Perhaps interest should not be tax deductible. It's a huge subsidy to the banks and finance industry, which does not need any assistance, and has routinely caused destructive economic recessions.
If you earned $100,000 in a year but paid $5,000 in mortgage interest, government will not collect taxes on that $5,000, because you gave it to the bank. The bank gets money, but government doesn't: makes little difference if you gave it to the government first (who then handed it on to a bank), or you gave it directly to the bank.