President Obama has admitted that his so-called Buffett Rule isn’t really about reducing the deficit, but about tax fairness. Yet he and his supporters have still clung to the idea that the proceeds, about $4.5 billion per year, while they wouldn’t close the deficit, are nothing to sneeze at.
As I pointed out the other day, though, while liberals have derided Romney’s plan to eliminate high-income taxpayers’ deduction for mortgage interest on second homes as meaningless, it would actually raise a non-negligible amount of revenue, and quite possibly more than the president’s proposal.
In fact, there are a variety of measures — including spending cuts and simplifications of the tax code — that could easily reduce the federal deficit by about $4.5 billion:
One. Legalize marijuana, and tax it: Philip Klein at the Washington Examiner has pointed out that taxing the drug would raise $5.8 billion in revenue each year, outdoing the Buffett Rule. The Puff-it Rule, anybody?
Two. Reduce the average monthly Social Security check by $7.50: The mean Social Security benefit per month is $1,230. The entire program’s outlays per year amount to about $750 billion; reducing this by just 0.6 percent, or approximately $7.50 on the average check, would save $4.5 billion per year.
Three. Withdraw the unspent federal subsidies for high-speed rail: The American Recovery and Reinvestment Act allocated $8 billion in subsidies for states to pursue high-speed rail. Most of the eligible states have rejected the money, but it’s been peddled elsewhere. $4.5 billion could easily be found by canceling assistance to the projects that are still ongoing, including $3.3 billion in California’s chimerical rail plan.
Four. Get rid of the “energy-efficiency improvement” tax credit: The federal government currently forgoes $4.37 billion in revenue per year by allowing taxpayers to deduct home-improvement expenses for solar panels, insulation, and more, as “energy efficiency” measures.
Five. Eliminate the credit for low-income-housing investments: Investments in certain housing projects that are to some extent aimed at low-income communities are currently tax-deductible, costing the federal government $6.15 billion in revenue each year — you wouldn’t even need to kill the whole program.
Six. You could almost get there by eliminating the tax deduction for “employee parking expenses.” Taxpayers are currently allowed to deduct the amount of money they spend on parking at their workplace, to the tune of a projected $3.06 billion in 2013. That doesn’t quite match the Buffett Rule, though you’d get closer by adding in the $560 million in revenue lost by a similar credit for the purchase of public-transit passes.
Seven. Reduce by half the exclusion for employee meals and lodging: Certain employee fringe benefits, including meals and lodging, are not taxed as ordinary income. This deduction will amount to a projected $10.29 billion in 2013; if just half of these benefits were taxed, it’d raise more than the Buffett Rule.
Eight. Tax interest income on bonds for the construction of hospitals: Such interest is currently tax-free (apparently to stimulate the building of hospitals), forgoing $4.28 billion in 2013 revenue.
— Patrick Brennan is a 2011 William F. Buckley Fellow at the National Review Institute.