President Submits Fiscal Year 2012 Budget
President Obama submitted his Fiscal Year 2012 budget to Congress, and it once again includes a limit on the value of itemized deductions, including the charitable deduction, for certain taxpayers. The proposal is virtually identical to language included in last year’s budget plan and calls for a 28 percent cap on itemized deductions for individuals earning more than $200,000 a year and couples earning more than $250,000 a year. The new budget plan indicates that “savings from this proposal” will increase tax revenues by roughly $320 billion over 10 years and will be used to offset the cost of a three-year “patch” to the current Alternative Minimum Tax.
In the “Analytical Perspectives” section of the budget, which provides an analysis on Federal receipts and collections, the itemized deduction proposal is listed as an “upper-income tax provision” to “reduce the value of certain tax expenditures.” The document then states, “The Administration proposes to limit the tax rate at which high-income taxpayers can take itemized deductions to a maximum of 28 percent, affecting only married taxpayers filing a joint return with income over $250,000 (at 2009 levels) and single taxpayers with income over $200,000. The proposed limitation would be effective for taxable years beginning after December 31, 2011. As indicated in the discussion of adjustments to the BEA [Budget Enforcement Act] baseline earlier in this Chapter, the Administration proposes to offset the first three years’ cost of extending AMT relief with savings from this proposal.”
For more information on the President’s FY 2012 budget, click here.