With his tax plan taking heavy fire, Mitt Romney has floated a new idea in recent days: Instead of wiping out popular tax breaks and deductions, perhaps we should just cap the amount anybody can claim in itemized deductions.
Tuesday, in an interview with a Denver television station, Romney suggested a $17,000 cap. Wednesday, he proposed a cap of $25,000 or even $50,000, and suggested that the cap should fall to zero for the very wealthiest households. Who would get hit under such a plan? Clearly, the burden would fall heavily on high earners.
The nonpartisan Tax Policy Center published a new analysis Wednesday night showing that the top 1 percent of earners claim $174,000 in deductions, on average. However, the study also shows that it would be tough to draw that line without whacking somebody in the middle class. For example, setting the cap at $25,000 would hurt more than 10 percent of middle-income itemizers -- people earning between $40,000 and $65,000 a year -- because those people currently claim more than $25,000 in deductions.