Liberal think tank: Cutting tax breaks more responsible way to attack deficit

The report also notes that tax expenditures were more expensive in fiscal 2010 than areas like Social Security and national defense, and declares that tax breaks are in many ways akin to direct government spending: “After all, give a company a $1,000 check to subsidize an activity, or give it $1,000 off its tax bill — the company doesn’t care.”

The liberal group’s list of tax expenditures that can be curtailed includes health savings accounts, subsidies for the oil-and-gas industry, write-offs for corporate meals and entertainment, and subsidies for agribusiness and timber.

The study comes as lawmakers are debating how to fund the federal government for the last six months of this fiscal year and how to tackle long-term deficits. 

The most recent short-term spending measure passed by Congress will keep the federal government open through April 8. Officials on both sides of the aisle have said that they would like to make that the last short-term bill, but Democrats and Republicans as of yet have failed to find much common ground on how to fund the government for the rest of the fiscal year. 

Looking more long-term, more than 60 senators sent a letter to President Obama last week to push for “a broader discussion about a comprehensive deficit reduction package” that would use the president’s own fiscal commission as a foundation for talks.

The debt panel, chaired by Erskine Bowles and Alan Simpson, called for comprehensive tax reform to help eat into budget deficits. 

Overhauling the tax code has been an area that lawmakers on both sides of the aisle have said should be pursued. But there is some disagreement on Capitol Hill on how to proceed on tax reform — including whether tax reform should be part of a broad deficit-reduction package. 

Rep. Dave Camp (R-Mich.), the chairman of the House Ways and Means Committee, said last week that he wanted to bring the top corporate and individual tax rates down to 25 percent. (Both currently stand at 35 percent.)

Camp has yet to get into specifics about which tax credits and deductions he would prefer to see in exchange for those lower rates. It would reportedly take the elimination of roughly $2 trillion in tax expenditures to reduce rates to 25 percent without adding to the deficit. 

At the moment, the Obama administration has also shown more interest in revamping the corporate tax code, as opposed to the more comprehensive approach preferred in some quarters on Capitol Hill.