The first change is to lower the fraction of mortgage interest that households can deduct from their taxable incomes. The second is to lower the fraction of their interest payments that corporations8 are allowed to deduct from their taxable incomes. Of course, it would be appropriate and important to adjust the timing of these changes in light of prevailing macroeconomic conditions.
5  See Internal Revenue Service (2010). 6  See Harris Interactive Poll (2011). 7  See CoreLogic (2011). 8  I have argued that financial institution leverage undercuts financial stability.