It's Tax Day (again)!
Taxes discussed, sort of, in the second presidential debate

Will popular but costly tax breaks end?

Tonight President Obama and Mitt Romney face off in their second presidential debate.

While Obama might be, as his campaign staff promises, more aggressive, I doubt we'll get any more specifics this time from Romney about his tax proposal(s).

The Republican challenger and his vice presidential pick Paul Ryan have remained steadfastly vague about changes they would make to the tax code.

The most we've gotten are three possible limits on itemized deductions: $17,000 mentioned by Romney before the first debate and $25,000 or $50,000 (make up a number, any number!) he threw out there during the event itself.

Romney swears that the home mortgage interest deduction on a principal residence, as well as the charitable donation deduction, are safe.

But from then on, it's fair game.


No guts, no glory, no tax deduction changes: Christopher Bergin, president and publisher of Tax Analysts, told CNN Money that to pay for any substantive rate reduction (such as the 20 percent across the board cuts to current tax rates that Romney proposes), a lot of tax breaks will have to be eliminated or significantly reduced.

And to do that, says Bergin, lawmakers will have to say "no" to lobbyists and constituents in their home states who have enjoyed those breaks.

Bergin doesn't see that happening. Neither do I and most other long-time Capitol Hill and tax observers.

"These guys have the political courage of my couch," says Bergin. "I'll predict with certainty that Congress will fail [Romney]" if he's elected and tries to do away with popular tax preferences.

So regardless of which man wins the White House this November, continued Congressional gridlock is a good bet.

For debate's sake -- the tax debate here on the ol' blog, that is, although I'd love to see it really happen during tonight's debate or any other time on the campaign trail in the next three weeks -- let's look at some of the more expensive tax breaks.

Tax savings for us vs. tax costs to Treasury: The Joint Committee on Taxation regularly tracks the ever changing effects that tax breaks have on the Uncle Sam's cash collection.

The Joint Tax Committee's report issued on Jan. 17 went to the tax-writing Ways and Means Committee; its counterpart across the Hill, the Senate Finance Committee; as well as to both the House and Senate Budget Committees.

Joint Tax Committee staff made its 2011-to-2015 estimates based on the tax law in effect as of Jan, 10, 2011. Expired or repealed provisions were not listed unless they had "continuing revenue effects that are associated with ongoing taxpayer activity."

Similarly, proposed extensions or modifications of expiring provisions were not included either.

In its analysis last year, the bipartisan committee offered a breakout of the most popular individual tax breaks and their potential costs to the Treasury between 2010 and 2014. The bottom line then was that Uncle Sam would forgo slightly more than $3.5 trillion those five years thanks to the tax deductions, credits and exclusions.

Earlier this year, the committee updated its figures to reflect tax break costs between 2011 and 2015. Amounts of the popular tax breaks are included and compared with last year's estimates in the table below.

Individual Tax Expenditures
2011-2015 & 2010-2014 Comparisons

Tax expenditure
and Function
Total Amount
(in billions)
Total Amount
2010-2014 except as noted (in billions)
Exclusion of employer contributions for health care, health insurance premiums and long-term care insurance premiums


Deduction for mortgage interest on owner-occupied residences $464.1 $484.1
Reduced rates on tax on dividends and long-term capital gains $456.6 $402.9
Net exclusion of pension contributions and earnings: Defined benefit [employer] plans $263.7 $303.2
Earned Income Tax Credit $294.1
Deduction of nonbusiness state and local government income, sales and personal property taxes $230.3 $273.3
Net exclusion of pension contributions and earnings: Defined contribution plans $375.9 $212.2
Exclusions of capital gains at death $230.8 $194.0
Deduction for charitable contributions, other than for education and health $186.1 $182.4
Exclusion for untaxed Social Security and railroad retirement benefits $188.8 $173.0
Tax credit for children younger than age 17 $168.9 $231.7 (2005-2009 estimate)  
Exclusion of benefits provided under workplace cafeteria plans $197.6

 $134.4 (2005-2009 estimate )

For the five years of 2011 through 2015, the costs to the Treasury in lost taxes is up a bit to almost $3.8 trillion.

Given how, as Bergin and many other have noted, Congress likes to reward voters and political action committee donors, a $3 billion increase isn't that much.

But it brings us back to the big question. Can anyone, at 1600 Pennsylvania Avenue or in the halls of Congress, stop the tax break train?

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