Tax Guru-Ker$tetter Letter
Saturday, February 28, 2009
Deductions for the Evil Rich
Subject: 2009 Standard Deduction
Your Blog indicates that in 2009, the Standard Deduction will be eliminated for those filing jointly, and earning over $166,800.
What will it be replaced with ?
Will this be positive, or negative, for those whose AGI is $2000,000 + ?
You are misunderstanding what that provision of the tax law means.
Standard deductions aren't eliminated for anyone based on AGI.
What has been part of the tax code for several years now has been a dollar limitation on the total amount of itemized Schedule A deductions that people considered to be evil rich (as measured by AGI) are allowed to claim. At the threshold levels, which are increased each year based on inflation, the limit starts to be applied.
However, although this type of penalty on the evil rich can completely eliminate their personal exemptions, I have never seen where it has completely eliminated their Sch. A deductions.
The trend of punishing people with high AGIs is looking like it's going to get worse. From what I have heard about our Supreme Ruler's plans for future tax laws, there will be even tighter limits on the deductions allowed to be claimed by those folks he considers to be evil rich.
I hope this helps you understand this part of the tax code.
Many thanks for your explanation.