Tax Extenders, the Budget, and the Need for Reform

Discretionary budget, tax breaks, and the deficit (FY 2013)

Tax Extenders signal need for reform

Right now, Congress is considering the fate of the so-called tax extenders, a laundry list of unrelated, "temporary" tax breaks that have been bundled together and extended year after year, costing the U.S. Treasury billions of dollars.

These tax extenders are a great example of why Congress needs to tackle comprehensive tax reform, yet they’re only a small part of the overall cost of tax breaks.

Tax breaks cost as much as discretionary spending

Back in fiscal year 2013, we spent about $1.18 trillion of discretionary funds. At the same time, we lost about $1.18 trillion in revenue due to special credits, deductions, and loopholes in our tax code.

That’s right. In 2013 the cost of tax breaks – which are subject to little oversight and tend to remain quietly on the books – was about the same as our discretionary budget. That's why tax reform is so important. Even tax breaks designed to be short-lived have a habit of sticking around so long that we call them "tax extenders."

New report examines corporate, individual tax breaks

NPP’s latest report, The Big Money in Tax Breaks Continues, uses the latest data to explore the total cost of spending through the tax code. The report shows corporate tax breaks over time and examines how the largest tax breaks for individuals do not benefit everyone equally.

Key U.S. tax break findings

  • Total tax breaks were 1.6 times the amount of the budget deficit in 2013.
  • Corporate tax breaks totaled $176 billion in 2013 – that’s about $1,328 per household.
  • About 17 percent of the benefits from major tax breaks go to the top 1 percent of households.
  • The majority of Americans want a budget that closes corporate tax loopholes and limits tax breaks for the wealthy.

Read the entire report: The Big Money in Tax Breaks Continues.

Additional tax break data and interactive resources