By Conor Clarke
It seems to me that the best objection to the House's plan to pay for health care with a surtax on the wealthy is that it's not very likely to pass in the Senate. And so I'm drawn back to two ideas that might have a little more traction: capping charitable deductions, and capping the tax exclusion for employer-sponsored health care. The first idea is what the administration originally proposed (many moons ago, when Obama took office) to help fund health care.
The basic idea is to limit the amount you can deduct from your income taxes when you give to charity. I realize that reducing "charitable giving" sounds like a horrible and miserly thing to do. (And it will definitely curtail giving, if not by as much as critics say. Lowering the deduction for gifts necessarily reduces the incentive to give.) But as much as I like the idea of being horrible and miserly, I don't think the consequences will be dire, for two reasons:
First, the deduction is unfair: You can deduct gifts from your income tax liability at your top marginal rate. So, if you are in the highest tax bracket you can deduct $350 for a $1000 donation. If you are in the lowest tax bracket you can only deduct $150 on a $1000 donation. I think this is regressive.