NC State Ag Economist Dr. Mike Walden – “A Battle of Deductions”

 

Mary:  This is Mary Walden with economist MW, welcoming you to the economic perspective.  Today’s program looks at a battle of deductions.  Mike, one of the proposals on the table for tax changes is to double the standard deduction available by tax payers.  The standard deduction is the amount of earnings a household makes that is not subject to federal income taxation.  I understand this proposal has raised some concerns by groups who benefit from other deductions.  Why?

Mike:  Summary Answer

  1. because under current law, can’t take both the standard deduction and other

deductions

  1. so if standard deduction is increased, increases the number of people who will

take it and who will not itemize other deductions

  1. means fewer people will therefore care about the mortgage interest deduction –

which will reduce the attractiveness of homebuying – and likewise for the

charitable deduction and similar deductions

  1. so spending specific deductions are made less attractive even if they are kept
  2. one option would be to change the rule that can’t take both standard deduction

and other deductions – but this would be a sharp change from the past

  1.   I’m MW

Mary: And I’m Mary Walden for N C State Extension


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