In this article on Townhall, Michael Reagan advocates a different kind of economic stimulus:  allowing tax deductibility of interest on the purchase of cars, second homes, and other purchases.  I wrote the following letter in response to this wrong-headed idea:

Mr. Reagan,
Your idea to spur economic growth through selective tax inducements is not the right approach.  We do not need more taxpayer deduction of interest.  That's simply more government intrusion — government rewarding behavior it considers "good" at the expense of the rest of taxpayers.  Any behavior that government incentivizes, whether through a "tax credit" or through a direct payment, is thus subsidized by the rest of us, with no choice on our part.  Your idea involves a transfer of wealth from those who choose not to buy houses, cars, or boats to those who do.

Further, when government promotes one activity at the expense of another, it distorts the market.  The collapse of the subprime mortgage market and the housing bubble are demonstrations of the unintended consequences of government-subsidized behavior and intrusion on the free market.

Rather than providing tax code incentives for one behavior versus another, the real goal should be a flat, fair, simple tax code that neither encourages nor discourages individual behavior.  Whether I rent or buy a home, or whether I buy a car or a bicycle for transportation should be no business of the government.

One final reason your idea is the wrong approach is that it encourages people to assume more debt.  Surely the recent housing foreclosure debacle has shown you that when you encourage people to buy on credit, they come looking for a bailout when the bill can't be paid.

Sincerely,
Dave Smith
Houston, TX