A March 2 USA Today article uncritically reported Rep. Tom Price's (R-GA) false claim that President Obama's tax proposal would “eliminat[e] tax deductions for upper-income Americans.” In fact, rather than “eliminating” itemized tax deductions, the proposal would, beginning in fiscal year 2011, limit the tax rate at which families earning more than $250,000 can take itemized deductions to 28 percent.

As Media Matters for America documented, addressing the question, “Is our budget proposal uncharitable?” in a February 27 blog post, Office of Management and Budget director Peter Orszag wrote that “we are not eliminating the deduction -- just reducing it to 28 percent ... for the 5 percent of families at the very top of the income distribution”:

Non-profits play a critical role in our society (indeed, I have worked at several of them in the past). But let's look at how the tax code treats two different contributors to a non-profit. If you're a teacher making $50,000 a year and decide to donate $1,000 to the Red Cross or United Way, you enjoy a tax break of $150. If you are Warren Buffet or Bill Gates and you make that same donation, you get a $350 deduction -- more than twice the break as the teacher.

This proposal walks that difference back some of the way -- it would limit the tax benefit for Buffet or Gates to $280. In other words, we are not eliminating the deduction -- just reducing it to 28 percent (or $280 on the hypothetical $1,000 contribution) for the 5 percent of families at the very top of the income distribution. That is the same tax benefit that they would have enjoyed at the end of the Reagan Administration.

From Obama's budget proposal:

Reducing Itemized Deduction Rate for Families With Incomes Over $250,000. Lowering health care costs and expanding health insurance coverage will require additional revenue. In the health reform policy discussions that have taken place over the past few years, a wide range of revenue options have been discussed -- and these options are all worthy of serious discussion as the Administration works with the Congress to enact health care reform. The Administration's Budget includes a proposal to limit the tax rate at which high-income taxpayers can take itemized deductions to 28 percent -- and the initial reserve fund would be funded in part through this provision. This provision would raise $318 billion over 10 years.

From the March 2 USA Today article:

The difficulty of reaching a bipartisan agreement on health care was evident last week, when Obama proposed setting aside $634 billion over the next decade to pay for overhauling the nation's health care system. Some Republicans, such as Rep. Tom Price, R-Ga., have criticized Obama's proposal, because he would fund it by eliminating tax deductions for upper-income Americans and reducing payments to doctors and other Medicare and Medicaid providers.

“That means that churches ... synagogues ... and community groups all across this nation will not be receiving the same kind of support from their citizens,” Price said Sunday on CNN's State of the Union.