Former Wells CEO: Slashing mortgage deduction would affect ‘people who can afford it’

Housing groups have opposed cutting the mortgage-interest deduction, but a former Wells Fargo CEO says that the proposed cut won’t harm the housing market in the long run

Former Wells CEO: Slashing mortgage deduction would affect ‘people who can afford it’
Some are concerned about how Republican tax-reform legislation would affect the housing market, but a former Wells Fargo CEO said that the main effects will fall on “people who can afford it.”

The House tax-reform legislation includes a controversial provision that halves the popular mortgage-interest deduction, lowering it from $1 million to $500,000. While the Senate bill preserves the mortgage-interest deduction at $1 million, it calls for the elimination of state and local tax deductions.
The House plan to limit the deduction has met resistance from industry groups that insist the deduction is an important tool to keep homeownership affordable. But former Wells Fargo CEO Richard Kovacevich told CNBC’s Power Lunch that it’s mainly the rich who would feel the pinch.

Kovacevich said that while the GOP’s proposed change to the tax code might slow down the real-estate market temporarily, he didn’t believe they would cause any long-term harm.

“The people who really get hurt are the people who can afford it,” he said.

Kovacevich also pointed out that since the plan doubles the standard deduction, most people wouldn’t be taking itemized deductions.

“You can’t have tax reforms unless you get rid of some of the incentives,” he told CNBC. “It has to start somewhere.”

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