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FLOOR FOR CHARITABLE DEDUCTION FOR ITEMIZERS?
January 12, 2006
The Senate's budget reconciliation bill has an interesting provision. It would allow non-itemizers to deduct charitable contribuitions above $420 ($210 for single filers), but impose the same floor before charitable deductions become deductible for itemizers.
I confess that I find floors for some deductions useful, because you can "deduct" stuff the client wants to deduct and have the floor make the deduction go away. The 2% floor for miscellaneous itemized deductions is a perfect example; the floor means I don't have to tell the taxpayer that his subscription to Playboy isn't really a business expense, because all of the miscellaneous deductions don't add up to enough to reach the floor.
Whether this is a good idea here, I doubt. If it's AGI-based, it's a bad idea, because that amounts to a hidden tax rate. Ultimately, the floor just makes things a little more complicated, which nobody needs.
Where the $420 number comes from, I have no idea.
Hat tip: Tickmarks blog.
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