Obama Calls for Limits on Itemized Deductions
In a speech yesterday, President Obama said reducing spending in the tax code would be one of the planks in his plan to reduce the federal budget deficit. The other elements include efficiency improvements and spending reductions defense and health care, and keeping expenditures low for domestic programs.
Though he didn’t mention it specifically, he alluded to the mortgage interest deduction (MID) in his remarks.
“[T]he tax code is also loaded up with spending on things like itemized deductions,” Obama said. “And while I agree with the goals of many of these deductions, like home ownership or charitable giving, we cannot ignore the fact that they provide millionaires an average tax break of $75,000 while doing nothing for the typical middle-class family that doesn’t itemize.”
The most specific proposal from Obama’s speech was his call for limiting itemized deductions for the wealthiest 2 percent of Americans, which he claims would reduce the deficit by $320 billion over the next decade. But he also wants to push additional — though as of now, unspecified — reforms to make the tax code “fair and simple.”
“I believe reform should protect the middle class, promote economic growth, and build on the Fiscal Commission’s model of reducing tax expenditures so that there is enough savings to both lower rates and lower the deficit,” he said.