Saturday, July 16, 2011

Deductions Reduce Tax Revenue About Twice As Much As In 1990

Spending Hidden in the Tax Code by Greg Mankiw.

Click here to see the graph

It shows in 1990 the tax code allowed $500 billion in deductions, like for interest on your mortgage. It looks like about $1 trillion now. Here is what Mankiw says:
"The blue line is total discretionary outlays of the federal government, and the brown line is the sum of tax expenditures. Both are in constant dollars. Note that these two categories of spending are about equal in magnitude. It is just as important to focus on stealth spending implemented through the tax code as on explicit spending."

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