Donald Trump wants to slash Medicaid, Social Security disability, and food stamps in order to expand the military and give the rich and corporations big tax cuts.
There’s a far better way to help balance the federal budget – cap tax expenditures.
The federal government is diverting hundreds of billions of tax dollars every year to help the wealthiest Americans become even wealthier through tax expenditures that are the equivalent of government handouts – allowing the wealthy to deduct or exclude from their taxable incomes large amounts of employer-provided health care, retirement savings, and mortgage interest.
These tax expenditures demand reform for three big reasons:
- First, they are unfair. Middle and low-income workers don’t get from their employers nearly as much health insurance and retirement income as do corporate executives. Many get none at all. And their mortgages– if they have any– are usually much smaller, because they live in homes that don’t cost as much.
- Second. these deductions and exclusions are nonsensical. Originally, they were put into the tax code to give people financial incentives to get health insurance, to save for retirement, and to buy a home. But the rich don’t need financial incentives to do these things because they’re … rich.
- Finally, these deductions and exclusions are hugely expensive. They cost hundreds of billions of dollars a year – $348 Billion in 2015 alone – the lion’s share going to high-income families.
Instead of wasting these billions on making the wealthy even wealthier, we should be using these resources to provide better healthcare, retirement security and affordable housing to low and middle-income households, including households of color, who are currently losing out.
There’s no reason why America’s wealthy should be able to deduct or exclude from their taxable incomes more than, say, $25,000 a year for employer-provided health care, retirement, and mortgage interest.
Limiting those deductions and exclusions would be rational, fiscally responsible, and fair. Unlike Trump and Republican budgets that want to slash Medicaid, Social Security disability, and food stamps.
This article was originally posted on Robert Reich’s blog.
Stop tax breaks for the rich: Create a new tax system that doesn’t favor the wealthy:
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