5. Light Up the Swamp Act
Summary: Require full transparency into tax loopholes in our tax code, including the number of people that benefit, the highest benefit recieved and the average benefit per person.
Background: One of Trump’s main campaign promises was to “Drain the Swamp”, tapping into people’s realization the system is rigged to benefit the few at a cost to the many. Needless to say, Trump didn’t drain the Swamp, and if anything made it deeper and murkier. The tax code is where much of the rigging occurs, with obscure tax advantages that effectively make it possible for people in the know to avoid paying their fair share of taxes. And the more we allow the rich to not pay taxes, the more the rest of us have to pay. The Light Up The Swamp Act will reveal just how many tax breaks they are, and how much they advantage the people that use them, and will give Red State Democratic candidates an issue that directly appeals to people who were concerned about the rigged system to vote for Trump, which also highlights how the Republicans and Trump have failed to live up to Trump’s promise.
Background: One of Trump’s main campaign promises was to “Drain the Swamp”, tapping into people’s realization the system is rigged to benefit the few at a cost to the many. Needless to say, Trump didn’t drain the Swamp, and if anything made it deeper and murkier. The tax code is where much of the rigging occurs, with obscure tax advantages that effectively make it possible for people in the know to avoid paying their fair share of taxes. And the more we allow the rich to not pay taxes, the more the rest of us have to pay. The Light Up The Swamp Act will reveal just how many tax breaks they are, and how much they advantage the people that use them, and will give Red State Democratic candidates an issue that directly appeals to people who were concerned about the rigged system to vote for Trump, which also highlights how the Republicans and Trump have failed to live up to Trump’s promise.
Our tax code is used to encourage different kinds of economic activities. Allowing homeowners to deduct their mortgage interest payments makes home ownership less expensive and so accessible to more people.
Many of these tax breaks, like the mortgage interest exemption, allow expenses to be written off to reduce taxable income. Others are in the form of tax credits issued for private investments in socially desirable projects, for example low-income housing. Some tax breaks reduce the tax rate for a given activity or allow part of the profit to be exempt from taxation.
Many of the tax breaks are widely used; an estimated 20 to 30 million home owners take the mortgage interest deduction. Others are far narrower, benefitting only a small group of people, for example the exclusion of special benefits for disabled coal miners. All are in our tax code because Congress believed they would somehow benefit our country.
Tax breaks are also part of the reason why our playing field has become unlevel. Most kinds of tax expenditures have an inherent economic limit; there are only so many disabled miners. However the tax breaks that allow individuals to avoid paying taxes on the money they earn are far more flexible. Once written into law clever tax accountants and attorneys often find ways to expand the break to protect even more profit from taxes. They become just another way for people with money to avoid paying taxes.
Tax breaks tend to happen with less scrutiny and transparency, because they are money the government doesn’t actually receive. They also tend to have very long lives. As a result our tax code is stuffed full of special tax breaks and reductions, most of which benefit a small number of taxpayers, and some of which cost the government tens of billions of dollars every year. They help people that have already made a lot of many make even more money.
Each year the federal government publishes the estimated cost of the various tax breaks. However the report provides only limited transparency – it gives the total cost to government, but no detail on how many people benefitted or how much each benefitted.
We need to fix this lack of transparency. The IRS should be required to provide full transparency into tax breaks. For each category, it should provide the number of people or companies that benefitted, the average tax savings per taxpayer and the benefit to the single largest recipient of the tax break.
Providing transparency into tax expenditures won’t increase taxes or reduce our budget deficit. However it will allow us to have a more informed conversation about our tax code and may lead to a fairer tax code and a more level economic playing field.
Many of these tax breaks, like the mortgage interest exemption, allow expenses to be written off to reduce taxable income. Others are in the form of tax credits issued for private investments in socially desirable projects, for example low-income housing. Some tax breaks reduce the tax rate for a given activity or allow part of the profit to be exempt from taxation.
Many of the tax breaks are widely used; an estimated 20 to 30 million home owners take the mortgage interest deduction. Others are far narrower, benefitting only a small group of people, for example the exclusion of special benefits for disabled coal miners. All are in our tax code because Congress believed they would somehow benefit our country.
Tax breaks are also part of the reason why our playing field has become unlevel. Most kinds of tax expenditures have an inherent economic limit; there are only so many disabled miners. However the tax breaks that allow individuals to avoid paying taxes on the money they earn are far more flexible. Once written into law clever tax accountants and attorneys often find ways to expand the break to protect even more profit from taxes. They become just another way for people with money to avoid paying taxes.
Tax breaks tend to happen with less scrutiny and transparency, because they are money the government doesn’t actually receive. They also tend to have very long lives. As a result our tax code is stuffed full of special tax breaks and reductions, most of which benefit a small number of taxpayers, and some of which cost the government tens of billions of dollars every year. They help people that have already made a lot of many make even more money.
Each year the federal government publishes the estimated cost of the various tax breaks. However the report provides only limited transparency – it gives the total cost to government, but no detail on how many people benefitted or how much each benefitted.
We need to fix this lack of transparency. The IRS should be required to provide full transparency into tax breaks. For each category, it should provide the number of people or companies that benefitted, the average tax savings per taxpayer and the benefit to the single largest recipient of the tax break.
Providing transparency into tax expenditures won’t increase taxes or reduce our budget deficit. However it will allow us to have a more informed conversation about our tax code and may lead to a fairer tax code and a more level economic playing field.