Wipe out! ... (all tax deductions)
Politics Complicates the Math in Ending Tax Breaks for Rich
By ANNIE LOWREY, NYT
WASHINGTON — Whether to raise revenue through increasing tax rates or cutting loopholes has become a central sticking point in the negotiations on a major debt deal.
The White House has drawn one line in the sand: it argues that tax rates must go up on income above $250,000 a year, because reducing tax breaks for the affluent cannot on its own raise the $1.6 trillion in additional revenue it seeks. Congressional Republicans have drawn another line: they might accept higher revenue, but only through the reduction of tax breaks.
But is it even possible to raise $1.6 trillion from wealthy households without changing tax rates? Experts say it is. But doing so might be politically infeasible and hugely unpopular, because it would involve wiping out nearly every deduction, credit and preferential rate those affluent households claim.
“Getting $1.6 trillion on the individual side, only through rolling back tax expenditures?” said Donald Marron, the director of the Tax Policy Center, a Washington-based research group. “It’s a heavy lift.”
Wiping out all tax expenditures — the official name for the deductions, credits and other loopholes addling the tax code — for the top 2 percent of earners would raise about $2 trillion over 10 years. (Tax expenditures for all households cost the government about $1 trillion a year, because middle-class and low-income families also benefit.)
(More here.)
WASHINGTON — Whether to raise revenue through increasing tax rates or cutting loopholes has become a central sticking point in the negotiations on a major debt deal.
The White House has drawn one line in the sand: it argues that tax rates must go up on income above $250,000 a year, because reducing tax breaks for the affluent cannot on its own raise the $1.6 trillion in additional revenue it seeks. Congressional Republicans have drawn another line: they might accept higher revenue, but only through the reduction of tax breaks.
But is it even possible to raise $1.6 trillion from wealthy households without changing tax rates? Experts say it is. But doing so might be politically infeasible and hugely unpopular, because it would involve wiping out nearly every deduction, credit and preferential rate those affluent households claim.
“Getting $1.6 trillion on the individual side, only through rolling back tax expenditures?” said Donald Marron, the director of the Tax Policy Center, a Washington-based research group. “It’s a heavy lift.”
Wiping out all tax expenditures — the official name for the deductions, credits and other loopholes addling the tax code — for the top 2 percent of earners would raise about $2 trillion over 10 years. (Tax expenditures for all households cost the government about $1 trillion a year, because middle-class and low-income families also benefit.)
(More here.)
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