Geography of a Tax Deduction

The deduction in our tax code for mortgage interest payments has long been controversial. Economists argue it encourages people to over-leverage themselves, pushes up home prices in areas where new housing can't easily be built, and much of the benefit goes to wealthier families who own larger, more expensive homes, which does little to increase home ownership. Still, the deduction is politically sacrosanct and has been in force since the federal tax code was introduced in 1913. Above are the states where residents take greatest advantage of the deduction, according to a new study by the Tax Foundation. The average size of the deduction in each state is listed.