Saturday, April 21, 2012

What's Mine is Mine, What's Your's is Mine, Unless I Say So

Might as well be the title of Ezra Klein's article in today's Washington Post:
Tax reform has a ‘base line’ problem

How much does the federal government actually spend? About $830 billion more than you think.

That’s the conclusion of a recent Tax Policy Center study by Donald Marron and Eric Toder. They analyzed tax expenditures — the deductions, breaks and loopholes that clog the tax code — and sorted them into two groups: “spending substitutes” and “tax policy design.”
Letting the tax cuts that first passed under George W. Bush expire could clear the way for reforms that result in lower taxes.

The tax policy expenditures “represent broad choices in tax policy design but are not associated with any clear spending objective.” Marron and Toder cite the treatment of qualified retirement saving plans, which, for good or ill, nudges the tax code toward taxing consumption rather than savings.

Other expenditures, however, are simply government spending programs by another name. The mortgage-interest deduction, for example, is a spending substitute: it seeks to “subsidize identifiable activities” — homeownership in this case — and could easily be designed as a spending program in which the government sends homeowners an annual check....
Ignoring the bafflegab, all that Ezra is saying is that failure to collect money from anyone he (and the liberal think tanks) don't approve of is an expenditure.  By this method of accounting, failure to collect all the income from anyone or anything in the United State is considered as "tax expenditure". 

Why stop at $830,000,000,000? Why not just declare the uncollected 73% of GDP, approximately $10,670,000,000,000 in 2011, to be a "tax expenditure" and be done with it?

"Tax expenditure" is sort of like a stop-codon base triplet in DNA; a signal that you don't need to read any further, anything that follows is nonsense.

No comments:

Post a Comment