Our country is having its first serious conversation about comprehensive tax reform in more than three decades and this debate has put many big issues on the table. Should taxpayers be able to deduct the interest they pay on their mortgages? Thus far the answer seems to be yes. Should taxpayers be able to deduct their charitable contributions? Thus far the support for the charitable deduction seems wide and deep. Should federal taxpayers be able to deduct the taxes they pay to state and local government? This has become an area of considerable debate.
But there is one additional area of significant tax reform being discussed that has received less attention than these three issues, yet could have considerable, and unintended, negative impact.