I was wondering hoiw they would justify opposing the tax thing on the wealthiest people…and now I have my answer…at least in part.
President Barack Obama‘s proposal to limit itemized tax deductions for high earners is running into opposition from key Democrats in Congress who worry that charities and the housing market would be hurt. Senate Finance Committee Chairman Max Baucus questioned Wednesday whether the proposal was viable, a day after his House counterpart also expressed reservations.
Treasury Secretary Timothy Geithner said tax increases on families making more than $250,000 a year are necessary to make a down payment on health care reform and to limit future budget deficits. But, he said, he was willing to work with lawmakers on proposals they objected to.
Obama’s budget calls for setting aside $634 billion over the next 10 years as a down payment on health care reform. Half the money would come from tax increases on upper-income earners; the other half from cuts to Medicare and Medicaid.
Obama’s budget calls for two tax increases on couples making more than $250,000 and individuals making more than $200,000. He wants to increase the top tax rates from 35 percent to 39.6 percent by allowing a tax cut enacted under President George W. Bush to expire in 2011.
He also wants to limit the deductions those families can claim for charitable donations, mortgage interest and state and local taxes.
Without the new limits, a taxpayer in the proposed 39.6 percent tax bracket could save $396 in taxes from a $1,000 reduction in taxable income. Obama wants to limit deductions to the 28 percent bracket, starting in 2011, meaning the same taxpayer would save only $280.
The higher tax rates are a good bet to become law because Obama campaigned on the change and Congress would not have to do anything to enact them. Once the Bush tax cuts expire at the end of 2010, the higher rates would take effect.
But some key Democrats are wary of limiting deductions.
They are concerned that charities will suffer from the proposal……yeah right! They found away to oppose the president in favor of their wealthy contributors…sorry guys..it is just that simple.
Maybe I am not seeing the whole picture here. Why is there a need to cap the deductions for charities? Is there an abuse there? or is it that Obama wants the government to control it?
Something is just not adding up in my mind.
Given the fact that the cornerstone of his campaign was community and grassroots effots, why would he want to limit deductions on charities?
MOrning..the way I read it is that they are afraid that if the wealthy pay more taxes then their contributions will go down….I think not….it is a tax deduction and the wealthy have plenty to lessen their tax burden.
My question is why limit deductions on charity? The end result will be some of the people who normally would have contributed more than X will just contribute that amount and nothing more. I think that closing loopholes or limiting other deductions would be a better option.
I still think that charities will get their money because the wealthy will be looking for every deduction they can find. The charities may have to cut the 40% admin payrioll…but I think they will survive.