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1 Scott A. Hodge, Who Benefits from Corporate Loopholes 1 (2011)

handle is hein.taxfoundation/ffcgaxz0001 and id is 1 raw text is: FOUNDAT ION o,\L kk\1 Marc! 1, 2011 Ao. 260 Who Benefits from Corporate Loopholes? By Scott A. Hodge President Obama has been critical of so-called tax loopholes because, he maintains, they unfairly reward some industries-such as the oil and gas industry-and incentivize others to expand overseas rather than domestically. Despite this well stated position, the president's recently released FY 2012 budget shows that, like most people, he believes there are good tax expenditures and bad tax expenditures, and one's opinion and priorities determine which is which. On the one hand, the president's budget recommends eliminating or modifying more than $242 billion worth of tax expenditures benefiting multinational firms, oil and gas firms, coal companies, and insurance companies. On the other hand, the budget recommends making the Research and Experimentation Tax Credit permanent (worth $106 billion over ten years) and expanding a variety of other targeted tax credits for business worth more than $15 billion over ten years. To put these proposals in perspective, it's instructive to review the universe of corporate tax expenditures as outlined in a volume of the 2012 budget titled Analytical Perpedives. This volume contains estimates produced by the Treasury's Office of Tax Analysis of the budgetary costs of all of the tax preferences benefiting both corporate and individual taxpayers as of September 2010. However, these estimates do not include the extension of some preferences enacted in the compromise tax bill passed in December (such as the tax credit for ethanol production). In budgetary parlance, these preferences are called tax expenditures because public finance experts consider them the equivalent of spending through the tax code. There are roughly 80 separate corporate tax expenditures with a total budgetary cost of roughly $660 billion over the five fiscal years 2012 to 2016. While $660 billion is certainly a lot of money, it's not nearly as large as the amount of tax benefits conferred through the individual tax code. For example, the five-year budgetary cost of the exclusion for employer-provided health insurance for individuals is more than $1 trillion and the mortgage interest deduction is worth at least $609 billion to the housing industry.' Moreover, state and local governments enjoy about $640 billion in tax benefits through the combination of the Scott A. Hodge ispresident q the Tax Foundation Note: This study updates a previous study by Scott A. Hodge, Tax Foundation Fiscal Fact No. 236, Who Benefits Most from Targeted Corporate Tax Incentives? (July 27, 2010), .tr/5w.raxfoundaionjogg...u.b ic,-..s 9how!. 26 54.nrl. Office of Management and Budget, -Y2012 Budget of the United States GovernmentAnalytical Perspectives, chapter 17, table 17-3, p. 252.

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