The U.S.federal government offers homeowners a tax deduction for their home loan interest payments.This reduction in taxes may have encouraged too many people to own homes.If the tax deduction caused people who otherwise would have rented to own,the tax deduction serves as a(n)________ incentive.

Question

Quizplus · Accepted Answer

The tax deduction for home loan interest payments is an indirect incentive as it encourages people to buy homes instead of renting, but it does not directly provide a reward for buying a home. It reduces the cost of owning a home by reducing the taxes owed and indirectly encourages homeownership. The fact that the tax deduction may have encouraged too many people to own homes suggests that it might have unintended consequences, but this does not make it an unintended incentive per se.

The USFederal Government Offers Homeowners a Tax Deduction for Their Home