It is interesting what Congress has been tossing around to be limited or out an out eliminated with the possibility of tax reform: mortgage interest, charitable contributions and state taxes. For the vast majority of my clients that basically leaves property taxes as the lone deduction on Schedule A. As high as Cook County property taxes are; they alone do not usually hit the standard deduction levels, yet! Give it a couple of years.
So with the loss of theses deductions we would be looking a the elimination of Schedule A deductions for most people who consider themselves ‘middle class” but who are considered the “affluent” (over $100,000 of AGI); or the “rich” (AGI levels that put them in the top 10% of all taxpayers AGI of $115,000m or so). That elimination will mean higher tax bills!
If this does occur Congress will be effectively dealing with the AMT. By eliminating Schedule A deductions there will be nothing to scale back. So AMT will become the tax of the land! So everyone pays more, except the “poor” they still get the EIC so they get free money from the government. The rich will have new tax loopholes developed (they have flexibility), and those who are W-2 employees will be shouldering the bulk of the tax burden.