1.2: Tax Expenditures
Eliminate or scale back tax expenditures. Other Information:
Our tax code does more than raise revenues. It also reflects efforts to influence private economic decisions through favorable
tax provisions. As a result, it contains hundreds of "tax expenditures " in the form of deductions, credits, exemptions, and
exclusions. These expenditures make the process of filing taxes more difficult, amount to $1 trillion in lost revenues for
the government each year, and provide the greatest share of their benefits to higher income taxpayers. Some economists argue
that the expenditures have obsolete or undesirable social effects. Eliminating selected deductions and exclusions, or "broadening
the tax base," would allow the government to raise more revenue. The five largest tax expenditures alone amount to an estimated
$573 billion of lost revenue annually, which is more than the government spends on Medicare each year. Changes to these and
other tax provisions, including two of the most widely used and most costly—adjusting the tax treatment of employer-sponsored
health insurance, and capping or converting the home mortgage interest deduction—would help raise the amount of federal revenues
collected.
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