The Center on Budget and Policy Priorities has a nifty chart showing the huge impact of tax expenditures -- credits, loop holes, write-offs, etc. -- on the federal budget. Short story: In terms of overall spending, tax expenditures dwarf virtually everything else, including major entitlement programs:
For further context, this comes to a few hundred billion more than total defense spending, and more than twice the budget for non-defense discretionary spending, i.e.,the main target of GOP spending cuts. What's more, because of their design, tax expenditures tend to benefit those near the top of the income distribution. CBPP Director Robert Greenstein explains:
From an economic perspective, such a structure makes sense only if higher-income people need a substantially greater monetary incentive to take the desired action and wouldn’t take it without the tax incentive. Yet, as a number of tax experts and economists from across the political spectrum have explained, the reality is frequently the reverse; high-income families generally would send their children to college, make sure they have assets for retirement, and buy a home with or without the current costly tax incentives. [...]
[W]e spend money providing the largest tax incentives to people in the top income tax brackets despite the fact that tax incentives generally have a much smaller effect on whether those individuals will send their children to college, become homebuyers, and put income aside for retirement.
Granted, long-term deficits are mostly a product of rising health-care costs, which gives an additional significance to Medicare and Medicaid. Still, in the immediate short term, the real money is in tax expenditures. Relatedly, when we're too "broke" for spending on the poor and disadvantaged, but money ain't a thang when it comes to tax benefits for the well-off, it's a sign that our budget discourse is sharply titled toward the interests of the privileged.
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