We all know that the Obama's tax returns were made public recently and what they show us is quite telling. Now, I am not going to get into any pro or anti candidate crap here, but just examine the tax returns themselves.
What we see is that the Obama's a very well off by anyone's standards. They are grossing around $1,000,000 a year, but have what I would consider pretty standard/simple tax returns for that income. What we really need to examine though are the deductions, as these paint an interesting picture of US tax policy.
When looking at the deductions/credits, we see that the Obama's claimed approximately $60,000 in mortgage interest and I think over $30,000 in state/local taxes and of course received the $1200 child care tax credit. I personally think this is absurd (not the Obama's claiming it, they would be stupid not to), as it displays how sorely needed caps are for most tax deductions. There is no way anyone should be able to claim a mortgage interest deduction of $60,000 or a child care tax credit with a gross income of $1,000,000. What the Obama's tax returns show us is a need for tax reform (and I am not talking about tax rates here) that could increase revenues from ridiculous exemptions/deductions/credits. I would propose that all deductions/credits be tied to either income or have a set limit (in the case of mortgage interest. This reform alone could save money and may even reduce a future housing bubble by removing an "incentive" for buying a more expensive home.
For the mortgage interest deduction, I would propose that interest cannot be deducted beyond that which would be generated from the largest conforming loan at the highest conforming interest rate (30 year fixed) of the last 5 years (or simply a fixed tax credit). For income tax deductions, I would eliminate them on any income in excess of $250,000 and the same for the child care credit and similar deductions. These reforms alone would increase revenues and the effective tax rates on the wealthy.