February 7, 2013

Hidden Spending in Tax Code

A Center for American Progress report spells out $1 trillion in revenue that can be raised from closing loopholes in the tax code:

All told, this hidden spending through the tax code adds up to roughly $1 trillion in potential budget savings—about enough to turn off the sequester while nearly stabilizing the nation’s debt over the next 10 years. And these are nowhere near the full list of areas for potential savings—including loopholes for cruise ship operators, loopholes that allow companies to defer capital gains taxes using “like kind exchanges,” an enormous tax break called “stepped up basis” that is the major reason why about half of all capital gains avoid tax permanently, and many, many more…

It is likely that the next round of deficit reduction will include a mix of spending cuts and revenues. But even if the entire next round comes from revenues—in other words, if Congress replaces the sequester with roughly $1 trillion in new revenue from reducing tax breaks—the overall ratio of deficit reduction since 2011 would only then approach 1-to-1 between program cuts and revenue.

That is what a truly balanced approach to deficit reduction looks like.

It’s imperative that we raise significant revenue in order to reduce the deficit. We must pressure Congress to take some of these suggestions seriously. Stay updated on the tax fight by following us on Facebook and Twitter.