Under pressure for specifics on his tax plan, Mitt Romney has floated one concrete idea this month: Capping itemized deductions at $17,000 to help pay for the across-the-board tax cuts. Two concerns about the idea were that it could hit middle-class households in urban areas who take big mortgage deductions for their homes, and that the cap wouldn't come close to raising enough revenue to pay for his 20 percent rate cuts.
Raising the cap to $25,000 or $50,000 solves one potential problem with his initial proposal, but it exacerbates the other. The higher cap would help Romney's plan avoid the problem of burdening middle-class families. In 2011, the average total deduction was $25,769, with the bottom 90 percent of households averaging significantly below that level, according to the Tax Policy Center.
But raising the deduction would exempt many high-income households as well, which runs counter to Romney's promise to pay for tax rate cuts by eliminating tax breaks for the wealthy. On average, even the top 10 to 20 percent of households who itemized their taxes deducted $23,498 in 2011, falling below the $25,000 cap.
And if the deduction cap were as high as $50,000, as Romney suggested, many taxpayers in the top 1 percent to 5 percent of Americans who itemized wouldn't be affected either: On average, they deducted $43,208 from their taxes, the TPC calculates.
And while it would spare more households from pain, a higher deduction cap would also produce less revenue to offset Romney's tax cuts, raising more questions about how he could feasibly "broaden the base by lowering rates." So Romney has effectively raised more questions about how his tax math adds up.