Let's Chat about Deductions
CNNMoney takes a look at what limiting deductions would mean for taxpayers.
The wealthy could see their tax burden go up by an average of $14,000 if lawmakers limit itemized deductions as part of a fiscal cliff deal.
Taxpayers with adjusted gross incomes of $250,000 or more deducted an average of nearly $91,000 in 2010, according to a CNNMoney analysis of Internal Revenue Service data. If Congress limits deductions to $50,000, folks in this income bracket would be hit harder than others. Only about one-third of Americans itemize their deductions, and they are mostly the well off. In 2010, only 29.3% of those making between $30,000 and $50,000 itemized, but 96.8% of those making $250,000-plus did.
As the article details, the deduction for state and local taxes is the most popular for the wealthy, with the deduction for home mortgage interest being most popular for the middle class. It's somewhat safe to say that the home mortgage and charitable deductions won't be touched, although a universal cap would avoid lawmakers the pain of being responsible for a specific cut. From the looks of it, however, deductions may not even be on the table. (But they should!)
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