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66 IRET Policy Bulletin 1 (1996)

handle is hein.taxfoundation/iretpbul0025 and id is 1 raw text is: June 19, 1996 No. 66 FALSE CHARGES OF CORPORATE WELFARE FUEL ADMINISTRATION TAX HIKE PROPOSALS The Clinton Administration's budget submission for fiscal year 1997 includes a number of proposed tax increases, along with several much more publicized provisions to reduce taxes. The Administration claims that the majority of its revenue raisers are simply intended to curb excessive business tax breaks. The President's plan cuts unwarranted corporate tax subsidies, closes tax loopholes, improves tax compliance and adopts other revenue measures. These reforms ... are estimated to save $43.6 billion during the 7-year period, 1996-2002...l One problem with the Administration's characterization of its plan as a $43.6 billion saving is that taxpayers would not save on the deal; they'd be bearing higher tax costs in order for the government to collect additional revenue. A more fundamental problem with the Administration's sanguine assessment is that most of the tax hikes sought by the Administration would worsen tax biases against saving and investment. [Mlost business tax loopholes ... mitigate - but do not eliminate - tax penalties against saving and investment. Retaining or even expanding these breaks is thus called for by sound tax pr-inciples. The Administration's defense of its revenue raisers relies on the notion that corporations enjoy a wide assortment of tax breaks, causing their taxes to be too low. A leading advocate within the Administration of this position is Labor Secretary Robert Reich, who has spoken often of corporate welfare, implying that the tax treatment of businesses is somehow analogous to the benefits some people receive through means-tested welfare programs. Nor is this view confined to the Office of Management and Budget, Budget Of The United States Government, Fiscal Year 1997: Analytical Perspectives (Washington: DC, Government Printing Office, 1996). Institute for IRET is a non-profit, tax exempt 501(c)3 economic policy research and educational Research organization devoted to informing the public about policies that will promote on the economic growth and efficient operation of the market economy. Economics of 1730 K Street, N.W., Suite 910 * Washington, D.C. 20006 Taxation (202) 463-1400 * Fax (202) 463-6199 e Internet www.iret.org

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