Tierney: Tax loopholes a top priority

Rep. John Tierney is putting forth legislation he says will recoup an estimated $60 billion in annual revenue.In announcing the Tax Equity and Middle Class Fairness Act of 2011, Tierney said Monday that the legislation, if passed, will immediately eliminate nearly 30 tax “loopholes” and force the General Accounting Office (GAO) to review and evaluate hundreds of other tax giveaways.”We want to put on the table the issue of tax expenditures that are in the tax code that I consider hidden,” the Salem Democrat said from Washington while on a conference call with reporters, Nobel prize-winning Economist Joseph Stiglitz and Seth Hanlon of the Center for American Progress.”Too often the expenditures get in the code? and they serve little or no public purpose, are poorly designed or have not fulfilled their original intent,” Tierney said, adding that the legislation would save nearly $483 billion without cutting what he said are necessary investments in job training and education programs or social-services programs.Reducing the deficit “can’t all be done out of the domestic, non-security budget, we need to look at these expenditures,” Tierney said.Tierney noted that there were over 250 expenditures, which his office identified as subsidies, tax credits and various other small deductions that are in the current tax code. These allow companies to deduct approximately $1.1 trillion from their taxes each year, he said.These entitlements are not reviewed every year once they are in the tax code, nor are they capped, Stiglitz noted. Rather they are “spending programs,” according to Hanlon and do not undergo the same scrutiny as budget line items. Tierney argued that many of these subsidies have outlived their usefulness or, essentially, have done more harm than good.For instance, the proposal would immediately eliminate eight subsidies to oil and gas companies and four subsidies for coal companies that were originally intended “to help (the companies) get off the ground,” the Sixth District congressman said.Seven billion dollars would be recouped from tax breaks that allow companies to report international profits in countries with lower tax rates than the United States and other savings would come from closing loopholes in agribusiness and tax-shelter losses, he added.Stiglitz said that not only are the tax breaks inefficient and a source of inequality, sometimes they are somewhat puzzling. For instance, the legislation targets an expenditure that encourages horse breeding. “I’m not sure that’s on my short list of national priorities,” Stiglitz deadpanned.The bill would also require the GAO to evaluate the remaining tax expenditures and then recommend how to eliminate those that are not effective. Tierney estimated that this would occur within six months.Tierney acknowledged that the legislation does not yet have any co-sponsors, but was optimistic that it will achieve bi-partisan support when he presents it to legislators after the House and Senate reconvene in May.He noted that several groups including the Simpson-Bowles National Commission on Fiscal Responsibility and Reform, the Economic Policy Institute, Citizens for Tax Justice, and other groups have identified reforming tax expenditures as a priority.He acknowledged, however, that this would be only one part of legislators’ attempts to decrease the National Debt, which the Treasury calculates at over $14 trillion. The proposal does not include military or national security issues, which represent a large part of government spending, nor does it address entitlement programs such as Social Security or Medicare.”We definitely have to look at entitlements in the future,” Tierney said, while criticizing the proposal put forth by Rep. Paul Ryan, R-Wis., to replace Medicare funding with community grants. But Tierney said that this effort was focused on increasing revenues.”There are lots of small provisions, a billion here and a billion there,” Tierney said, and then paraphrased a longti