When did the standard deduction get codified? My impression is that it was created later to make things simpler.
As well, it wasn't so much a 'fake' as a perverse incentive. If your deduction is already $4k, then you don't start 'saving' money until your interest payments on your mortgage are over $4k. Which, ugh, is ugly. Keep in mind, that it also actually does trickle down to renters, since most apartments are going to be bought or built using debt. Or, it would trickle down, but only once. Like I said, it creates a new steady state.
It really fooled the Boomers. It, along with reductions in the interest rate, allowed their houses to climb faster than economic growth for a long time. And so, nowadays, we think of 'the house' as a way to make money rather than merely a way to save money.
As well, it wasn't so much a 'fake' as a perverse incentive. If your deduction is already $4k, then you don't start 'saving' money until your interest payments on your mortgage are over $4k. Which, ugh, is ugly. Keep in mind, that it also actually does trickle down to renters, since most apartments are going to be bought or built using debt. Or, it would trickle down, but only once. Like I said, it creates a new steady state.
It really fooled the Boomers. It, along with reductions in the interest rate, allowed their houses to climb faster than economic growth for a long time. And so, nowadays, we think of 'the house' as a way to make money rather than merely a way to save money.