Tax Foundation Testifies before Congress on Need for Fundamental Tax Reform

March 10, 2011

Yesterday Tax Foundation president Scott A. Hodge testified before the Senate Budget Committee, explaining the assemblage of deductions and provisions in the federal tax system known collectively as "tax expenditures." This category includes business provisions, like the deduction for research and development; individual provisions, like the mortgage interest deduction for homeowners; as well as provisions that function as aid to state and local governments.

The hearing, "Distribution and Efficiency of Spending in the Tax Code," was intended to clarify for Senators and attendees the size of major tax provisions and who is eligible for them, and provide options for comprehensive tax reform in the current Congress. Hodge also emphasized the increasing use of tax policy to implement social and economic policies unrelated to raising revenue.

Hodge told the committee:

While tax cuts will always curry more favor with voters than new spending programs, Washington needs to call a truce to using the tax code for social or economic goals. The consequence of trying to micromanage the economy as well as individual citizens' behavior through the tax code is a narrow tax base and unnecessarily high tax rates. These high rates are endangering America's global competitiveness and undermining the nation's long-term economic growth.

Watch the hearing, "Distribution and Efficiency of Spending in the Tax Code," or read Scott Hodge's the testimony.


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