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Mortgage deduction in crosshairs again

Tighter limits for wealthiest families in Obama's 2011 budget proposal

The Obama administration proposes to raise $291 billion over the next decade by reducing the amount by which wealthy families can cut their tax bills by claiming itemized deductions for mortgage interest payments and other write-offs.The Obama administration tried and failed to implement a similar change in last year's budget, after running into opposition from interest groups ranging from mortgage lenders to charities that benefit from the taxpayers' ability to claim such itemized deductions.Currently, individuals with incomes above $200,000 and families with incomes above $250,000 can lower their taxes by an amount equal to as much as 39.6 percent of their itemized deductions. The Obama administration wants to lower the cap to 28 percent -- the level in place at the end of the Reagan administration.Because families in lower tax brackets don't benefit as much from itemized deductions, the system in place now provides a disproportionate benefit to the wealthy, the administration said i...

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