Washington – As taxpayers recover from finishing their annual filing chores, a presidential commission studying the tax laws has concluded there are too many deductions and credits.
Two credits, a deduction and special savings plans help taxpayers cut college costs. Special urban and rural tax zones encourage investment and job creation. Dozens of other tax benefits help families raise children and save for retirement, encourage adoption, nudge drivers toward hybrid cars and push businesses to invest in new equipment.
“We have lost sight of the fact that the fundamental purpose of our tax system is to raise revenues to fund government,” President Bush’s Advisory Panel on Federal Tax Reform reported.
The commission’s chairman, former Florida Sen. Connie Mack, said its nine members were surprised at the number of tax deductions and credits.
“It really sunk in about how much and how often the code is being used these days to either create incentives or disincentives for either investment or behavior,” Mack said.
The White House budget office ranks the cost of a deduction for businesses that provide health insurance to employees as the top tax break, worth $126 billion next year. Also high on the list are the popular mortgage-interest deduction, a capital gains break for home sales, a deduction for charitable contributions and the child tax credit.
