6) Won’t elimination of deductions for mortgage interest, charitable contributions, etc. have harmful consequences?
In order to understand the impact of the tax reform package, you must look at the package as a whole, not piece by piece. The Commission concluded that lowering rates across the board and dramatically simplifying the tax code will provide numerous economic benefits for the American people. While the Commission proposal called for tax reform which dramatically reduced the number of tax expenditures, it recognized that some tax expenditures serve important functions that should be preserved, and that elimination or reforms of other tax expenditures should be phased in gradually to avoid adverse consequences.
In fact, the Commission called for tax reform to include provisions providing support for low income workers and families, mortgage interest for principal residences, employer provided health insurance, charitable giving and retirement savings in a reformed tax code. However, the Commission decided that starting with the zero plan approach would force Congress to evaluate the merit each tax expenditure carefully before adding it back, as each would have to be paid for by raising rates. This would encourage Congress to keep rates low, eliminate unnecessary or poorly constructed expenditures, and better target those tax expenditures that are added back.