The Economist: The Obamney Tax Plan. How to solve the fiscal cliff?

Presidents choose their words carefully. So, when Barack Obama talked about "tax reform" but not "tax rates" in his acceptance speech early Wednesday, he was presumably sending a signal, and it was similarly significant that later that day John Boehner repeatedly stated his opposition to higher tax "rates" rather than tax revenue. Within those two statements lies the nucleus of a deal: Raising tax revenue through some means other than higher tax rates. There are myriad ways of doing this, the trick is to find one that both Democrats and Republicans can live with. During the super-committee negotiations last year, Senator Pat Toomey proposed raising $250 billion in revenue over 10 years by closing loopholes. But he would also have cut rates sharply, which would have benefited the richest households most. That was an anathema to Democrats. They wanted more revenue, but not if it made the tax system less progressive. So the price for Democrats is that tax reform must be progressive. After tax incomes of people at the top must be squeezed more than for people at the middle. Thus far, Mr Obama has equated that with allowing the top two income tax brackets to return to their pre-2001 levels. But there is an alternative route to the same goal that does not require higher rates, and it comes courtesy of Mitt Romney. Recall that when asked how he would pay for a 20% cut to marginal rates, he proposed a cap on deductions, an idea proposed by Martin Feldstein, Maya MacGuineas and Daniel Feenberg. I don't have a ready estimate of how much capping deductions for those earning more than $250,000 would raise, but you can ballpark it by looking the Tax Policy Center's estimates!