Mortgage Interest Deduction on the Chopping Block?

One of Americans' most cherished tax breaks is the mortgage interest deduction. In a recent poll, more than 60 percent of Americans said they oppose getting rid of the mortgage interest deduction as a way of helping reduce the federal budget deficit. (To be fair, they opposed getting rid of any tax deduction.)

But supporters may have an uphill battle. Both Dems and Republicans have the mortgage interest deduction in their sights. If it goes away, first-time home buyers in particular may be affected, since interest payments are highest during the early years of a loan. The administration's budget reformers are proposing an alternative plan that would swap the mortgage interest deduction for a 12 percent tax credit for interest paid--less than many taxpayers now receive.