Income Tax Deductions Don't Matter

The Trump income tax cuts abolished personal exemptions but greatly expanded the standard deduction. That meant most taxpayers could gain nothing by itemizing their mortgage interest payments or their charitable contributions. Without these tax breaks, some predicted, home prices would plunge and charitable contributions would shrivel.

Sure enough, far fewer taxpayers claimed itemized deductions on their 2018 returns.

But so far, Felix Salmon points out, the economic impact of those lost deductions has been nil:

Only 8% of taxpayers now deduct mortgage interest, yet home prices continue to rise,  with no indication that the new law changed anything at all. 

Similarly, the charitable contribution deduction has had no visible effect on charitable contributions. Total giving rose by 0.7% to a new record high in 2018, despite a late-year stock market plunge.