What do you say about the economic persuasion and ideology of detractors of NG when they would prefer the incentive effect to be available to the institution and not the individual?
If by this you mean selective exclusion of personal services income (i.e. wages and salaries) from the game, yes, I think it would be not only utterly inequitable (as Eslake finally observes), but economically very distortive (as people will logically seek to restructure their affairs to look less like persons and more like institutions).
Note: The problem with economic distortions is that they lead to inefficient / unproductive national resource allocation (i.e. investment & spending decisions), something that no country can afford in an increasingly competitive world.
We must however also admit that severe distortions already exist. Negative gearing in property is no doubt one of these, but it is only one among very many. Some distortions are of greater scale and impact, while others are just convenient political footballs (the institutionalised economic vandalism, for example, that we know as the explosion of Howard-Costello middle-class welfare being by far the currently most damaging, but I digress).
So, selectively criticising NG as the old-Left / welfare lobby does for its 'ethical shortcomings' in contributing to housing unaffordability is disingenuous (or, more accurately, outright intellectually dishonest). NG
applicable to all asset classes has long been just one root of an entire taxation bush that has historically come into being over a good length of time: "Now exactly how many roots of that bush would you like me to cut out on this day?" one might judiciously ask. (Along with, "You do have a skip handy if the entire bush topples over, don't you?")
No. What's increasingly unaffordable is being economically uncompetitive, and that goes for every single country, institution and person on this planet. It's not fair? Join Al Qaeda! Otherwise, suck it up, recognise charity when its given to you, and be prepared to pitch in decently when you've found your own feet.