Capping Deductions Won't Raise Enough Revenue
Posted at 11 a.m. on Nov. 30, 2012
A new report from the White House’s top economists finds that a “realistic cap on itemized deductions that protects charities and the middle class would raise only about $450 billion over the next decade…too little to make a serious dent in the soaring national debt,” according to the Washington Post.
“Limiting the cap to those with incomes over $250,000 would raise about $800 billion over the next decade… But implementing the cap at $251,000 would create an unacceptable ‘cliff,’ the document argues. So policymakers would have to draft a ‘realistic phase-in’ that would implement the cap gradually on higher earnings.”
“That would reduce the potential revenue to about $650 billion… Exempting charitable deductions would knock revenues back even further, to around $450 billion over the next decade, the estimates suggest — barely one-fourth of the $1.6 trillion in revenue Obama has said would be needed.”