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 What is a “tax expenditure?”

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The Propagandist
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PostSubject: What is a “tax expenditure?”   Wed Jul 27, 2011 9:24 pm

Everybody knows what a “tax” is. That is money you pay to the government. Some people who like big fancy words know what an “expenditure” is. That is when money is spent. So, it stands to reason that a “tax expenditure” would mean money that government spends after you paid your taxes, right?

Ummm, no … not really.

Another name for a “tax expenditure” is a tax deduction, a “tax loophole”, money that you would have paid to the government were it not for that deduction. Rather than the government collecting taxes from everybody, then paying it out directly to selected taxpayers engaged in politically-favored activities, the government just allows you to not pay tax on money you spent engaging in that activity.

Also, with the enactment of a new “loophole” into law, your representatives can claim that they “lowered taxes” because the government now does not collect tax that it would have collected had that deduction not existed. In that way, taxpayers get to “keep more of their own money” and use it to fuel economic growth by investing more or consuming more. And that sounds like a really good thing, right?

Ummm … not always.

Leonard Burman wrote a short article about this subject recently. He is the Daniel Patrick Moynihan Professor of Public Affairs at the Maxwell School of Syracuse University, a research associate at the National Bureau of Economic Research and the Center for Policy Research, and an affiliated scholar at the Tax Policy Center (TPC). So, I guess you could say he might know what he’s talking about. Prof. Burman expounded thusly:

“You don’t believe there’s spending in the tax code??? Here’s a real life example: the chicken-s**t tax credit. Really, it’s in section 45 of the Internal Revenue Code. You can look it up. Senator Roth of Delaware (home of lots of chickens and “poultry manure,” as it’s euphemistically called) put this little goody into our tax laws. Here’s the backstory: the EPA said that enormous chicken farms could no longer put their poultry waste in pools or bury it because it poisoned the ground water. One of the best options to meet the new requirement was to dry the vile effluent and burn it to make electricity, but that was still costly. Roth didn’t want chicken farmer profits to plummet or chicken and egg prices to rise just because farmers couldn’t use the earth as a giant toilet, so he pushed through the chicken s**t tax credit to create a profitable market for that (as well as all sorts of other crap).

“There are lots of chicken s**t tax subsidies. The mortgage interest deduction is basically a housing voucher for rich people. Those who really need help get bupkes. The tax-free health insurance you get at work is heavily subsidized by the tax code, but those with low incomes rarely get health coverage and, if they do, the subsidy is worth little or nothing. The ethanol tax credit is a farm price support program that is literally starving people.

“And when we’re talking about cutting food stamps, nutrition programs for mothers and infants, and environmental protections to save money, those spending programs in the tax code should be on the table too.

“Tax subsidies add up to more than $1 trillion per year. That’s not chump change, but, until recently, it’s been off limits in any bipartisan budget negotiations in Congress because Republicans have been unwilling to consider anything that might be labeled a tax increase.”

http://blogs.forbes.com/leonardburman/2011/05/10/jon-stewarts-fake-news-on-tax-expenditures/

So, you see, well-connected business constituents can get a lot of their cost of complying with the law, which should be seen as their civic duty anyway, subsidized by a tax loophole.

And that $1 trillion per year that is not collected in taxes? Isn’t that just “allowing taxpayers to keep more of their own money?” Well, you could say it is. But that kind of putting more money in certain people’s pockets means that a lot of important government stuff doesn’t get the money it needs. That stuff is so important that money has to be borrowed in order to pay the cost of doing it.

We all know by now that borrowing money that didn’t have to be borrowed, just so some well-connected persons can keep more of their own money, adds to the deficit. A lot of us think that is not a good thing and didn’t have to happen at all when it is caused by favors given by lawmakers to favored constituents. Recurring deficits add to the national debt which will have to be paid by all of us some day, with taxes paid by most of whom are not so well-connected.

When it doesn’t let the rest of us keep more of our own money just so a favored few can keep theirs to deal with the chicken s**t they made – well, a lot of us think that is definitely not a good thing.

If you really want to dive into a lengthy explanation on how these "tax expenditures" shower benefits on corporations and the rich at the expense of America's hard-working, taxpaying families, go to:

Tax Expenditures: The Hidden Entitlements
http://www.ctj.org/hid_ent/contents/content.htm#shelly
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lmm
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PostSubject: Re: What is a “tax expenditure?”   Thu Jul 28, 2011 9:31 am

You still spin it as if the reps are always the bad guys. How about Reid's lying one trillion dollar savings by claiming what we would spend IF the two wars continue another 10 years?

That's like me claiming I saved $40,000 this year because I did not buy a new luxury car. If I wasn't going to buy it in the first place how the heck did I save $40,000 that I don't have in the first place?

As for the chicken manure, it's either pay more for chicken and eggs or have the loophole. What do you prefer?

On the mortgage deduction, where do you get that it's only for the rich? I looked forward to that every year until my house was paid off. How is that only for the rich?
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Ubu
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PostSubject: Re: What is a “tax expenditure?”   Thu Jul 28, 2011 10:46 am

Not to mention that the "rich" , generally, don't have mortgages..........

Nor has it been factored in what the cost of constructing the "drying houses" is. $12,000,000.00 to $14,000,000.00......for a procedure that has not been proven to be either effective or safe. Then include the cost of staffing, testing, compliance etc.......and who is going to pay for that in the end? The corporations? Yeah, right.........the writer is worried about people starving, but is not willing to take into consideration that without the "incentive" (and that is what it is) the cost is going up for the very people that he "purports" to be concerned with......

If the author truly believe this then it is a classic example of not seeing the forest for the trees......

But Props knows this LMM. He understands the big picture. Why do you think he is against the "flat tax"? Because he knows that revenue has to flow. That's what our current tax structure is all about. Keeping money in circulation. Do you know how many jobs would be lost if we went to a flat tax? Even a "progressive" flat tax would have such an impact on our economy that we would go into a "tail spin" that we may not recover from. Sure, as a business man I should be ALL FOR the flat tax, but as a citizen I know that revenue must flow!! Revenue only flows by spending!

Controlled Inflation is good, debt is good, deflation is terrible, horrendus. Revenue must flow!

We want each dollar to turn over a minimum of 6 times. MINIMUM! People must spend. Spending money is what creates revenue. Incentives aid that. It's the "perception" of a constrictive tax structure that stops growth, however, when people perceive that they are getting something for nothing.........

I've seen a hundred models where a flat tax will increase revenue under the CURRENT economic conditions. Yet, those models do not take into account the jobs that would be lost as a result of the flat tax and the subsequent effect of the "roll over" of those incomes.........

LOL......remember it is all, for the most part, propaganda and he is The Propagandist Clap

But then again what do I know......I'm just a goof troop trying to have fun......and I could have competely misjudged Props.......

Razz
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cage the elephant
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PostSubject: Re: What is a “tax expenditure?”   Thu Jul 28, 2011 12:59 pm

lmm wrote:
You still spin it as if the reps are always the bad guys. How about Reid's lying one trillion dollar savings by claiming what we would spend IF the two wars continue another 10 years?

That's like me claiming I saved $40,000 this year because I did not buy a new luxury car. If I wasn't going to buy it in the first place how the heck did I save $40,000 that I don't have in the first place?

As for the chicken manure, it's either pay more for chicken and eggs or have the loophole. What do you prefer?

On the mortgage deduction, where do you get that it's only for the rich? I looked forward to that every year until my house was paid off. How is that only for the rich?

This is the reason I cannot take the Prop seriously. No matter what the problem is, Prop ALWAYS takes the Democratic / Left avenue, and blames the Republicans / Right. While I have no part affiliation, I tend to be conservative, but not to the point of blindly following the Republican / Tea Party parade. I follow politics enough to know that the problems are a combination of BOTH parties. I hold each party in equal judgement on issues I feel like they fail in. I know similar people to Prop, and I think it is a very naive practice to follow a single party while neglecting to admit / see it's weaknesses. It almost smacks of being "brainwashed". Very dangerous line of rational.
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Ubu
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PostSubject: Re: What is a “tax expenditure?”   Thu Jul 28, 2011 1:23 pm

LOL, true Cage. But you understand why we need a two (or more) party system and advocates for the respective parties?

"Power corrupts and absolute power corrupts absolutely"

We require a two party system to "see saw" back and forth as a "check and balances". Otherwise......................

Our job is to recognize when we need a change to swing the pendulum back............

Crap.......y'all are making me think and now my head hurts........fooey on y'all

Giggle
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lmm
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PostSubject: Re: What is a “tax expenditure?”   Thu Jul 28, 2011 2:44 pm

Prop is pro liberal and heavily pro union as all his posts show.

I agree Cage, both sides are not worth a dime, but the liberals terrify me while the conservatives only annoy me. Giggle
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