Administration Again Proposes Limits to Upper Income Individuals

The Administration has proposed the same concept to limit itemized deductions in its Fiscal Year 2011 budget recommendations as it did in its FY 2010. The proposal again would limit the value of deductions for upper income taxpayers. Under the proposal, the value of itemized deductions (including the mortgage interest deduction and property tax deduction) would be capped at 28% (or 28 cents on the dollar) for taxpayers who were in higher brackets. (Under current law, taxpayers in the 30% and 35% tax brackets receive the economic value of 30 cents and 35 cents, respectively, on the dollar.) During 2009, this proposal was rejected almost immediately upon introduction. In 2009, the Administration would have used these revenues from these limits to fund health care reform. In the current FY 2011 recommendations, the funds would be used to extend the duration of the 2001 Bush tax cuts for some, but not all, taxpayers. The Bush tax cuts would be continued for those who have adjusted gross income (AGI) of no more than $200,000 (single return) or $250,000 (married filing joint return). The tax rates would be allowed to revert to a maximum of 39.6% for taxpayers with AGI in excess of these amounts. NAR has communicated its opposition to this proposal to the Chairs and all members of the tax-writing committees.

 

 
 
 
 

 

 
 

ADMINISTRATION AGAIN PROPOSES MID LIMITS FOR UPPER-INCOME INDIVIDUALS

 
The Administration has proposed the same concept to limit itemized deductions in its Fiscal Year 2011 budget recommendations as it did in its FY 2010. The proposal again would limit the value of deductions for upper income taxpayers. Under the proposal, the value of itemized deductions (including the mortgage interest deduction and property tax deduction) would be capped at 28% (or 28 cents on the dollar) for taxpayers who were in higher brackets. (Under current law, taxpayers in the 30% and 35% tax brackets receive the economic value of 30 cents and 35 cents, respectively, on the dollar.) During 2009, this proposal was rejected almost immediately upon introduction. In 2009, the Administration would have used these revenues from these limits to fund health care reform. In the current FY 2011 recommendations, the funds would be used to extend the duration of the 2001 Bush tax cuts for some, but not all, taxpayers. The Bush tax cuts would be continued for those who have adjusted gross income (AGI) of no more than $200,000 (single return) or $250,000 (married filing joint return). The tax rates would be allowed to revert to a maximum of 39.6% for taxpayers with AGI in excess of these amounts. NAR has communicated its opposition to this proposal to the Chairs and all members of the tax-writing committees.

 
 
 
 
 

 

 
 

ADMINISTRATION AGAIN PROPOSES MID LIMITS FOR UPPER-INCOME INDIVIDUALS

 
The Administration has proposed the same concept to limit itemized deductions in its Fiscal Year 2011 budget recommendations as it did in its FY 2010. The proposal again would limit the value of deductions for upper income taxpayers. Under the proposal, the value of itemized deductions (including the mortgage interest deduction and property tax deduction) would be capped at 28% (or 28 cents on the dollar) for taxpayers who were in higher brackets. (Under current law, taxpayers in the 30% and 35% tax brackets receive the economic value of 30 cents and 35 cents, respectively, on the dollar.) During 2009, this proposal was rejected almost immediately upon introduction. In 2009, the Administration would have used these revenues from these limits to fund health care reform. In the current FY 2011 recommendations, the funds would be used to extend the duration of the 2001 Bush tax cuts for some, but not all, taxpayers. The Bush tax cuts would be continued for those who have adjusted gross income (AGI) of no more than $200,000 (single return) or $250,000 (married filing joint return). The tax rates would be allowed to revert to a maximum of 39.6% for taxpayers with AGI in excess of these amounts. NAR has communicated its opposition to this proposal to the Chairs and all members of the tax-writing committees.