Orszag on the Limits of Capping Itemized Deductions

December 6, 2012 at 4:16 pm

Appearing on a conference call we held for journalists today, Peter Orszag — former director of the Office of Management and Budget and of the Congressional Budget Office, currently Vice Chairman of Global Banking at Citigroup — discussed proposals to cap itemized deductions for upper-income households as a way to reduce deficits while maintaining or lowering current tax rates.  He said in part:

One of the reasons why some of these proposals, like a $50,000 cap, remain, in my opinion, artificially attractive at this point is their vagueness.  No one knows exactly what deductions get scaled back under that kind of approach, as opposed to attacking — or changing — the provisions directly.  But that attractiveness is misleading.

If you look at the $50,000 itemized deduction cap as just one example, [among] households above $200,000 in income who have average deductions of $50,000 or more . . . 90 percent of the dollar value of the deductions claimed by those households in 2009 came from three sources:  mortgage interest deduction, taxes paid (which, in turn, is mostly state and local taxes), and finally, charitable contributions.  So that’s really where the bulk of the hit will come.

Click on the button below for the audio of the presentation portion of the call.

Click here for the CBPP’s report on the issue.

 Download as mp3

Print Friendly

Your Comment

Comment Policy:

Thank you for joining the conversation about important policy issues. Comments are limited to 1,500 characters and are subject to approval and moderation. We reserve the right to remove comments that:

  • are injurious, defamatory, profane, off-topic or inappropriate;
  • contain personal attacks or racist, sexist, homophobic, or other slurs;
  • solicit and/or advertise for personal blogs and websites or to sell products or services;
  • may infringe the copyright or intellectual property rights of others or other applicable laws or regulations; or
  • are otherwise inconsistent with the goals of this blog.

Posted comments do not necessarily represent the views of the CBPP and do not constitute official endorsement by CBPP. Please note that comments will be approved during the Center's business hours. If you have questions, please contact communications@cbpp.org.

five + = 9

 characters available