FollowThe Senate Budget committee held a hearing on Tuesday, March 5th, to get to the bottom of wasteful spending, reduce the deficit and avoid key spending cuts caused by the sequester. At stake is either raising taxes on the wealthy and large corporations or slashing programs vital to seniors, families and communities all over the country.
USC law professor Edward D Kleinbard (http://weblaw.usc.edu/contact/contactInfo.cfm?detailID=68912) stated that because of the Great Recession, the government has lost around $2 trillion in revenue over the last few years and that the Fiscal Cliff will reduce revenues by $4 trillion. He argued that it is especially important to focus on personal itemized deductions such as home mortgage, charitable contributions and state and local taxes. They take about $250 billion out of revenues and help the wealthy rather than low income people.
He suggests replacing personal itemized deductions and the standard deduction with 15% tax credits. In doing so, it would raise approx. $1.5 trillion in revenues over the next 10 years.
He is also in favor of scaling back the home mortgage deduction, which is known to be a “sacred cow.” His rationale is that it is a sacred cow we can no longer afford. “Either we corral these sacred cows, or we allow them to stampede all over us.”
Jared Bernstein, (http://jaredbernsteinblog.com/) senior fellow at the Center for Budget and Policy Priorities wants tax expenditures assessed. He would like to see tax deductions for tax payers of certain incomes capped. However, he agrees that a cap would overlook other tax expenditures that are ripe for reform. “Tax expenditure reform offers an excellent option to reduce wasteful spending through the tax system, while helping to meet our fiscal challenges in ways that will simultaneously improve our deficit outlook, increase economic efficiency, and add much‐needed fairness back into the code,” he said.
Sen Patty Murray, D-Wash, (http://www.murray.senate.gov/public/) chair of the Senate Budget Committee stressed that it’s important that we look at government programs carefully and put families and our economy first. However, she also agrees that expenditures in our tax code must be closely examined as well. “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?”
Russell Roberts, (http://en.wikipedia.org/wiki/Russell_Roberts_(economist) research fellow at the Hoover Institution feels that the tax code needs to be simpler and more transparent. But even more important, the government needs to spend money wisely. “We spend too much and much of it we spend poorly.”
To learn more:
Click here: Senate Eyes Wasteful Spending in Tax Code
For more information please contact Kevin Thompson at
kevin@kevinthompsoncpa.com or call him @ (310) 450-4625.
