A proposal to cap the value of itemized deductions at 35 percent was not included in the House bill. Instead, House leaders chose to cover the bill's cost through a 5.4 percent surtax on taxpayers earning in excess of $500,000 annually (households earning over $1 million annually).

As legislative action now shifts to the U.S. Senate, senators could turn to the itemized deduction cap to cover the costs of their health care reform bill. A number of senators could offer amendments that would cap the value of itemized deductions at 33 percent or 35 percent for taxpayers whose income tax brackets would increase to 36 percent or 39.6 percent in 2011. However, 31 senators signed a Nov. 4 "Dear Colleague" letter urging their fellow senators to protect the value of the charitable deduction.

CASE will continue to urge Congress to protect the value of the charitable deduction. Additional information on the proposal is available on the CASE website: http://www.case.org/Public_Policy/United_States/Proposed_Cap_on_Itemized_Deductions_for_High-Income_Taxpayers.html.