May 4, 2011

NOT TO MENTION THE MONEY WE'D SAVE AS A SOCIETY ON TAX RETURN PREPARATION:

Raise Taxes, but Not Tax Rates (Martin S. Feldstein, 5/04/11, NY Times)

As the bipartisan fiscal commission appointed by President Obama stressed last year, tax revenues can be increased substantially by limiting the deductions, credits and exclusions that are essentially government spending by another name.

Tax credits for buying solar panels or hybrid cars are just like government spending to subsidize those purchases. Similarly, the exclusion from employees’ taxable incomes of employer payments for health insurance is no different from subsidizing the purchase of those insurance policies. The deduction for interest on residential mortgages, probably the best-known tax expenditure, amounts to a giant subsidy for homeownership.

At their worst, such tax expenditures create incentives for wasteful borrowing and spending; they have been factors in the mortgage crisis and the rising cost of health care.

Tax expenditures collectively increase the budget deficit by more than all other nondefense spending combined, other than Social Security and Medicare. And unlike those direct outlays, these tax expenditures are not subject to annual review as part of the appropriations process. Once they are part of the law, they automatically continue and become more costly with time.


Posted by at May 4, 2011 8:43 PM
  

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