An Archaic Remnant of LBJ's Tax Policy

The attached chart is the annual summation of something which needs to be thought about a bit more. In the mid-1960s LBJ's Tax Policy Assistant Secretary came up with the notion of "tax expenditures" - he reasoned if you can track appropriations you should also track dimunitions of the tax base and he named these things tax expenditures.

Look at the list and you might go - so what (even if there is some argument about whether the real impacts of the "expenditures" are correct - which most people who know this stuff do not believe). Look closely at the first ten and there are some legitimate and illegitimate issues in public policy. Would it really be a good idea to eliminate the preference on capital gains and allow the government to reap the benefits of inflation and also depress the growth in capital stock? A couple like step up basis, are involved in the inheritance tax (or death tax) debates - if you buy the death tax - you probably buy the step up change (or else you go back to the nightmare that was in the IRS code briefly after the 1954 tax revision where holders of appreciated assets had to go back and find original values.

But there are also some other things that might bear looking at - the president's proposal on the absolute deductability of health insurance premiums is something that is on the table - part of our problem in health care costs is the structure we have created in the tax code. Some, although they might be worth looking at are off the table because of the interest groups represented (there is very little evidence that the mortgage interest deduction does a significant boost in home ownership - data from other nations where there is no deduction are not appreciably different).

My point is here is a report required in law which does little to improve the quality of public discourse - except at the extremes.