A little history

Prior to 1986, consumers were able to deduct the interest on their credit cards, auto loans and personal loans on their itemized income tax returns. Congress eliminated these deductions in the Tax Reform Act of 1986 believing it "encouraged people to spend... at the cost of savings."

(You can find the whole quote on the U.S. Treasury website.)

Congress killed the deduction because they felt it encouraged spending! Isn't that what they're trying to accomplish right now? Isn't the big effort to get banks to loosen credit so we can borrow more? What are we borrowing for? Spending!

Bringing back the personal interest deduction subsidizes our spending and will help build consumer confidence and the economy. The only way to grow our economy is to buy things: the more we buy, the more manufacturers produce. People fill the jobs needed to make and sell us things. The economy grows.

Obviously, we're not suggesting that consumers spend more than they can afford to. What we are suggesting is that you borrow responsibly . . . and that Congress gives us an incentive to do so. [read more]

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