Cut Spending

Much has been said by Republicans regarding the need to cut spending. While they continually point to entitlement programs like Medicare and Social Security they also look to cut many of the safety net programs as well. At the same time, they vocally resist raising revenue calling that approach “class warfare”. On place that needs examination, is the area of tax benefits. Whether a dollar is spent on food stamps or on an individual tax deduction, regardless it is a dollar not available to pay expenses of government. Just as the Bush tax cuts have favored the top 10% of tax payers, the special tax deductions also favor the top individuals as well as corporations. Eliminating these deductions would prevent the loss of over $800 billion in revenue a year. This amount, by the way is far more than the expenditures on various safety net programs for the impoverished and the unemployed. The top 10 tax reductions are: 10 Year Revenue Loss* Tax Free Health Insurance $2.00 Tax Deferred Retirement $1.60 Mortgage Interest Deduction $1.00 State & Local Tax Deduction $0.90 Charitable Contribution Deduction $0.63 Step Up In Basis $0.71 Capital Gains $0.51 Tax Exempt Bonds $0.37 Off Shore Deferral $0.43 Accelerated Depreciation $0.54 Total Costs ove 10 Years $8.69 Total 10-year Tax expenditures $8.69 trillion If you keep in mind the majority of these tax benefits are used by less than half of individuals, it is apparent that money is power when it comes to influencing the writing of tax legislation. It should also be made known that a majority of the members of Congress, themselves, pay lower income taxes (and at lower rates) than their average constituent. If the Tea Party is serious about spending cuts, here is an easy way to shave $800 million from government expenditures.