White House suggests Social Security cuts remain 'on the table'

[Divernan]

37. With Obama, it's the death of a thousand cuts.

A friend who has been on 18 months of medical disability leave (unpaid after the first 3 months) from her job just worked on her federal taxes today and learned the following change had been slipped in to this year's tax code, which screws over everyone under the age of 65 who themself or one of their dependents suffered significant medical expenses.

If you itemize deductions and you're under 65, you may deduct the amounts you paid for medical and dental expenses that exceeds 10% of your adjusted gross income (AGI). If either you or your spouse is 65 or older, you can deduct the amount that exceeds 7.5% of your AGI.

However, don't breathe a sigh of relief, fellow senior taxpayers:

Beginning in 2013, assuming that nothing changes, the floor for itemizing medical expenses will be increased from 7.5% of AGI to 10% of AGI. Seniors are exempt from the increase only through January 2017. http://www.forbes.com/sites/kellyphillipserb/2011/06/20/deduct-this-the-history-of-the-medical-expenses-deduction/

I suppose Obama's cheerleaders will blame the Congress, and the Congress will blame Obama. I choose to blame all of them. Wherever the change originated, Obama signed off on it. Just like his hero Ronald Regan increased the threshold from 3% to 5%.

As part of the 1954 changes, the threshold for claiming expenses was lowered to 3% and the cap on the expenses was doubled. Ten years later, the ceiling on medical expenses was eliminated though the floor remained.

In 1982, as part of the Tax Equity and Fiscal Responsibility Act (“TEFRA”), the first of then President Ronald Reagan’s tax bills, the floor for the medical expense deduction was increased (again) to 5% of AGI.

So tuff news for all you folks with chronic diseases; or whose kids have chronic diseases; or who faced catastrophic medical expenses of every sort. Even if you had health insurance, you still had to pay the co-pays, the deductibles; transportation and parking costs. Changing the threshold from 7.5 to 10 percent just reduced your deduction by 25%.

There are no such floors for other, more popular deductions, such as taxes paid and home mortgage interest. Is that because bankers have better lobbyists? Or do we just value homes over health care generally?