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Our trillion-dollar tax breaks

U.S. tax form

U.S. tax form Photo Credit: istock

Extending billions of dollars of expiring tax cuts is the battle of the hour, but there's another tax number worth pondering - $1.1 trillion.

That's the cumulative value of the many deductions, credits, exemptions, exclusions and special rates scattered throughout the federal tax code. President Barack Obama's deficit reduction commission calls these breaks what they really are - "spending by another name." And because they provide something for just about everybody, what they also really are is popular.

Making like the Grinch that stole Christmas, the National Commission on Fiscal Responsibility and Reform says all these individual and corporate tax breaks should be eliminated in exchange for lower tax rates, smaller deficits and a simpler, more user-friendly tax code. That's a trade-off worth considering.

Nobody relishes giving up familiar tax breaks. Some taxpayers will no doubt grade any reform plan entirely on what it would mean for their personal bottom line. Anyone taking that narrow view will be disappointed. It will likely take higher taxes and less spending to rein in soaring federal deficits.

But a simpler tax code and smaller deficits would be huge pluses for the nation. That's doubly true if, in the process, some revenue is redirected to investments in education, infrastructure and energy, laying the groundwork for a dynamic, job-creating economy in the decades ahead. hN


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