As the debt limit talks continue between Congress and the White House, I have a suggestion for how to both cut spending and simplify personal income taxes: eliminate itemized deductions.
Now all the special interests that have gotten their spending hidden in the tax code will squawk about this. But when you think about it, you realize that this spending only benefits those who are well off enough to actually itemize their deductions: those who need it the least. They can still take the standard deduction like everyone else.
Democrats will complain about losing the deduction for state taxes, and Republicans won’t want to lose the mortgage interest subsidy. With pain on both sides, this has the makings of a reasonable compromise.
The spending cuts would be significant. According to the Congressional Budget Office, the deficit would be reduced by $795 billion over five years and $2.5 trillion over 10 years.
Eliminating itemized deductions simplifies the tax code and cuts spending significantly. What’s not to like?
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