Recent tax reform discussions have involved proposals that would broaden the income tax base and reduce the tax rate. Other discussions have focused primarily on modifying the tax law so that only the most affluent Americans would pay more taxes, either as a result of broadening the tax base or raising tax rates. Broadening the tax base can involve subjecting more types of income to taxation and /or eliminating or reducing tax deductions. Locate at least two tax reform proposals that have been debated or are currently being debated where itemized deduction provisions would be modified. In a memo to your professor, evaluate each of the proposals in terms of costs and benefits and compare them to current law.
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In this memo I discuss two tax reform proposals that have been debated or currently are being debated where itemized deduction provisions would be modified.
The first tax reform proposal relates to broadening the base of tax by reducing deduction for mortgage interest, state and local taxes, and charitable contributions. The benefits of these deductions would be that the tax collected by the Federal Government will increase. The cost of these deductions is that the higher-income individuals will be taxed (Gravelle.J & Lowry. S, 2013). For example, state and local income taxes are levied mainly on high income individuals. By removing this deduction the Federal Government will be able to ...
The answer to this problem explains itemized deductions change proposals. The references related to the answer are also included. 450+ words.