Washington’s love affair with tax preferences has spawned a system that is needlessly complex, economically harmful, and often unfair. Tax breaks reach into many aspects of daily life and influence many personal choices — on matters including health care, education, charitable donations, investment, saving for retirement, owning a home, and even raising children. They represent a major exercise of government power, but face less oversight than many activities on the spending side of the budget. They conceal the true size of government, and they confer enormous power upon the tax-writing committees in Congress — which have the ability to simultaneously raise revenue and spend it inside the tax code.
The time has come for serious reform. America needs to fix its broken tax system and find additional revenue to help reduce our persistent budget deficits. The best way to achieve both aims is to take a hatchet to the thicket of spending-like tax preferences. Many preferences should simply be eliminated; those deemed to serve important policy goals should be restructured to be simpler, fairer, and more effective. Lawmakers can then use the resulting revenue to cut tax rates across the board and reduce the deficit.
Such reform is long overdue. It won’t be easy, but the enormity of our budget problems may finally be enough to get liberals, moderates, and conservatives to join together to get it done.