Bluefield Daily Telegraph, Bluefield, WV

Washington Post Features

November 29, 2012

Why vague plans to limit tax breaks may soon die

As negotiations over the fiscal cliff get down to details, they will become more arduous — something that financial markets seem to be ignoring. The superficial appeal of proposals to limit tax expenditures, for example, will fade as the details become clearer.

Whether the negotiators can navigate the obstacles and still get a deal done before Dec. 31 remains an open question. Automatic tax increases and spending cuts are scheduled to take effect at the beginning of January.

On their face, proposals to raise revenue by limiting tax breaks enjoy unusual bipartisan support — at least when they are described generically as "broadening the tax base and eliminating loopholes." Enacting legislation, though, requires much more than such platitudes, and therein lies the political difficulty.

Take the recent proposal to limit itemized deductions to a maximum of $50,000 a year. According to the Tax Policy Center, that would raise more than $700 billion over the coming decade, almost as much as the marginal-rate increases the Barack Obama administration is proposing for high-income taxpayers. Because median household income is also about $50,000, that level of allowable deductions strikes most people as extraordinarily generous, adding to its luster.

Perhaps more important, the proposal doesn't specify which deductions would be limited, but rather leaves that up to the individual. It thus reflects the new fundamental law of political economy: The vaguer the proposal, the better.

Let's take a closer look at the effects of such a limit, though. In 2009, according to data from the Internal Revenue Service, taxpayers who itemized their deductions and had incomes of more than $200,000 had average deductions of $50,000 or more. For those with $200,000 to $500,000 in income, average deductions amounted to more than $51,000; from $500,000 to $1 million in income, the average was more than $100,000. At higher incomes, the averages rose further.

That households with incomes of more than $200,000 would be disproportionately affected by the deduction limit is neither surprising nor necessarily troublesome. Here comes the problem. In 2009, those taxpayers deducted more than $300 billion, 90 percent of which came from just three categories: taxes paid (mostly state and local taxes), home-mortgage interest and charitable contributions.

Text Only
Washington Post Features
  • McCain 1 House Republicans are more active on Twitter than Democrats

    Your representative in the House is almost certainly on Twitter. Your senator definitely is. But how are they using the social network? Are Democrats more active than Republicans, or vice versa? Who has the most followers on the Hill?

    April 22, 2014 1 Photo

  • Victimized by the 'marriage penalty'

    In a few short months, I'll pass the milestone that every little girl dreams of: the day she swears - before family and God, in sickness and in health, all in the name of love - that she's willing to pay a much higher tax rate.

    April 17, 2014

  • To sleep well, you may need to adjust what you eat and when

    Sleep.  Oh, to sleep.  A good night's sleep is often a struggle for more than half of American adults.  And for occasional insomnia, there are good reasons to avoid using medications, whether over-the-counter or prescription.

    April 17, 2014

  • Search teams will send unmanned sub to look for missing Malaysian airliner

    Teams searching for a missing Malaysian airliner are planning for the first time to send an unmanned submarine into the depths of the Indian Ocean to look for wreckage, an Australian official leading the multi-nation search said Monday.

    April 15, 2014

  • DayCareCosts.jpg Day care's cost can exceed college tuition in some states

    Most parents will deal with an even larger kid-related expense long before college, and it's a cost that very few of them are as prepared for: day care.

    April 11, 2014 1 Photo

  • 10 tips for surviving a severe allergy season

    My colleague Brady Dennis reported recently that the arrival of warmer weather will soon unleash a pollen tsunami in parts of the country where the winter has been especially long and cold. Here are some survival tips from Clifford W. Bassett, an allergy specialist and assistant clinical professor of medicine at the New York University School of Medicine.

    April 9, 2014

  • news_twitter.jpg Travelers fly on Air Twitter

    The enlightened age of social media has dawned over the airline industry, casting shadows over telephone call centers and on-site agents. Facebook and Twitter are racking up the friends and followers while the hold music plays on.

    April 8, 2014 1 Photo

  • To get quality care, it helps to be the right kind of patient

    I am a family physician. Sometimes I must step out of the comfort of my clinical role and into that of patient or family caregiver. Generally, these trips to the other side of the exam table inspire a fair amount of anxiety.

    April 8, 2014

  • Fast, cheap test can help save lives of many babies

    As Easley did more research into her daughter's death, she learned that a pilot program had started just months earlier at Holy Cross Hospital in Silver Spring, Md. (Easley had delivered at a different hospital in the Washington area.) The program's goal was to screen every newborn with a simple pulse oximeter test that can help detect heart problems such as Veronica's, allowing doctors to respond.

    April 8, 2014

  • At many leading schools, football fails to make cut

    To my astonishment, 67 of the top 100 schools, ranked by participation in college-level tests, said they do not field a team, denoting a shift in American high school culture, at least in those schools that challenge their students most.

    April 7, 2014