NEW YORK (MainStreet) — Taxpayers have a message for Congress and the White House as the U.S. debt picture continues to be debated. That message? Go ahead and cut spending, just don’t mess with our tax deductions. A Gallup poll has the full details, and just what deductions taxpayers really consider “off limits.”
The Gallup poll asked participants this key question: Would you eliminate each of the following tax deductions to reduce the federal budget deficit? (The results are below.)
Ironically, the data show that most Americans don’t take the mortgage interest tax deduction (55% that don’t versus 43% that do), while the majority do take the charitable contributions deduction (51% to 47%).
The former issue should be obvious enough – the majority of U.S. taxpayers don’t own homes and therefore don’t take the deduction. But most Americans do give to charitable causes, and seem to balk at the idea of taking deductions tied to those contributions off the table.
But whether you take both deductions or not, key lawmakers have each in their target sights. Two major deficit reduction plans – one offered by Rep. Paul Ryan (R-Wisc.) and another by President Obama’s deficit reduction commission – both call for the elimination of the mortgage interest deduction, with Ryan’s plan replacing the deduction with lower tax rates on the front end.
But politicians may be reluctant to cut common tax deductions if they perceive the move could threaten their jobs. And the Gallup data clearly shows that most Americans are against taking key tax deductions away from them.
“That means political leaders who favor getting rid of deductions as a way of reaching other fiscal goals likely would face a difficult challenge in getting the public to back that approach,” Gallup said. “The poll makes it clear that how the issue of eliminating tax deductions is framed makes little difference in how Americans respond to the idea. The challenge is further complicated by the high levels of opposition to eliminating tax deductions among Americans who do not personally benefit from them, a group that in theory could be supportive since such moves would be unlikely to affect them directly.”
There’s a lot of money on the table when it comes to income tax deductions, especially the home mortgage deduction. Tax specialist CCH estimates that the average U.S. homeowner takes more than $10,000 annually off their tax burden every year in mortgage interest. That’s saves Americans about $2,500 annually in cold, hard cash.
Prying that $2,500 away from taxpayers won’t be an easy – or a popular – task.
Tax Type For elimination Against Elimination
State and Local Taxes 33% 58%
Home mortgage interest 33% 60%
Contributions to charities 29% 68%
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