Tax Expenditures

Next week's reading covers the Commission of Fiscal Responsibility and Reform's recommendations for reducing debt and deficit in the long run. The plan includes cutting tax expenditures, which seem more like tax exemptions. This pretty thorough, though not unbiased report by CAP explains them in depth, including why they are favored by members of Congress:

" tax expenditures receive different treatment in two key ways. Most tax expenditures are not subject to the same annual appropriations process as other forms of spending. This means they are less likely to be scrutinized.

Second, tax expenditures appear to be tax cuts instead of spending because they transfer funds to businesses and individuals through tax subsidies. It is therefore generally easier to win votes for tax expenditures than direct spending."