Romney's gone, but his best idea can still help with the fiscal cliff Rather late in his forlorn campaign, Mitt Romney introduced a tax policy idea that had bipartisan appeal: to cap the amount in itemised deductions that American tax filers can use. The problem was that Romney was suggesting it as a way to help make his proposal to lower tax rates pay for itself, ie to be "revenue-neutral" in the jargon. But there was no way to do that just by lowering deductions: the tax cuts were too big, and Romney never really explained just how he would offset them. But as part of a more sensible tax plan, capping itemised deductions is still a good idea. It's progressive ("progressive" as in "not regressive," not as in "only Democrats like it"). And it simplifies the tax code while avoiding the difficult fights to eliminate one deduction or another. The deductions stay in place, and individual filers choose how they want to use them. Tax code simplification without too much fuss. There are some nuances involved that would have to be worked out, and for a quick explanation we recommend Josh Barro's treatment of the idea at Bloomberg from early October. But nothing insurmountable. Well, now that the election is over, Scott Galupo of The American Conservative reckons that the idea could be revived to find a common ground between the two parties on the fiscal cliff: The big kahunas are the exclusion for employer-provided health insurance (costing $434 billion in income and payroll taxes annually), the mortgage-interest deduction (about $100 billion), and the deduction for charitable contributions ($53 billion). Other tax expenditures include the deduction for property taxes and, Bartlett notes, the tax-free status of Medicare (since seniors consume more than they pay into the system over their lifetime, you can look at those benefits as a kind of income). ... It's actually a far bigger pot than the Bush tax cuts: All told, tax expenditures account for a whopping $13 trillion over 10 years. So here's what I'm thinking could be the outline of a fiscal cliff-averting deal. Call it the Romney-Ryan plan without the rate cuts. It would give Obama the revenue he wants, and Republicans could at least claim not to have raised tax rates. The idea here is to keep tax rates where they are now rather than letting rise to their levels from before the Bush tax cuts (which were extended under Obama). There's no way to know whether either party would go for it, and it doesn't address all of the fiscal cliff items. And we still think the best possible outcome of the fiscal cliff negotiations would be to simply postpone the whole thing for another year and let the economy heal further until such a debate is more appropriate. But this idea from Galupo is an intriguing alternative.