To hear the National Association of Realtors talk about it, the income-tax deduction for mortgage interest is the cornerstone of home affordability in the U.S. The group's chief economist, Lawrence Yun, asserted last year:

One thing that is indisputable is that eliminating the MID (mortgage interest deduction) will lower the homeownership rate in the U.S.

The authors of a new Swiss Finance Institute study beg to differ. After comparing tax codes and housing markets across several countries, they say that the mortgage deduction generally does not increase home ownership rates. Home ownership rates around the world range from 34.6 percent in Switzerland, which has a mortgage deduction, to 87.2 percent in Singapore, which does not. (Singapore does, however, subsidize owner-occupied housing in other ways.)

The authors, led by Steven Bourassa of the University of Louisville, say the subsidy gets built into house prices. In other words, the tax break makes houses more affordable, but it also makes them more expensive, and thus less affordable. The two effects roughly offset each other, but of course that isn't true for each individual homeowner. When you think about who benefits most, the paper says, you can see why abolishing the interest deduction shouldn't erode home ownership:

The loss of deductions would be greater among high-income households, but such households are likely to be owners in any case. Low-income households who are more likely to be on the margin between renting and owning are less likely to itemize deductions and thus would be less affected by the elimination of the MID ....

So, Democrats should hate this deduction because it favors the wealthy, and Republicans should disapprove because it is economically inefficient. Yet, when the Bowles-Simpson commission suggested reducing or eliminating it, the idea was dismissed out of hand. Why?