Now, it's not clear whether he means tax liability or taxable income. As Dylan Matthews explains, that's the difference between a highly progressive (in the technical sense, not the euphemism-for-liberal sense) proposal and one that would affect a lot of middle-class households:
Does the $17,000 cap mean that deductions can’t reduce a person’s taxes by more than $17,000? That would raise a good chunk of revenue, mostly from high earners. Or is Romney proposing that taxpayers can’t reduce the income subject to tax by more than $17,000? That would raise even more money, but it would hit a lot of middle-class households. The typical household gets about $15,000 chopped off its taxable income from the employer health-care exemption alone, so many families would hit the $17,000 limit very quickly.
Sahil Kapur adds that if the change did affect only the rich, it wouldn't produce enough new money to pay for the tax-rate cuts Romney wants to make. So there remain questions as to the basic math of Romney's plan to pay for deep cuts to high-income tax rates without raising middle-class taxes. Still, good to see him floating a serious idea.
I expect we'll hear more about this at the first debate tonight. Along with party flacks talking down expectations, Jim Lehrer asking (hopefully) less inane questions than your average bear, and perhaps Romney offering Obama sincere congratulations on a certain nonprofessional achievement.