WHILE ONE goal of a bipartisan panel tasked with overhauling the U.S. tax code was simplification for small businesses, the panel's proposals could prove costly for business and have unintended consequences for the U.S. economy.

Indeed, the housing industry is already bracing for potential fallout from a proposed repeal of the popular mortgage interest deduction, which would be replaced with a credit worth 15 percent of interest paid during the year. "The housing market drives about 12 percent of the economy," says Martin Regalia, chief economist and vice president of economic policy for the U.S. Chamber of Commerce. "There's a tremendous section of the economy ...