How The Federal Government Is Leaving Over $1 Trillion On The Table Every Year
The Center on Budget and Policy Priorities released an ambitious if controversial report yesterday that found that tax expenditures — tax deductions, exclusions, and other tax breaks — were costing the U.S. far too much.
Expenditures are a popular topic of discussion when it comes to discussions of fiscal policy.
Any politician who has ever championed "closing tax loopholes" — for instance, both President Barack Obama and 2012 presidential challenger Mitt Romney — is really saying that they would like to end several tax expenditures that they deem unfair.
There are different ways of perceiving tax expenditures. According to the report, many were designed to incentivize several behaviors like buying a house, finding a job, or pursuing higher education.
Because of this, some advocates of ending some expenditures consider them a subtle type of government spending.
Either way, the magnitude of annual tax expenditures is staggering.
From the report:
They are costly. Tax expenditures cost nearly $1.1 trillion a year in 2011. If classified as
spending, they would constitute the single largest category of federal spending — larger than Social Security, or the combined cost of Medicare and Medicaid, or defense or non-defense discretionary spending.
Here's the chart that drives this point home:
To get some additional perspective on this, the entire projected federal deficit for Fiscal Year 2013 is $901 billion.
The report is proposing that the U.S. find ways to either cap expenditures or eliminate different expenditures to get that number down.
In essence: the U.S is leaving a lot of money on the table — some of it undoubtedly well spent — but it may be worth a second look.