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Boehner is right about one thing on taxes

I was pretty tough on House Minority Leader John Boehner the other day, and I don’t regret a word, but the Ohio Republican made one important suggestion that’s worth highlighting. It’s about the obscure-sounding but increasingly costly subject of tax expenditures.

These are just what they sound like -- spending programs disguised as tax breaks. In recent decades, the number and price tag of tax expenditures have exploded: the annual cost is approaching $1.2 trillion, according to the Center for American Progress. To put this in some perspective, that is half of what the government brings in through the tax code and twice the entire budget for non-security discretionary spending.

This expansion has occurred in part because Boehner’s colleagues have been happy to embrace new tax expenditures -- these are tax cuts, after all, and therefore by Republican definition always good -- that they would denounce if accomplished through direct spending.

Yet tax expenditures, once embedded in the code, are harder to remove because they don’t have to go through the annual appropriations process. This is government spending on auto-pilot. And because most are structured as deductions rather than credits, tax expenditures are worth more to wealthier people, who pay higher marginal tax rates. As Maya MacGuineas of the Committee for a Responsible Federal Budget has pointed out, it is bizarre social policy to subsidize millionaires who buy vacation homes.

“We need to take a long and hard look at the undergrowth of deductions, credits, and special carve-outs that our tax code has become,” Boehner said in his speech to the City Club of Cleveland. “And, yes, we need to acknowledge that what Washington sometimes calls ‘tax cuts’ are really just poorly disguised spending programs that expand the role of government in the lives of individuals and employers.”

Boehner cited the “tax extenders” bill now making its way through Congress. “There’s everything in this bill: the research and development tax credit, special expensing rules for the film industry, an extension and modification of a tax credit for steel industry fuel, the mine rescue team training tax credit, and tax incentives for investment in the District of Columbia,” he said. “Are they worth it? Many are. But we just go ahead and extend all of them temporarily -- and usually right at the last minute -- so Washington can continue pandering to the loudest voices instead of implementing the best ideas.”

I can’t believe I’m saying this, but, bravo, Mr. Leader.

Boehner put his finger on the problem of tackling tax expenditures: No matter how arcane the tax break, there are lobbyists poised to defend it at any cost. Your tax expenditure is a special-interest loophole. Mine is a near constitutional right. Don’t even think about touching my: mortgage interest deduction, state and local tax deduction, charitable giving deduction, child care tax credit, flexible health spending account, 401(k), IRA, college spending account, employer-sponsored health care ... well, you get the point.

It’s clear what should be done about tax expenditures. Ronald Reagan and a Democratic Congress did it when they overhauled the tax code in 1986. Broaden the base. Clear out the “undergrowth” that Boehner correctly decried.

Whether he becomes speaker next year or remains the minority leader, he ought to follow through on this one.

By Ruth Marcus  | August 26, 2010; 10:52 AM ET
Categories:  Marcus  | Tags:  Ruth Marcus  
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Comments

"Don’t even think about touching my: mortgage interest deduction, state and local tax deduction, charitable giving deduction, child care tax credit, flexible health spending account, 401(k), IRA, college spending account, employer-sponsored health care ... well, you get the point."

Eliminating ALL of the above would have a direct impact on middle class Americans soo republicans will go after them before cutting carve-outs for industry or reducing the BLOATED military industrial complex welfare check.

Posted by: knjincvc | August 26, 2010 11:22 AM | Report abuse

In 1986 the tax code of this country was reformed. At that time as is typical of most pieces of legislation passed by congress the details - rules and regulations - were in many instances to be written by the IRS. At the time, my father's lawyers negotiated an agreement with the IRS that basically said that we would play by the old rules and if and when new rules were issued that we would abide by the new rules. To date, the IRS has not issued rules relating to our business and more than 3 decades have passed. I am certain that no one knows what is or is not in the 80,000 pages of tax code. We need tax reform in this country and we need it badly but the chances of this happening are ZERO.

Posted by: jeffreed | August 26, 2010 11:45 AM | Report abuse

Ruth Marcus' column contains a factual error. Control of Congress was split between the two parties when tax reform was passed in 1986: Democrats controlled the House, Republicans the Senate.

Democrats gained a Senate majority in the 1986 midterm elections, but the senators who were elected that November didn't take office until January 1987.

Posted by: austinrl | August 26, 2010 12:14 PM | Report abuse

I feel like I went through the looking glass. Not collecting taxes is spending? And spending is easier to stop than not collecting taxes? It makes you dizzy.

No, real "tax expenditures" are the ETIC, Education tax credit, home mortgage tax credit, child tax credit, etc. Vastly different than taxes not collected.

Posted by: kitchendragon50 | August 26, 2010 12:31 PM | Report abuse

Unable to just compliment someone on a position she agrees with, Ms. Marcus takes the opportunity to continue to take partisan swipes.

She's part of the Washington problem not part of the solution.

Posted by: Crmudgeon | August 26, 2010 1:32 PM | Report abuse

There is much to be said, both for and against, the use of tax law to steer private spending.

Some things, like home-ownership, are positive social trends. Others, like clean energy tax credits, promote new industries that will benefit our economy over the longer term.

I am less certain about things like yachts and vacation homes, which seem to favor those who really don't need incentives or help.

Posted by: OldUncleTom | August 26, 2010 2:01 PM | Report abuse

Subsidize millionaires who buy vacation homes? This one got away from me, this is the first time I'm hearing about this. And I can't believe Bohener brought this subject up. Was he smokin crack? So much for Obama going through the budget line by line. They need to cut that Military spending, too. There must be 30 years of Ex Military & politicians living the life off their big fat no-bid Govt. contracts.

Posted by: HemiHead66 | August 26, 2010 3:28 PM | Report abuse

"Subsidize millionaires who buy vacation homes? This one got away from me, this is the first time I'm hearing about this."

You didn't hear that the federal government was paying an $8,000 tax credit for first-time home buyers and a $6,500 tax credit for repeat home buyers? Your tax dollars were given to anyone buying a home, millionaires included.

Posted by: kitchendragon50 | August 26, 2010 3:56 PM | Report abuse

Boehner is crazy. Why cutting out the labyrinth of tax incentives would stop the special interests that keep this country running right in their tracks, why it would mean going back to letting the market allocate resources in the most efficient manner instead of the government determining how we spend our money, and it could even cause us to wonder why we need all the huge government bureaucracy anyway. Further, thousands and thousands if not millions of lawyers, accountants, finance managers and economists, and others are employed in high paying big bonus jobs trying to figure out what the government is going to do next and how to profit from it. Think of their jobs and their poor families before you start trying to make the tax system reasonable or understandable. You certainly don’t want to create another job crisis, now do you?

Posted by: droberts57 | August 26, 2010 6:34 PM | Report abuse

"Unable to just compliment someone on a position she agrees with, Ms. Marcus takes the opportunity to continue to take partisan swipes. She's part of the Washington problem not part of the solution. Posted by: Crmudgeon"

The only reason to quote you is you were short and wrong.

You don't like anti Republican posts, and haven't as long as I have been skipping you, so it is obvious that you miss a real strain of Irony running through this post.

John Boehner has NEVER been in favor of "Government Expenditures" being used to encourage things that need encouraged. His ONLY recipe for all things needing fixed or built is to propose yet another tax break, usually something only the Koch Brothers would have any real use for. His perscription for absolutely everything is "Tax Breaks" exactly because they can't easily be "Unfunded" when they don't work. Like the Bush tax breaks. Eight years experience show just how poorly they worked, (read that, not at all), and were they legislated incentives even the Republicans would be ought to repeal them. Unfortunately foer the republicans, they got a sunset provision that hurt, and the republicans never got a convenient time to make them premanent.

So now John, "Stop Federal tax Giveaways" Boehner is out there, in the very same speech, demanding Obama make HIS tax give away permanent.

He can't keep his story straight for even a single half hour speech.

Of course, the tax breaks he OPPOSES are things like the earned Income tax Credit, (It doesn't help the Koch Brothers) and day care tax credits for the lowest income tax payers, (It doesn't help the Koch Brothers.) and a dozen other tax breaks that were theoretically supposed to help the poor and middle class except that neither class made enough money to pay enough taxes to benefit from the programs. They were supposed to help the middle class, bad, and didn't help the Koch Brothers, badder. But John is all about posturing rather than doing. I75 and I 70 in John's district are permanently under widening, bridge replacement, beautification, upgrading, landscaping, bridge protection, beautification, decoration or expansion, all of which are ear marks none of which John personally earmarked because he can always get someone else to do the earmarking for him, so he can campaign on NO EARMARKS!!!

That orange glow he sports isn't chemical tan, people, it is excess hypocrisy oozing out his pores.

Posted by: ceflynline | August 26, 2010 8:36 PM | Report abuse

The Republicans play the childhood game of hide and seek with taxes.

They attack Democrats for entitlement spending (which is not baseless), but proceed to implement tax cuts and tax expensidutres which are the same as entitlements.

Tax cuts have the same budget impact as entitlements.

Tax cuts have the same permanency of entitlements.

Tax cuts are as hard to repeal as entitlements.

Tax cuts carry the same public sentiment as entitlements.


Yet Boner and the Republicans want to Hide the fact that they are entitlements, and play seek with how they have run up our national debt over the past 30 years.

Posted by: thecontributist | August 26, 2010 10:13 PM | Report abuse

Unable to just compliment someone on a position she agrees with, Ms. Marcus takes the opportunity to continue to take partisan swipes.

She's part of the Washington problem not part of the solution.

Posted by: Crmudgeon | August 26, 2010 1:32 PM |
-------------------------------------------

And you NEVER take partisan swipes??

Bohner never partisan swipes?

Have you read Krauthammer's column today?
Nothing but partisan swipes...

Posted by: Supertzar | August 27, 2010 6:03 AM | Report abuse

I agree. If Boehner was being honest about cutting deductions, bravo for him. It is needed.

Nobody really wants it, though, certainly in Washington. THAT is where their real power is.... giving favors to big constituents through tax breaks.

Posted by: baldinho | August 27, 2010 6:49 AM | Report abuse

There are so many fingers in the soup that no one would want to eat any. It is time to start over, go to a flat tax even with the chance of less progression.

Let the economy BE the economy!! Time to take out the trash. Legions of Accountants & tax lawyers & lobbyists are evidence of that. Reform is no longer possible. Gut it!

Posted by: GrinCanyon | August 27, 2010 8:36 AM | Report abuse

We hear all to often from conservatives that the remedy is a "FLAT TAX". Well, it would certainly work for corporate income tax.

Right now $billions are spent every year by corporate America to file tax returns. In 2008, GE's tax return was over 30,000 pages. You can imagine the cost and man hours spent to produce that return.

The solution:

1) A flat 20% tax on Earnings before Interest and Taxes (EBIT) for all corporate tax returns. All industry sectors would see the same tax rate, no exceptions. This would take the government engineering out of the economy that right now favors oil, gas, timber, mining, etc.

2) An automatic withholding of 1% on all cash receipts in any bank account with a corporate tax ID. This would catch all the tax cheats and off-shore entities that skip out on US taxes.

And with these new tax revenues Congress should drop the social security tax by 50% - pay for it by eliminating the salary cap (now at $100,000).

When is Congress going to fix AMT? When is the middle class going to get a tax break? W

Posted by: MikeTracy | August 27, 2010 8:50 AM | Report abuse

Sure, BoneHead from Ohio wants to kill all tax breaks for working people. How very GOP of him. Just like Reagan killed the solar tax breaks for homeowners.

For starters, kill the stupid Ethanol subsidy and oil depletion allowances.

Posted by: 809212876 | August 27, 2010 1:54 PM | Report abuse

If we're going to go to a flat tax, make sure there's a flat tax on the gross receipts of churches, they do not deserve any tax breaks.

Posted by: 809212876 | August 27, 2010 1:56 PM | Report abuse

Very well said. If Boehner carries through he'll have earned his pay and my grudging respect.

I don't have the moral fortitude to pass up the ridiculous deductions that the tax code allows me to take but have wondered for years why the government gives me tax incentives to do things that I have plenty of financial motive to do for myself anyway -- e.g., save for my retirement, own a home, own and maintain a rental property...

The day I hear Tea Party members actively supporting the repeal of these kind of deductions that benefit people who live well above the poverty line is the day that I will entertain the possibility that they may have a few ideas that make sense.

Posted by: exco | August 27, 2010 2:58 PM | Report abuse

Sorry, I take back the comment that I could ever give Boehner grudging respect for anything. I have unfortunately just seen his latest campaign abomination. In it, the same Republican Party leaders who have done NOTHING to stop the over-the-top anti-Muslim screeds by people like Newt Ginrich -- despite the fact that these screeds make the jobs of US soldiers and civilians in Iraq and Afghanistan more difficult and more dangerous -- have just told all Americans, once again, that Republicans and Republicans alone support our troops.

Real Republicans, PLEASE take back your party.

http://gopleader.gov/News/DocumentSingle.aspx?DocumentID=204451

Posted by: exco | August 27, 2010 3:40 PM | Report abuse

Ruth,

Stanley Surrey would be proud.

Posted by: Blattman | August 27, 2010 7:29 PM | Report abuse

"Boehner is right about one thing"

Well, that is one MORE than Oblather & his econ team.

Oh yes, NOT taking money out of citizens pockets isn't equal to spending money taken from citizens pockets. Where does WaPo get these psychotic writers from? The spin bin?

Posted by: illogicbuster | August 28, 2010 6:11 AM | Report abuse

Marcus, as is usual for Journolist, has never met a tax she didn't like. I particularly enjoy her quotes from the Center for American Progress. Why not just use Karl Marx directly?
What's needed is for the income tax to be repealed a replaced with a national sales tax that will automatically rise and fall with the economy.
No more deductions or "rewarding your friends and punishing your enemies" AND it gets rid of the IRS.
Thank you Woodrow Wilson.

Posted by: backsds | August 29, 2010 7:50 AM | Report abuse

Marcus, as is usual for Journolist, has never met a tax she didn't like. I particularly enjoy her quotes from the Center for American Progress. Why not just use Karl Marx directly?
What's needed is for the income tax to be repealed a replaced with a national sales tax that will automatically rise and fall with the economy.
No more deductions or "rewarding your friends and punishing your enemies" AND it gets rid of the IRS.
Thank you Woodrow Wilson.

Posted by: backsds | August 29, 2010 7:52 AM | Report abuse

Marcus, as is usual for Journolist, has never met a tax she didn't like. I particularly enjoy her quotes from the Center for American Progress. Why not just use Karl Marx directly?
What's needed is for the income tax to be repealed a replaced with a national sales tax that will automatically rise and fall with the economy.
No more deductions or "rewarding your friends and punishing your enemies" AND it gets rid of the IRS.
Thank you Woodrow Wilson.

Posted by: backsds | August 29, 2010 8:35 PM | Report abuse

The tax code aptly illustrates what is wrong with Congress.

Posted by: snowyphile | August 30, 2010 7:06 AM | Report abuse

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