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I wonder if Tex or Flounder will post this HF article

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Well-known member
Apr 12, 2008
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real world
...it was actually written by Washington Post, but reprinted/posted at Huffington Post.

Ever-increasing tax breaks for U.S. families eclipse benefits for special interests

By Lori Montgomery, Published: September 17

As President Obama and congressional Republicans argue over how to rewrite the U.S. tax code, the debate has revolved around “loopholes” for corporate jets and ending “carve-outs” for well-heeled special interests. But if the goal is debt reduction, that’s not where the money is.

Broad tax breaks granted to millions of families at all income levels dwarf the corporate giveaways. Over the past two years, largely because of these popular benefits in the federal income tax code, the government has reached a rare milestone in tax collection — it has given away nearly as much as it takes in.

President Barack Obama is expected to seek a new base tax rate for the wealthy to ensure that millionaires pay at least at the same percentage as middle income taxpayers. The proposal will be officially unveiled on Monday. (Sept. 18)

President Barack Obama is expected to seek a new base tax rate for the wealthy to ensure that millionaires pay at least at the same percentage as middle income taxpayers. The proposal will be officially unveiled on Monday. (Sept. 18)

The number of tax breaks has nearly doubled since the last major tax overhaul 25 years ago, with lawmakers adding new benefits for children, college tuition, retirement savings and investment. At the same time, some long-standing breaks have exploded in value, such as the deduction for mortgage interest and the tax-free treatment of health-insurance premiums paid by employers.

All told, federal taxpayers last year received $1.08 trillion in credits, deductions and other perks while paying $1.09 trillion in income taxes, according to government estimates.

Only about 8 percent of those benefits went to corporations. (The write-off for corporate jets equals about .03 percent of the total.) The bulk went to private households, primarily upper-middle-class families that Obama has vowed to protect from new taxes.

“The big money is in the middle-class subsidies,” said Syracuse University economist Leonard Burman, former director of the nonpartisan Tax Policy Center. “You’re not going to balance the budget by eliminating ethanol credits. You have to go after things that really matter to a lot of people.”

These tax breaks weave an invisible web of government benefits that now costs nearly as much as the Pentagon and all other federal agencies combined. But “tax expenditures,” as they are known in Washington, get no routine oversight. Congress and the Treasury Department both track them but use different rules to count them and estimate their value. The congressional Joint Committee on Taxation lists more than 300 breaks, while Treasury tallies 172.

No one regularly assesses whether tax expenditures accomplish the goals they were created to serve. Yet, with the rise of an ideology within the Republican Party that shuns big government and vilifies taxes, they have become virtually untouchable.

For those reasons, the tax code is a popular venue for both parties to pursue costly policy goals.

Edward Kleinbard, a University of Southern California law professor who served until recently as chief of staff to the Joint Committee on Taxation, says tax breaks are now the dominant instrument for creating new spending programs. Policymakers can give taxpayers a government benefit and get credit for lowering their tax bills — a combination lawmakers find “irresistible,” Kleinbard said, because they can portray themselves as tax cutters rather than big spenders.

Every president since Ronald Reagan has learned that lesson. In 1997, after a Republican Congress refused to increase spending for federal student loans, President Bill Clinton turned to the tax code to create a slew of higher-education credits. Initially worth around $10 billion a year to the nation’s college students, those benefits have been expanded to more than $20 billion annually.

continued... http://www.washingtonpost.com/business/economy/ever-increasing-tax-breaks-for-us-families-eclipse-benefits-for-special-interests/2011/09/15/gIQAgdjcaK_story_1.html

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