Tuesday, October 2, 2012  Capping Deductions Isn't a Cure-All
How do you get tax reform when everyone believes that lower
rates and fewer tax expenditures is a good overall policy, but
no one is willing to give up their tax breaks? Mitt Romney is
floating a plan to just put an overall cap on deductions. Matt
Yglesias endorses it as a "clever plan" and says, "The big
advantage is that since no particular deduction is eliminated,
you don't reap the fury of the impacted interest groups in the
same way." Ezra Klein is also positive. And I am too, but note
the questions Klein asks: This leaves a lot of unanswered
questions. For instance, which deductions are covered in the
$17,000 cap? Is it only the deductions he mentioned? Is it all
itemized deductions? Is the state and local tax deduction in
there? Is it really going to include the exclusion for employer-
based health care? Is the cap in addition to, or instead of, the
standard deduction? Do individual taxpayers have a lower cap
than families?  See, that's the