[Rhodes22-list] Taxes - Timely Article

[Rik Sandberg]

Brad,

Yikes!!! this woman is scary. I wonder if she isn't into the Guinness......

Subsidy, does she understand what that word means? How is taking less of 
a persons money a subsidy? By her way of thinking ALL of our money 
belongs to the government and nice guys that they are, sometimes they 
let us keep a little of it.

This little blurb is really precious

"They are also extremely regressive. A particular
tax exemption might be worth 35 cents on the dollar to a wealthy individual
and only 10 cents to someone on the other end of the income scale who faces
a lower tax rate."

Excuse me ....... how can you give a tax break to people who don't pay 
any???

I think I'm going to read Ayn Rand again and see if I can figure out 
where all those guys went. It's starting to seem like a helluva good 
idea. This next thing has been around before, but maybe some need 
reminding. here's a link

http://www.julianpistorius.com/journal/?postid=45

Rik






Brad Haslett wrote:

> Here's an article from today's WaPo that dovetails neatly with our recent
> discussion.  Care to make a bet about the home interest deduction?  No 
> one
> in the Congress has the guts to take on that sacred cow!
>
> Brad
>
> -----------
>
> *The $800 Billion Tax Loophole
> *
>
> By Maya MacGuineas
> Special to washingtonpost.com's Think Tank Town
> Thursday, January 18, 2007; 12:00 AM
>
> Democrats are in a bind when it comes to their domestic economic agenda.
> They have promised a number of new and costly initiatives such as 
> fixing the
> Alternative Minimum Tax, providing middle-class tax relief, and 
> increasing
> spending on homeland security and education. But they have also made a
> commitment to fiscal responsibility. So how can they deliver on their
> promises without opening themselves up to the old "tax and spend" label?
> Reforming tax entitlements -- a large, mostly under-the-radar part of the
> federal budget -- might just give them a way out of their predicament.
>
> As a result of the 1986 bipartisan tax reforms, the tax base was 
> broadened
> and the tax code was greatly simplified. But these reforms have been
> gradually undone as Congress has created scores of new tax breaks and
> loopholes. Want to preserve historic buildings, encourage alternative 
> energy
> sources, help working families, or give certain industries a boost 
> without
> appearing to increase spending? Voil? -- a new targeted tax break is 
> born.
>
> Most tax expenditures are really spending programs designed to look 
> like tax
> cuts. Picture them as vouchers for healthcare, mortgage payments, 
> daycare,
> transportation -- name the tax break. Dressing these programs up as 
> tax cuts
> makes them a much easier sell for politicians who fear the "big spender"
> label. But call them what you will, they drain the money from the 
> Treasury
> and extend the scope of government. All told, this portion of the budget
> represents $800 billion in lost government revenues annually.
>
> Not only do these tax breaks mask the true size of the government, 
> they are
> a terrible way to make policy. They regularly pay people and 
> businesses to
> do what they would do anyway, making them both poorly targeted and
> unnecessarily expensive. They are also extremely regressive. A particular
> tax exemption might be worth 35 cents on the dollar to a wealthy 
> individual
> and only 10 cents to someone on the other end of the income scale who 
> faces
> a lower tax rate. It would be hard to justify a housing policy that does
> more to subsidize the rich than the poor, yet that is exactly what the 
> $80
> billion a year home mortgage interest deduction does.
>
> Moreover, tax expenditures do not get nearly the level of scrutiny they
> should. (If they did, would we really have a government program that
> subsidizes millionaires who buy vacation homes?) New government programs
> should only be created following vigorous debate over whether a proposed
> policy is important enough to warrant government intervention, and if 
> it is,
> whether it will be effective. Discussions about new tax programs however,
> tend to focus almost exclusively on the cost. Billions of dollars of
> targeted tax cuts have been passed in the past few years with little 
> or no
> discussion about the worthiness of their goals. And unlike spending
> programs, which are subject to congressional review, tax expenditure
> programs are pretty much on automatic pilot.
>
> Reforming this area of the budget would not only be a critical step in
> improving the tax code (and probably the closest thing we will see to
> fundamental tax reform in the next two years) it could also generate 
> tens --
> if not hundreds -- of billions of dollars in savings.
>
> The first step should be capping a number of existing tax breaks. Capping
> two of the largest breaks -- the home mortgage interest deduction and the
> exclusion for employer-provided healthcare, would easily provide over $50
> billion a year in savings. Both of these changes would reduce the large
> subsidies that go to the highest earners while freeing up resources. 
> Getting
> rid of a host of other tax breaks that subsidize certain businesses or
> industries could easily generate another $25 billion. A thorough 
> review of
> the over 150 existing tax expenditures to determine which ones have 
> outlived
> their usefulness would yield still more in savings. As Democrats 
> search for
> ways to offset the costs of their new agenda, reducing the $800 
> billion tax
> loophole would be an excellent place to start.
>
> *Maya MacGuineas is the Director of the Fiscal Policy Program at the New
> America Foundation.*
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