Remember when people ridiculed Bush 41 for not being familiar with the price of milk or how a supermarket scanner worked during the 1992 campaign? It sounds like Reich is similarly unfamiliar with the cost of housing in many parts of the country.

From his article (emphasis added):

Here's how it currently works. Homeowners can deduct from their income taxes all interest paid on mortgages written for up to $1.1 million. This means people living in mansions with gigantic mortgages get to deduct tens of thousand of dollars a year. It's as if the federal government handed them a giant housing subsidy.

He also stated:

It wisely wants to lower the million-dollar ceiling on the mortgage interest deduction to the size of an average mortgage in any region of the country. In today's market, the ceiling would range from about $170,000 in many rural areas to a high of $412,000 in high-priced housing areas such as Southern California. This is just good common sense, and fair.

In much of the country, a $1.1 million dollar house could indeed be a mansion. However, for some parts of the country that amount of money would buy something far more modest. My youngest son and daughter-in-law bought a home in San Diego 3 years ago for $285,000. Today, its appraised value is close to $500,000. What would you get for your half-million dollars if you bought it from them? Your money would get you an 1185 square foot townhome, 2 bedrooms, 2.5 baths, and a one car garage. It's a nice place but hardly a palace, nor would something costing twice as much.

He is right that renters don't benefit from the mortgage deduction. In those high priced locations, they're squeezed by high rents that make it hard to save for a down payment, high home prices that might exceed what they can afford, and a higher tax burden that makes things even tougher. Phasing out the mortgage interest deduction and lowering the tax rates would probably benefit more people than converting the deduction to a credit. That's the whole idea behind a flat tax - eliminate most or all deductions except for a personal exemption and make everyone pay the same tax rate. The wealthy will still pay more taxes than the poor and everyone benefits (except tax accountants) when we don't have to pay several hundred billion dollars and the full time labor equivalent of over 2 million people each year to comply with a complex and corrupt tax code.