June 15, 2014
WHITE COLLAR WELFARE:
Hidden in Plain Sight: The Mysterious Case of Tax Expenditures (Paul Posner, Steven Redburn and Jonathan Breul | February 6, 2014, Brookings)
Posted by Orrin Judd at June 15, 2014 8:14 AMThe one big piece of America's financial picture that is ripe for reform is tax expenditures. Tax expenditures are provisions of the federal income tax code favoring specified sources or uses of income. Right now they are not part of the budget process but they should be. And here's why.In a real sense tax expenditures function like spending programs, designed to promote the provision of publicly valued goods. In some policy areas, tax expenditures are the major form of government subsidy. For instance, of roughly $280 billion in federal spending and tax expenditures for housing in FY 2012, tax expenditures accounted for more than three-fourths of the total, most notably the mortgage interest deduction, other homeownership exclusions, and low income rental housing tax credits.Over the years tax expenditures have quietly assumed major fiscal significance. Donald Marron estimates that they constitute over $1.1 trillion in revenue losses for the income tax alone in FY 2012 -- 31 percent of total federal spending, or nearly as much as total discretionary spending that year.