David Brooks and Ezra Klein both have smart columns focusing on tax expenditures today, the hidden spending that the US government engages in through subsidies, credits and loopholes in the tax code. The core of both pieces is the same, it's about time that tax expenditures got as much scrutiny as regular spending and while some of these expenditures are critical others are daft.
And because they are hidden, many of the tax expenditures go to those who need them least, the well connected and established over the vulnerable and the entrepreneurial.
As bad as it can be when the government makes poor spending decisions, it's even worse when the tax code leads hundreds or thousands of firms to make poor spending decisions. And it can be hundreds or thousands of firms.
I recommend reading both pieces. This point about tax expenditures needing scrutiny and being poorly targeted is one that we've been making for years with our annual review of the President's Budget Proposal, The Assets Report (last year's is here; this year's is forthcoming.) It's a point our friends at CFED have made with their report, "Upside Down."
There's good news on this front, as Brooks and Klein (who have both been on this page for a long time) are bringing much needed attention to the subject. As Klein points out the President, Governor Romney and other elected officials are making more and more noise about cleaning up the tax code. It's starting to look like something might happen.
Two big challenges remain, actually getting something to happen (not this year) and making sure that the baby doesn't get thrown out with the bathwater. In the meantime, keep an eye out for The Assets Report 2012, because this issue needs continued attention.