Does an appeal to a sense of collective equity matter when it comes to raising taxes?
When President Obama proposed in February to limit the rate at which families making more than $250,000 a year can take itemized deductions on their taxes as a major means to pay for a health care overhaul, the squawking began immediately around the country's dinner tables.
Members of my family, most of whom don't make the $250,000 per year salary at which the new rate would kick in, and don't itemize many deductions, complained bitterly about "paying more taxes."
Congress isn't sold either, and charitable organizations are steamed.
But Budget Whiz Kid Peter Orszag is trying a new approach — fairness, and an explanation that doesn't require a tax law degree.
In a blog post Saturday (yes, the Office of Management and Budget has a blog), he explains it this way:
If you're a teacher making $50,000 a year and decide to donate $1,000 to the Red Cross or United Way, you enjoy a tax break of $150. If you are Warren Buffet or Bill Gates and make that same donation, you currently get a $350 deduction—more than twice the break as the teacher. Limiting itemized deductions for high-income Americans would help restore balance to the tax code, and any effect on charitable giving is likely to be swamped by other Administration policies.