News Analysis shows “Tax expenditures” for individuals totaled about $760.5 billion in 2007
“Tax expenditures” for individuals totaled about $760.5 billion in 2007, topping what the federal government spent on either national defense or all non-defense discretionary programs, a new analysis by the Urban Institute-Brookings Institution Tax Policy Center (TPC) shows.[1]
In most cases, these tax expenditures are also regressive — that is, they benefit high-income taxpayers the most. In light of their high cost and regressive nature, they should be “on the table” when efforts to address the nation’s long-term budget problems are mounted.
The tax code is packed with scores of tax breaks that favor particular activities, such as tax-free employer contributions for health insurance, mortgage interest deductions for owner-occupied homes, and lower tax rates for capital gains and dividends. The Office of Management and Budget (OMB) and the congressional Joint Committee on Taxation (JCT) refer to these tax breaks or subsidies as “tax expenditures” because they essentially represent spending accomplished through the tax code. Former Federal Reserve Chair Alan Greenspan has termed these measures “tax entitlements.”
$760.5 Billion Estimate Does Not Include Tax Expenditures for Businesses
At $760.5 billion, TPC’s estimate of the cost of individual income tax expenditures in 2007 makes them more expensive than the $549.2 billion the federal government spent in fiscal year 2007 on national defense and the $493 billion it spent on non-defense discretionary programs.
TPC also notes that if individual tax expenditures were counted as federal spending, total spending in the budget would be about 30 percent higher than what OMB reports.[2]
TPC’s estimate of individual income tax expenditures, however, is less than the total budgetary impact of tax expenditures because TPC’s estimate does not include tax expenditures for businesses.[3] The JCT estimates that business tax expenditures will equal at least $105 billion in 2008.[4]
Keep reading at Center on Budget and Policy Priorities
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Leave a comment