A Chilling Read: The Tax Expenditures
List
Every Sunday, the Washington Post publishes a book
review section covering the latest novels and works of nonfiction. The Post has yet to feature a recently
published tome authored by the staff of the Joint Committee on Taxation
entitled Estimates of Federal Tax
Expenditures for Fiscal Years 2007-2011. But if it had, the
book would have been listed under the heading "Scary Reading."
The Joint Tax Committee
publication is scary because it clearly lays out exactly where the money is
that is not currently taxed—but could be if Congress and the
President decided to change course. That's what a tax
expenditure is—a revenue loss to the government because of some
special provision in the tax law granted by Congress.
Here's a list of major
tax expenditures that relate to the business activities of NAIFA members
and the revenue loss associated with each over the period 2007-2011:
|
Revenue Function
|
Revenue Lost 2007-2011
(In Billions)
|
|
Cash
Value of Life Insurance/Annuities
|
$150.9
|
|
Insurance
Company Reserves
|
$10.7
|
|
Dividends/Long-Term
Capital Gains
|
$631.9
|
|
Capital
Gains at Death
|
$279.9
|
|
Cafeteria
Plans
|
$185.5
|
|
Employer
Provided Health/LTC Insurance
|
$628.5
|
|
Self
Employed Health/LTC Insurance
|
$24.3
|
|
Health
Savings Accounts
|
$4.6
|
|
Pension
Contributions and Earnings—Employers
|
$607.3
|
|
IRAs
|
$94.1
|
|
Keogh
Plans
|
$54.5
|
|
Employer
Provided Life Insurance
|
$13.3
|
|
Employer
Provided Accident/Disability Insurance
|
$15.3
|
The take away from this
Joint Tax work of nonfiction is that the products and services that NAIFA
members use in their daily work with clients receive a lot of special
treatment. As the late Sen. Everett Dirksen (R-IL) observed back in the
1960s: "A billion here, a billion there, after a while you got some
real money." And it's all neatly laid out on the printed page.
How is the book used?
Say you're the federal government and you are running a budget deficit, but
you want to stop running a deficit. You can cut spending or increase
taxes—or some combination of the two. Or, say, you want to increase
the funding for a program favored by the majority in Congress but don't
want to increase the deficit. Again, you have the same choices.
Making
choices is never easy in Congress, but depending on the political
environment, raising taxes on a particular group is usually easier than
cutting overall federal spending. That's the robbing Peter to pay Paul
principal. Just ask the tobacco industry. The bulk of the funds ($35
billion over five years) needed to pay for the congressional plan to beef
up the State Children's Health Insurance Plan (S-CHIP) would come from an
increase in tobacco taxes. Say what you will about tobacco, but the point
is clear. If Congress wants to do something, and it needs money to do it,
it knows just where to find it. It's all in the book.
Back to October 15, 2007, NAIFA Frontline
|
