This idea has been floating around for more than a decade. Every time any party considers 'comprehensive tax reform' in fact. Usually it is packaged as part of a massive deal to eliminate deductions, etc., altogether and just lower the overall tax rates a great deal while still cutting the deficit. The Bowles-Simpson Plan and others have proposed this sort of thing many times and it floats to the top of the news every time there is a swing in party power.
Hypothetically, I think simplifying the tax code is a good idea and that this type of overall plan is worth considering. Practically, I feel a sense of total panic when I consider that even though we don't even itemize most years and thus wouldn't feel the bite of THAT particular element of these plans, the pretax deductions we get for health care and retirement accounts alone are tremendous. Tax rates would have to fall a LOT to make up for that.
In terms of likelihood of passing, I think very low. It's mostly the upper middle class and wealthy that benefit from pretax retirement deductions, so the GOP is very unlikely to push something that contradicts their message of 'save on your own' and hurts the rich. Then there are the financial lobbyists, etc. An all-Dem government might consider it, but I'm very skeptical.
