The ten largest tax expenditures in terms of 2012–16 budgetary costs (revenue losses plus outlays for refundable credits) identified by OMB (2011) will cost $4 trillion between 2012 and 2016—about 65 percent of the cost of all tax expenditures over that period (table 1). We classify six of them as spending substitutes: the exclusion of employer contributions for medical insurance and medical care, deductibility of mortgage interest on owner-occupied homes, exclusion of net imputed rental income on owner-occupied homes, deductibility of nonbusiness state and local taxes other than on owner-occupied homes, the earned income tax credit, and deductibility of charitable contributions other than education and health….
When we add in about $230 billion in user charges, finally, effective federal spending rises to 25.4 percent of GDP. By this metric, federal spending was more than one-quarter of economic activity in 2007, almost 30 percent more than officially reported.
From a Tax Policy Center paper by Donald Marron and Eric Toder. HT: Ezra Klein.
Instead of looking for ways to tax people more; why not reduce government spending?
You mean they have been lying to us? You’re pulling my leg.
In my mind, a tax cut is not the same as a spending program.
If you count tax expenditures and spending as the same thing, then why not assume the government controls the entire economy, and it “costs” 75% of the economy for the government to maintain its citizens with income?
As 43′ would say, it was “fuzzy math”.
I agree! You can go to the most rudimentary of gas stations and find more food than would have been available to the richest residents of an American town in the 1800s. Capitalism and the free market are truly beautiful things!
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