all the way back to the original enactment of the Federal Tax Code in 1913. It also survived massive Tax Code changes back in 1986. In a nutshell, the MID allows homeowners to deduct the interest paid on a mortgage, line of credit, or home equity loan for a primary residence. The same is true even for a second home (if the homeowner uses it at least 14 days a year, or 10% of the time it's rented out), as long as that mortgage money is used to buy, build or improve the home-even while it is under construction for up to 24 months. That goes for aggregate loans all the way up to $1 million, equity loans up to $100,000, and late or prepayment penalties can also be deducted. The whole point of the MID is to encourage Americans to own their own home, and there's sound economic reasoning behind that, since two thirds of America's middle class wealth historically comes from home equity. And here's a new twist-for homeowners who needed help these past few years from their State Housing Finance Authority, Hardest Hit Fund, or Emergency Homeowner Loan Program: payments made on those loans may be deductible, too.

The reasons we keep hearing about potentially reforming MID have more to do with the current financial condition of the country than the merits of the MID itself. For example, back in the day of the Congressional "Super Committee," Alan Simpson and Erskine Bowles suggested reducing the MID cap from $1 million to $500,000, and...