No, it's just badly broken, arbitrary, unnecessary complication. Deductions are sensible for essential costs, but healthcare doesn't magically become essentially when it crosses the 10% AGI threshold; it makes sense for healthcare costs to be deductible period.
It's also hard to draw lines. Is Viagra covered, for example? This is one of the reasons there's a threshold — to make sure the deduction is only being granted where there are non-routine expenditures. The tax code views some level of medical expenditures as routine, and therefore non-deductible.
It's easier if you don't draw unnecessary and illogical lines to start with, which is what the dollar threshold is.
> Is Viagra covered, for example?
Apparently, if you buy enough relative to your income.
> This is one of the reasons there's a threshold — to make sure the deduction is only being granted where there are non-routine expenditures.
Which is both a dumb idea and not done well by a share of income rule.
> The tax code views some level of medical expenditures as routine, and therefore non-deductible.
Routine expenditures being non-deductible isn't an intelligent rule; if it is a kind of expenditure that should be deductible, being routine doesn't really change that. If it is a routine expense that is assumed covered by the standard deduction, then you just require itemization to take a specific deduction for the purpose; we don't need special handling for something for which we already have a better and more general solution.
One man's loophole is another man's incentive. If you are struck by catastrophic medical issues and pay more than 10% of your AGI in medical bills, you can deduct the cost. Is this a loophole? Or is this a way to cushion the blow of having been dealt a lousy hand in terms of medical costs? It depends on your perspective.
> That'd probably >2x tax revenue and be "fair" to everyone.
From an economic perspective, it's great to "lower the rate and broaden the base". The problems come when, after the rate has been lowered, lobbyists get all the same incentives/loopholes put back in. Now you have a lower rate, and many of the same carveouts.