I don’t want anything exempt. Deductions and credits and exemptions are all in the same camp — letting the government influence your decisions. That said, I understand people aren’t willing to give them all up immediately. That is why I favor a minimum tax so that no matter how many deductions you’ve got or how little money you make, your tax bite will still be at least 10% of your AGI. I’d add that one condition to Newt’s 15% flat tax that still allows the most popular deductions — that those deductions can’t reduce your tax below 10% of AGI.
True, that would enable lower rates generally for everyone and bring a lot more people back onto the tax rolls. I just don't like the government to stake claim to every dollar I make. I agree I don't like opening the door to social engineering with deductions and credits. But I'd also like to see people keep 100% of the first dollars earned as a personal exemption. Everyone gets it and it is the same for everyone - a subsistence exemption. It doesn't make sense for someone on a low income who can barely afford food and lodging to pay taxes then need foodstamp assistance. Overall though I'd still prefer eliminating taxes on wages, and switching to a tax on consumption.