Cross-posted from Nieman Watchdog
Tax cuts are expenditures which increase the deficit. That simple fact, which is taught in every econ 101 course, seems to have eluded many Republicans, Tea Party members and the news media.
Tax expenditures, aka tax subsidies, special interest provisions, exemptions, deductions, credits, deferral of tax liability and preferential tax rates, mean the government collects less money that could be used to lower tax rates or provide for more accountable government spending. Although some tax expenditures can be justified on a cost benefit analysis, most cannot. Tax expenditures are not subject to the annual scrutiny appropriated funds receive and, even if they were, it would be very difficult to do a cost benefit analysis because of the lack of transparency and open ended nature of most tax expenditures. It's like signing a blank check for services, but without the ability to determine whether you are getting any services or what they're worth.
Tax expenditures cost the federal government over $1 trillion last year and the figure keeps growing faster than both mandatory and discretionary spending. That's real money, even by government standards. Yet, we see almost all Republican and some Democratic legislators calling for more tax cuts (tax expenditures) while railing against appropriated expenditures. Why? Could it be that tax expenditures are worth more for the wealthy, who fund campaigns, than for middle or lower income taxpayers who are in the lower brackets and who have seen their income decline while the rich's have increased?
This ability of the rich and powerful to get tax expenditures, which last long after any rational justification, is largely responsible for the common belief that "We have the best Congress money can buy." With oil at over $80 a barrel, does the oil industry really need about $14 billion of tax expenditures? But where are the media?
Aside from Tax Analysts, which publishes Tax Notes, and of which I am chairman (in the interests of disclosure), none of the media are covering these issues with any degree of regularity or even a modicum of sophistication. When was the last time you saw an article pointing out the hypocrisy of a politician calling for tax cuts and cuts in expenditures? As long as the media fail in their responsibility, we will have an increasing number of people seduced by false promises that by cutting taxes and appropriated funds we can cut the deficit.
If we are going to cut the deficit by cutting expenditures, the place to start is by eliminating most tax expenditures so that we can simplify the tax code, make it less economically distorting and perhaps even lower rates. Given the power of the rich and powerful, this cannot be done until the public understands the real economic issues. That won't happen until the media do their job.
Taylor Leake: 27 Ways to Pay Lower Taxes
Tomorrow is tax day and if you haven't already, you will most likely be filing your taxes. But while you are paying your fair share, Walmart is cheating states out of millions of dollars, leaving you and your community to make up the difference.
Who agrees the GOP misses this point: not everyone starts on equal footing hence the dems want to step-in to do just that? Who thinks that they advocate survival of the fittest without giving those who can't afford the opportunity to put themselves on equal footing with the "haves"
That being said, I would be very much in favor of perhaps three flat tax rates with no deductions. However politicians will never allow that because it doesn't allow them to bestow tax relief on their buddies.
If we could have Republicans actually cutting spending to pay for tax cuts and Democrats raising taxes to pay for new spending, maybe Americans could actually see the costs of services and have honest debates about whether or not the government service is cost effective and worth spending extra in taxes to obtain. But I don't see how that will ever happen as it is far more politically popular to just spend lots of money, cut lots of taxes, and run gigantic deficits.
Hence the difference between the rhetoric and reality. What do you want the government to stop providing?
Where were they when Bush wanted to waste our money and national integrity on illegal wars of aggression which cost us trillions? Those folks making their kids hold up signs about how they are footing the bill should consider that the BushBots who lowered taxes on the rich, engaged us in 2 pointless wars and created a global economic meltdown fueled by greed created the worst possible future for those kids - one of endless war, terror, inflation, degraded infrastructure, expensive education and healthcare, and universal hatred of Americans. Where's your kid's sign about THAT future?