Mar 5 2013 10:30 AM
Washington, D.C.— Today, Chairman Patty Murray (D-WA) and the Senate Budget Committee held a hearing with policy experts on tackling the deficit in a balanced and fair manner, rather than solely by cutting programs that are critical to families, seniors, and communities nation-wide. Majority witnesses included Edward D. Kleinbard, Professor of Law, University of Southern California, Gould School of Law and Jared Bernstein, Ph.D., Senior Fellow, Center on Budget and Policy Priorities. Members and witnesses discussed the impact of tax expenditures on the deficit, and the need to close loopholes and eliminate wasteful and unfair spending in the tax code.
Professor Kleinbard testified on the effects of tax expenditures and the need for tax reform, “The United States can afford to increase the total taxes it collects as a fraction of GDP. Just a decade ago, the country ran budget surpluses and enjoyed both a robust economy and job growth, while tax collections exceeded 20 percent of GDP…. this means directly tackling some of the deliberate Congressional subsidy programs baked into the tax code, which is to say, tax expenditures.” Professor Kleinbard’s full testimony can be found here.
Dr. Bernstein testified that tax expenditures’ usefulness, or lack thereof, should be assessed using a three-part test. He noted, “Members will not be surprised that it is far too easy to find many tax expenditures that are ‘trifectas’: they forego significant revenue, they induce inefficiencies, and they return most of their benefits to the wealthiest households, boosting after-tax inequality and failing on the fairness criterion.” Dr. Bernstein’s full testimony can be found here.
Key excerpts from Murray’s opening statement
“Now, there’s no question that we do need to look at government programs carefully, so that we can make fair, responsible cuts that put families and our economy first. But a big source of spending, and one that deserves to be just as closely examined, is expenditures in our tax code. While we don’t often think of tax expenditures as a form of spending, they require us to make the same kinds of tradeoffs that other forms of government spending would, and lots of them.
“There’s no good reason, for example, that taxpayers currently subsidize millionaires more, when they purchase a second home, or a yacht, than they do middle class families purchasing their first home. And why should a hedge fund manager pay a lower tax rate on his income than a soldier, police officer or a teacher?
“If the goal of our budget plan is to strengthen the middle class and work towards broad-based economic growth, finding savings from unfair tax provisions is an opportunity to responsibly reduce our deficit, and invest in our future.
“Just as we have got to bring down our deficits and debt, we’ve got to make sure we’re educating our workforce for the 21st century. We need to repair our roads, bridges and airways so that businesses can move their people and products efficiently. And we need to invest in research and development so we can continue growing new industries in the United States, rather than ceding those new industries, and the jobs that come with them, to China or India.
“So at a time when we absolutely must cut where we can, looking at ways we can close special tax breaks that aren’t targeted to help the middle class or our economy just makes sense. Especially when, by making these adjustments, we can stop giving an unfair advantage to those who are already doing far better than most Americans, and instead focus on making crucial investments in our future, while cutting our deficit in a fair way.”
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3/5/13 -Current record