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Snipe Hunting in DC (Or: In Search of Tax Reform)

March 24, 2012

A perennially hot topic in DC is tax reform. We need to make it simpler, lower rates, close loopholes, make it more fair! Naturally, politics being politics, Congress can’t ever agree on how to define ‘tax reform.’ (Which is great, because it’ll still be around for the next election season.)

Everyone loves the idea of making the tax system simpler; which is why politicians are always floating gimmicks like Rick Perry’s  postcard. But how do you make a simple system that makes everyone happy?

Congress, especially Republicans in Congress, leery of being labeled big spenders, love to pass tax breaks. Call it what you want, it still amounts to a deduction in Federal revenue. In other words: spending. And lots of it.

In fact, a new report issued by the nonpartisan Congressional Research Service, shows that the value of tax breaks has reached $1 trillion annually (which, incidentally, is pretty much the size of the deficit.) According to the Wall Street Journal:

A congressional report detailing the value of major tax breaks shows they amount to more than $1 trillion a year—roughly the size of the annual federal budget deficit—and benefit wide swaths of the population.

The figures could be useful to lawmakers of both parties and President Barack Obama, who are looking for ways to shrink future deficits and offset the anticipated cost of overhauling the much-criticized U.S. tax code, an effort likely to include tax-rate cuts. Both parties are looking to trim or eliminate tax breaks to achieve those goals.

Why are politicians addicted to tax breaks? Maybe it’s because we all are.  For example, the following table lists the top ten individual deductions. Which would you give up?

Top Ten Tax Breaks - 2014

One Comment leave one →
  1. October 21, 2012 12:37 pm

    I’d been looking for this chart, so I could write a blog post about it myself, but it’s apparently behind a paywall at the Wall Street Journal. So thanks for posting it.

    Oh, and you do a great job here! I’ve enjoyed all of the posts I’ve read so far.

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