House Tax Plan May Kill Deduction Taken by 95% of Itemizers

The tax plan the House Ways and Means Committee will release on Wednesday may eliminate the federal income tax deduction that people are currently permitted to take for the state and local income or sales taxes they have paid. That deduction, according to the latest Internal Revenue Service data, was taken by 42,502,130 tax filers—or 95 percent of the 44,671,840 tax filers who itemized their deductions in tax year 2015. The deduction allowed those 42,502,130 tax filers to reduce their federal taxable income for 2015 by a combined $351,163,796,000. The tax reform framework that the White House, the House Ways and Means Committee and the Senate Finance Committee agreed to in September said the tax plan it envisions “eliminates most itemized deductions, but retains tax incentives for home mortgage interest and charitable contributions.” It did not say it would retain the deduction for state and local income and sales taxes.

Nor should it.  We need to get to a “flatter,” fairer income tax, as long as we have it.  For more, click on the text above.

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