Loopholes

September 12, 2012
Posted by Jay Livingston

Romney has promised broad tax cuts and a reduction in the deficit.  But the only way you can reduce tax rates for everyone and maintain the same amount of tax coming in is to close tax “loopholes.”  Which is what Romney said he would do.  The only trouble is that when it comes to which loopholes, he’s keeping that a secret.  (When it comes to specifics about taxes, Romney apparently has a don’t-tell policy.)

If Romney wanted to identify a few loopholes, he’d have a very wide choice.  The tax code is huge and complicated, and it is full of tax breaks. The Washington Post recently posted this interactive graphic that allows you to mouse through the mountain of tax expenditures* and see when each was created, how much it costs the government, and whether the money benefits mostly to individuals or to companies. 

Here’s a screen shot.

(Click on the image for a larger, clearer view.  Better yet, go to the WaPo Website.)

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* Some people have a hard time understanding the idea of “tax expenditure” especially at the individual level.  But from the perspective of the bottom line, it should be clear that forgoing money by not collecting a billion dollars in taxes has the same effect on the deficit as spending a billion dollars.