This paper examines the theoretical and empirical justifications for replacing the special bad-debt reserve deduction currently accorded to thrifts under federal tax law with a mortgage interest tax credit. It presents the background to the recommendations of the President's Commission on...

The pattern of housing investment through the Seventies was a product of high and variable rates of inflation, a financing system that was segmented from other capital markets and restricted in scope, and a tax system that abetted the demand for housing relative to other investments. In the...