Tax Analysts Blog

Romney's Intriguing Idea

Posted on Oct 3, 2012

Cutting tax breaks one-by-one is trench warfare with some of America's most powerful political lobbies. That's why real world tax reformers always eventually start looking at limits that hit all tax breaks a little bit. The complexity, the diffused effect, and the idea of shared sacrifice all seem to blunt the political backlash. This is why we have an alternative minimum tax and the "Pease" phase-out of itemized deductions. And this is also why President Obama has proposed limiting the tax benefit of deductions to no more than what a 28-percent taxpayer receives and why Martin Feldstein's idea of limiting tax benefits to a percentage of AGI is so useful.

Yesterday Mitt Romney offered us another version of this type of limitation:

"As an option you could say everybody's going to get up to a $17,000 deduction; and you could use your charitable deduction, your home mortgage deduction, or others - your health care deduction, and you can fill that bucket, if you will, that $17,000 bucket that way," Romney said. "And higher income people might have a lower number."

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