President Obama has repeatedly called for doing away with special tax breaks he says litter the tax code — but he himself has recently proposed yet another new carve-out to push businesses to hire veterans and spur the economy.
He is not alone.
Even as the government’s dim fiscal picture pushes all sides to try to sweat savings out of the budget and all sides say carve-outs should be on the table, Republicans and Democrats on Capitol Hill are proposing their own special breaks, known as “tax expenditures” in legislative-speak, for items such as clean energy and student-loan repayments for veterinarians.
“We’re our own worst enemy,” said Sen. Tom Coburn, Oklahoma Republican and a vocal advocate for reforming the tax code. “And that’s based on parochialism and lobbying. You have to reform the tax code for two reasons — we’re wasting a ton of money and it’s stifling growth.”
After the last major tax reform was enacted in 1986, tax expenditures have risen steadily each year since the mid-1990s. They include breaks that benefit millions — such as deductions for retirement savings, charitable contributions and employer-sponsored health plans — as well as ones targeting much smaller groups of people.
The tax code is now littered with more than 200 credits, deductions or other tax expenditures, and the number has risen moderately over the past five years to reach roughly $1 trillion in revenue that the government would otherwise be collecting.
- Republicans pretend they might consider taking a reasonable position on taxes (dailykos.com)
- How Many Words Are in the Tax Code? (slate.com)