…is explained well in columnist Bruce Bartlett’s book, The Benefit and Burden of Tax Reform – What It Will Take and Why We Need It.
Mortgage interest is the most important deduction because of its aggregate enormity and because of the proportion of the population it embraces. While it is the most inequitable of deductions because it favors one population of domiciled Americans (home owners) over another (renters), it is the least likely to be subjected to reform.
Because it is the first and foremost among tax deductions, the mortgage interest deduction allows taxpayers to take deductions they might otherwise be unable to take, most especially deductions for state and local taxes and for charitable contributions.
State and local governments have and will continue to lobby for federal mortgage interest deductions, Bartlett asserts, because it gives them cover under which to increase tax rates and revenue.
So, ironically, while it has the least value to the federal government as a tax expense, the charitable deduction stands alone as the most vulnerable tax deduction. It has a sort of symbiotic relationship with the mortgage interest deduction that pilot fish have with whales. If pilot fish were given to lobbying, they’d mass in the cause of saving whales.