Here's a link to an Official White House analysis of the Republican proposal on the Fiscal Cliff. The Republicans propose to cap tax deductions at $25K. The White House analysis concludes that this would raise revenues by $1 Trillion, but only if the deduction limit applies to all taxpayers, not just the rich. Excluding those making less than $250K from the cap lowers the revenue to $800 Billion. Exactly what I'm hearing the Republicans claim. (Note: These numbers are over 10 years)
The analysis argues that this cap should be phased in over a few years to lessen disruptions. Sounds fine, and I agree. Though I don't think the Democrat's proposal to revert to pre-Bush tax rates will be "phased in". Hypocrites. Anyway, assuming a gradual phase in to make the changes more "fair" limits revenue to $650 Billion. Sounds very reasonable.
I find section 3 of the article most fascinating. They argue, quite correctly, that capping deductions will reduce charitable giving. They estimate $10 Billion a year less to charities. Since I believe that the revenue numbers are over 10 years, to compare apples to apples this number then becomes a $100 Billion decrease in charitable giving. The analysis assumes that we don't really want this, and that therefore charitable gifts will not be capped. With this assumption, revenues decrease to $450 Billion.
See something wrong here? In order to support $100 Billion in charitable giving, the analysis proposes to give up $200 Billion in revenue. This makes no sense. I suspect that the numbers and assumptions are flawed, but, if true, this is no reason to "uncap" charitable giving.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment