Republican presidential candidate Mitt Romney would consider an approach to cutting the U.S. deficit that would wring savings from the tax code by capping the total benefit taxpayers can receive from tax expenditures, according to Lanhee Chen, Romney’s policy director.
The plan, advanced by Harvard University economics professor Martin Feldstein, would limit the total tax savings for any individual to a maximum percentage of his or her total income.
“I think the Feldstein cap is an interesting idea,” Chen said at a Bloomberg policy breakfast at the Republican National Convention in Tampa. “It’s one we would look at in a Romney administration.”
Republicans, including Romney, have been offering tax overhaul plans that would lower rates and simplify the tax code without saying what tax breaks they would limit or eliminate to offset the more than $4 trillion cost of cutting individual and corporate income tax rates.
Many of the deductions that would save the government the most money are also the most popular among U.S. taxpayers, including the exemption from employees’ taxable income for employer payments for health insurance and for interest on residential mortgages.
In a May 4, 2011, opinion editorial in the New York Times, Feldstein wrote that he has been studying a proposal that would cap the tax reduction that each taxpayer could get from tax expenditures to 2 percent of his or her adjusted gross income.
During the breakfast forum held before the start of the last day of the Republican convention, Chen would not say whether the approach to overhauling Medicare authored by vice presidential candidate Paul Ryan of Wisconsin and backed by Romney would lead to benefit cuts for seniors.
Ryan’s plan would convert Medicare to a voucher plan.
“We’ll give you confidence that the Medicare program will exist, we’ll give you confidence there’ll be health care in there that’ll be worth something,” he said. “If we continue on the current trajectory what I can tell you is that the face of Medicare will look very different when that worker retires. It’s not going to be a pretty picture.”