Romney’s deduction cap would touch sensitive tax breaks [View all]

[Texas Lawyer]

Source: Politico

Mitt Romney floated the idea of a $17,000 limit on itemized tax deductions Tuesday night — and is likely to get a quick lesson in the risks of providing details about his tax plans.

While a $17,000 limit would hit hardest on people in the highest tax brackets, it would take a bite out of a lot of homeowners who live in places where housing prices are high. A $500,000 mortgage, for example, would require interest payments that would exceed a $17,000 cap, leaving homeowners in and around many large cities with interest they could no longer deduct. Add in other deductions these homeowners are likely to take — including ones for state income tax — and it’s even easier to exceed the $17,000 cap.
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Romney has proposed a rewrite of the tax code that would lower marginal tax rates and pay for it by narrowing or eliminating certain credits or deductions. But his vague plan has drawn many questions and charges that it would result in tax hikes on middle-income individuals and families.
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A disproportionate share of mortgage interest deduction claims come from urban areas. And the GAO study noted that in 2008, tax returns from 10 such states — California, Colorado, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, New York, Virginia and Washington — accounted for 51 percent of mortgage interest and property tax deductions, even those states accounted for just 37 percent of all returns.



Read more: http://www.politico.com/news/stories/1012/81954.html

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This news article is different from other articles reporting Romney's comment about capping the tax deduction because this article reports who will be affected and how they will be affected.

Specifically, Romney's proposed tax policy would disproportionately hurt voters in Colorado and Virginia. See http://gao.gov/assets/600/593752.pdf

We should make sure that voters in Colorado and Virginia are aware of this fact.

Also, this is just a tip-of-the-iceberg elimination of tax deductions affecting the middle class. If Romney is going to fund a reduction in the tax rates for the ultra-wealthy 1%, he's going to have to eliminate many, many more middle class tax deductions that just this proposal.