The Republican party has managed to paint itself into a corner with its adamant stand against an increase in the marginal rates for the top 2% of income earners, even though that was the signature issue that Barack Obama campaigned on and won, and polls show consistent and considerable support for it. The party is now faced with finding ways to get around what is clearly a weak position and various proposals are circulating that would supposedly raise the same amount of revenue as a marginal tax rate increase and provide them with a face-saving compromise.
One suggestion is that there be a cap on the amount of deductions that one can take. In the second town hall debate Mitt Romney, who had been evasive all along about how his tax plan would lower rates while remaining revenue-neutral, suggested out of the blue that it may be achieved with a $25,000 cap on deductions. The Tax Policy Center did the math and found that this would raise $1.27 trillion over ten years, nowhere close to being enough to cover his increased spending costs. The new figure being tossed around is a deduction cap of $50,000 which would bring in even less revenue, about $700 billion over ten years.
These caps on deductions seem to me to be extraordinarily generous to wealthy people, considering that the median income for families is around $50,000. One of the things that surprised me is that the average deductions taken by a married couple filing jointly is nearly $32,000, which seems like a huge number. What that implies is that there must be a very few, extremely high-income earners who take enormous amounts as tax deductions, skewing the average so high.
With such a system already biased so much in favor of rich people, the Republican devotion to giving them even more breaks is really something to see.