Interesting read on tax deductions

This wasn't a big issue for me in the recent campaign.  As noted in the following article, Romney mentioned how he could pay for his rate reductions by capping deductions.  For the purposes of this post, I won't rehash the election.  Let's just look at what may be possible today.

1.  Eliminating all itemized deductions would yield about $2 trillion of additional revenue over ten years if we cut all rates by 20 percent and eliminate the AMT.  [comment:  Basically, this was Romney's proposal.  ] 
2. Capping deductions would generate less additional revenue, and the higher the cap, the smaller the gain.
3. Limiting deductions to $17,000 would increase revenues by nearly $1.7 trillion over ten years.
4. A $25,000 cap would yield roughly $1.3 trillion and a $50,000 cap would raise only about $760 billion.

Since Romney lost, #1 is off the table.  Number 3 and eliminating the AMT would do two things:

1. It would make the tax code "more progressive" since it would affect the wealthy more.  
2. The AMT brings middle income taxpayers into higher tax brackets.  Therefore, eliminating helps middle income taxpayers.

Number 4 would yield less revenue, but nearly as much as Obama is demanding.  Evidently, you can do this by keeping the Bush tax cuts and making them permanent.

Overall, I don't think this is much worth arguing about.  That's because my position is that revamping the tax code isn't going to make much difference in terms of creating jobs and economic growth.  What does matter to me is that the code should not become the ridiculous mess it once was and Obama is threatening to make it yet again.

Raising tax rates as Krugman indicates will only lead to more loopholes.  There's no way that the rich will pay 90% tax rates.  That's not going to happen.  It didn't happen in the past even though the top rate was that high because all kinds of loopholes were added.  Raising rates should be a non-starter.

One more thing I thought about.  You could raise the allowable deduction for charitable donations.  In fact, you could make this very generous so as to allow the upper income people to put their money where their mouth is and actually help people with their money.  That is, to stop the stupid rhetoric of "please tax me".

Update:

Not everybody likes this.  Could it be part of a negotiation?  A negotiation has a starting point.  It isn't necessarily the end point.