Economic efficiency of tax reform

Until 2017, taxpayers could deduct interest payments on up to $1 million of mortgage debt secured by the taxpayers residence. In addition, homeowners could deduct interest on HELOCs of up to $100,000 (HELOCs - home equity lines of credit - are like credit cards secured by the value of a home). Evaluate each of the following tax reforms (in isolation) on the basis of economic efficiency.

A. The deduction for mortgage interest is replaced with a non-refundable credit equal to 15% of mortgage interest payments. The rest of the tax code remains as it was in 2017.

B. The amount of mortgage interest eligible for deduction is lowered to $500,000 of debt. The rest of the tax code remains as it was in 2017.

C. The deduction for interest on HELOCs is eliminated. The rest of the tax code remains as it was in 2017.