Thanks to Len Burman’s latest insight on his brand-new, awesome blog on Forbes.com, what was otherwise going to be a pretty ordinary complaint about a pretty dull yet aggravating speech by House Speaker John Boehner (which has already gotten lots of spot-on criticism, including this column by Ruth Marcus), is now a post where I get to point out a much more entertaining Jon Stewart video!
Apparently, John Boehner and Jon Stewart have this in common: they both don’t understand how special preferences in our tax code are just a different form of government spending, and hence how reducing such “tax expenditures” would reduce both the budget deficit and the size and scope of government.
For 40 years, tax geeks like me have been trying to explain that there’s a boatload of spending programs masquerading as tax cuts, and they’re multiplying. Their number increased by almost 60 percent between 1987 and 2007.
The fact that pols can claim credit for “tax cuts” (good) rather than “spending” (bad) has made them irresistible to legislators of both parties. Never mind that the IRS doesn’t have the budget or expertise to effectively administer a couple hundred spending programs (sorry, tax cuts) or that many of them make no sense. The tax code’s cluttered with this junk.
Finally we get the president of the United States to acknowledge this and you drill him a new one.
You don’t believe there’s spending in the tax code??? Here’s a real life example: the chicken-s**t tax credit. Really, section 45 of the Internal Revenue Code. You can look it up…
It’s spending, Jon. Often really dumb spending. And when we’re talking about cutting food stamps, nutrition programs for mothers and infants, and environmental protections to save money, those spending programs in the tax code should be on the table too.
Tax subsidies add up to more than $1 trillion per year. That’s not chump change, but, until recently, it’s been off limits in any bipartisan budget negotiations in Congress because Republicans have been unwilling to consider anything that might be labeled a tax increase.
I’ve said before that a tax reform that broadens the base by reducing some of these “dumb” tax expenditures would raise revenue and reduce the deficit in a progressive way while keeping marginal tax rates (and economic distortions) low–and this is a reason why politicians and policy wonks on both the left and the right should love this way of being fiscally responsible.
But instead, it seems both Jo(h)ns are in denial about it.
As Len concludes, this is “not helpful.” Amazingly, before Len pointed out Jon Stewart’s take on the issue to me, I was going to blog only about the Boehner speech with the title “Not Helpful.” Really! No joke.