And if a tax deduction is so great for homeownership, they ask, how come Canada has about the same homeownership rate as we do - without any deduction?

But the most critical issue waiting for big-scale public attention - the kind a presidential campaign ought to address - is basic fairness to all Americans. It's whether the deduction - which now saps the Treasury of well over $50 billion a year - is really increasing homeownership at all.

First, look who gets it. Peter Dreier, a leading economist/urbanologist at Occidental College in Los Angeles, calculated the data from Congress' Joint Committee on Taxation. In 1994, 27.2 million returns claimed the deduction; 8.1 million of them came from families earning less than $50,000, 19.1 million from those earning over $50,000. The under-$50,000 income group's total benefit was $6.1 billion, while people earning over $50,000 benefited by a staggering $45 billion.

The fact is that only half of homeowners - and relatively few in the lower- and middle-income brackets (and of course no renters) - itemize their deductions anyway. But of those who did in 1994, earning $30,000 or less, the mortgage deductions were mostly under $500. By contrast, 71 percent of people earning over $200,000 claimed the deduction, at an average value to themselves of $8,350.

Instead of home-mortgage-interest deduction, this tax break ought to be labeled for what it is - a mansion subsidy for the rich.

If a flat tax is a good idea, it would be preposterous to save the mortgage deduction. And if a flat tax isn't a good idea, then Dreier has a proposal worth airing. Take the $50-plus billion hit the Treasury is now experiencing for the mortgage deduction, he says, and turn it into a straight tax credit for homeownership. Except that this tax credit would be progressive, with highest benefits for the poor who can least afford their own homes now, the next most for middle-class people, and the least benefits for the rich.

That kind of formula could actually expand homeownership - a continuing, valid national goal, for low- and moderate-income folk, indeed for the striving younger children of the affluent too.

Dreier likes to quote an October 1969 speech by the late Housing and Urban Development secretary and one-time Republican presidential aspirant, George Romney. At the dedication of a new building for Fannie Mae, Romney tossed aside his prepared speech and proposed repealing the part of the homeowner deduction that goes to "middle-income and affluent families," and channeling the revenue instead "to meet the problems of the slums."

While the affluent rather mindlessly accept their federal housing subsidy, said Romney, "the plight of the poor is getting worse every day."

How refreshing it would be if today's presidential candidates could match George Romney's heart - and common sense.

(Copyright, 1996, Washington Post Writers Group)

------------------------------------------------------------------ Neal R. Peirce's column appears regularly on editorial pages of The Times. ------------------------------------------------------------------