By Damian Paletta and Sara Murray

The Romney campaign on Wednesday clarified that a proposal it floated earlier in the week that would put in place a new cap on tax deductions would not affect the pre-tax health care insurance premiums many Americans pay.

On Monday, Republican presidential nominee Mitt Romney said he might pursue an overhaul of the tax code that lowered rates but capped the deductions middle-class Americans took at $17,000. Upper-income earners would have an even lower cap. Roughly 30% of tax filers itemize deductions, and on average they claim $26,000 in deductions.

Mr. Romney gave three examples of deductions that could be subject to the cap.

1) The mortgage-interest deduction

2) Charitable contributions

3) And health care.

He didnt go into more detail on what he meant by health care, but the single largest tax break is the exclusion of employers contributions for health care and health insurance premiums, according to the Congressional Budget Office. (On your paycheck, chances are the amount that is deducted for your health insurance premium isnt part of the portion you are taxed on). The Obama campaign quickly challenged the proposal, saying if the health care portion is included in the cap it would lead to a large tax increase on many people.

The Romney campaign assured Wednesday that the heath care portion wouldnt be subject to the cap. Heres why: the health care portion isnt really a tax deduction. Its a tax exclusion.

Its very clear that our tax code has an exclusion for employer-sponsored health care, one campaign staffer said. Thats separate and apart from tax deductions.

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Health Care Not Part of Romney’s $17,000 Tax Plan