Put down the tax code and step away from the tax code. As usual, doing nothing would be a major improvement over what Congress is planning to do. Adam Michel writes:
The tax-extenders package being debated by Congress — which would prolong the life of certain tax breaks, many of which expired almost two years ago — does nothing but tilt the tax code in the favor of well-connected corporations. This package of narrow tax subsides undermines the gains from the 2017 tax cuts and reinvigorates the Washington swamp.
Each tax-extender grants a narrow economic privilege, tailored to some particular group or business interest. That naturally reduces opportunity for individuals and businesses who aren’t showered with special favors by Congress.
The list of extenders includes subsidies for three different alternative fuels, two special types of vehicles, short-line railroads and certain coal owned by Indian tribes, among others.
Many of these programs, by their very nature, are so complicated that the government agencies which oversee them have been unable to carry out proper enforcement.
For example, the owner of one of the largest biodiesel companies in the United States illegally claimed $511 million in biodiesel tax credits over a six-year period in Iowa. A different man in Colorado created a fake company to claim millions in biodiesel tax credits. And in New Jersey, another company claimed $100 million worth of credits for fuel they never produced.
The IRS struggles to enforce narrowly tailored tax incentives like this. It is too difficult to determine what types of fuels qualify for the credit and if the company claiming the credit actually follows through on production.
The result? Hard-working taxpayers subsidize fraudulent tax payments as part of a tax credit that shouldn’t exist in the first place. […]
Temporary reauthorizations mask the true cost of what are effectively permanent policy features. They provide an opening for politicians to request patronage from special interests on a semi-annual basis, and create economic uncertainty.
Even worse, retroactive reauthorization of credits that expired in 2017 are nothing more than a windfall profit — a convenient way for politicians to line the pockets of the special interests that support them.
By simply doing nothing, Congress can improve the tax code through attrition. Tax reform has never been so easy.
[Adam Michel, “Tax Reform Has Never Been So Easy,” The Heritage Foundation, July 25]
