Warning to budget mavens: ‘Tax expenditures’ may yield less than expected
By Glenn Kessler
WashPost
“Don’t forget, there are 180 tax expenditures in this tax code, which are really tax earmarks, which are really spending by any other name, and you get rid of those and start picking them off, and you can save billions and billions of bucks.” — Former U.S. senator Alan Simpson (R-Wy.), Aug. 18, 2011
It’s sometimes seen as the holy grail of revenues — a huge pot of money hidden in the tax code, ready to be exploited to rebalance the gap between spending and revenues.
We’re talking about “tax expenditures,” which include everything from the home mortgage deduction for homes to tax credits for college loans or energy-efficient vehicles. In the past 20 years, scores of such provisions have popped up in the tax code, in part because it has been easier to win approval for tax cuts than new spending programs. Some people, such as Simpson above, argue that these really are spending programs in disguise, though he overstates the case when he calls them “earmarks,” which are generally targeted to a small number of people. Millions of Americans benefit from these provisions.
In fact, one study by the Center for Budget and Policy Priorities concluded that if the estimated $1 trillion revenue loss from tax expenditures were counted as a spending item, then it would dwarf the annual spending for Medicare and Medicaid ($719 billion), Social Security ($701 billion) and national defense ($689 billion).
It sounds like a lot of money. But some caveats are in order before people can put this in the bank, including the new “super committee” of lawmakers tasked to find ways to cut more than $1 trillion from the deficit in the coming months.
(More here.)
WashPost
“Don’t forget, there are 180 tax expenditures in this tax code, which are really tax earmarks, which are really spending by any other name, and you get rid of those and start picking them off, and you can save billions and billions of bucks.” — Former U.S. senator Alan Simpson (R-Wy.), Aug. 18, 2011
It’s sometimes seen as the holy grail of revenues — a huge pot of money hidden in the tax code, ready to be exploited to rebalance the gap between spending and revenues.
We’re talking about “tax expenditures,” which include everything from the home mortgage deduction for homes to tax credits for college loans or energy-efficient vehicles. In the past 20 years, scores of such provisions have popped up in the tax code, in part because it has been easier to win approval for tax cuts than new spending programs. Some people, such as Simpson above, argue that these really are spending programs in disguise, though he overstates the case when he calls them “earmarks,” which are generally targeted to a small number of people. Millions of Americans benefit from these provisions.
In fact, one study by the Center for Budget and Policy Priorities concluded that if the estimated $1 trillion revenue loss from tax expenditures were counted as a spending item, then it would dwarf the annual spending for Medicare and Medicaid ($719 billion), Social Security ($701 billion) and national defense ($689 billion).
It sounds like a lot of money. But some caveats are in order before people can put this in the bank, including the new “super committee” of lawmakers tasked to find ways to cut more than $1 trillion from the deficit in the coming months.
(More here.)
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