Paul L. Caron

Sunday, May 30, 2010

Bartlett: A Pox on Tax Expenditures

Bruce Bartlett (Forbes), Spending Through The Tax Code: It's As Bad As Direct Spending:

Conservatives are united in their belief that government spends much too much and that spending ought to be cut sharply. But they almost universally ignore de facto spending through the Tax Code even though many tax provisions are functionally identical to spending. These "tax expenditures" not only hemorrhage revenue unnecessarily, but they distort private decision-making, create unfairness and reduce economic growth. ...

When the time comes, as it inevitably will, when raising revenues will be part of a big deficit reduction bill mandated by financial markets, Republicans will really have only two choices: raise tax rates or restrict tax expenditures. Since many of the latter are conceptually identical to direct spending, the choice should be an easy one. Those concerned about our nation's fiscal future should be focusing as much attention on tax expenditures as they do on the spending side of the budget.

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