America is fourth in the property tax take, despite the deductibility of mortgage payments; local property taxes are quite high.
Typically, donors are going to hesitate to give $500 or $1,000 if they aren't receiving tax deductibility for their donations, but now that donators will only pay if the campaign reaches its proposed goal and get to take advantage of tax deductibility, this could be a boon for bigger campaigns — and donations.
If we just cap deductions without the charitable carve-out, then people will take the mortgage deduction, which is structurally baked into their budgets, and since charitable giving is a year-to-year choice, they will reduce their giving as the deductibility goes away.
There is no longer much of an advantage in being rated AAA: shareholders instead want companies either to return the spare cash that might help earn them a high rating or to make their balance-sheets more "efficient" by borrowing more to take advantage of the tax deductibility of interest payments, thus jeopardising an exalted status.Instead, most bonds are lumped together in the middle.
At one level the answer is a simple yes, because the tax deductibility of interest payments encourages families to take out bigger mortgages and companies to borrow more relative to their equity capital.
Take the income level down to $100,000, remove the deductibility, and that will generate an additional $60 billion per year in revenue, according to the same testimony.
The last item in the "not done" category is a plan for the city to "take advantage of tax laws that allow interest and depreciation deductibility for privately owned buildings".
Another common practice, known as "thin capitalization," is for companies to rely on debt financing for their operations -- using little own equity, thereby taking advantage of tax deductibility for interest payments as well as reducing their cost of capital.
The high income needed to take advantage of this tax benefit undercuts the claims of supporters that tax deductibility of mortgage interest promotes home ownership, which almost all Americans seem to assume is a good thing.
Proponents of the model on the far right believe that market distortions created by the tax deductibility of health insurance and expenses are enormous, and the extra political mile it would take to eliminate these well worth the effort in terms of marketplace correction and health system self-reform.
