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Giving and Taxes
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Issue
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| Contributor | ArmyDem |
| Last Edited | ArmyDem Mar 20, 2009 02:08pm |
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| Category | Editorial |
| Media | Newspaper - New York Times |
| News Date | Thursday, March 19, 2009 08:00:00 PM UTC0:0 |
| Description | Published: March 19, 2009
Evidently, the rich still carry influence in Washington. President Obama’s plan to cap itemized deductions for high-income taxpayers at a 28 percent rate flew like a lead balloon in Congress, reportedly sending the White House in search for other sources of revenue.
It would be a pity if the administration were to forgo that money — some $320 billion over the next 10 years to finance a good share of its proposed health care reform. The money is needed. And the complaints that capping deductions would kill charity, decimate small business and put yet another nail in the coffin of the housing industry are wrong.
It is true that under the proposed changes, many affluent families would not be able to deduct as much for their mortgages, charitable contributions and the like, but that would not amount to very many people.
The Tax Policy Center, a nonpartisan research group, estimated that in 2011, when the changes would be due to take effect, only 1.8 million taxpayers — 1.2 percent of the total — would have their deductions reduced. Just 1.9 percent of taxpayers with income from a small business earn enough to be affected by the limits.
The effect on housing would be small, too. According to the I.R.S., households earning more than $200,000 account for less than 8 percent of all taxpayers who claim a deduction on mortgage interest. Capping the mortgage interest deduction at 28 percent might nudge a high-income family to buy a cheaper home than it otherwise would. It is unlikely they would forgo a home. |
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