November 11, 2010 1:39PM 

# There Ain’t No Such Thing as a Tax Expenditure 

By [Michael F. Cannon](https://www.cato.org/people/michael-f-cannon) 

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The co-chairs of President Obama’s [Fiscal Commission](fiscalcommission.gov) [propose](www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/CoChair_Draft.pdf) to eliminate several tax loopholes while reducing marginal rates. Hear, hear. But they describe those loopholes as “backdoor spending in the tax code.” It is incorrect and dangerous to equate tax loopholes with government spending.

The tax code’s countless credits, deductions, and exclusions let people keep a portion of their earnings, provided they use the money how the government wants them to use it. Tax loopholes therefore have a lot in common with government spending: they give power to politicians, inhibit freedom, reduce economic output, unjustly enrich special-interest groups, et cetera.

But to call them “tax expenditures” or “tax subsidies” or “backdoor spending in the tax code” is to claim that when the government *fails to take* a dollar from you, it is *spending* that dollar. It implies that your dollar actually belongs to the government, which is graciously letting you keep it. And it implies that eliminating a tax loophole is not a tax increase, because that dollar already belonged to the government anyway. The government has simply decided to spend its money somewhere else.

When you hear a politician use the terms *tax expenditure*, *tax subsidy*, or *backdoor spending in the tax code*, beware. He’s about to raise your taxes.

##### Related Tags 

[General](https://www.cato.org/general), [Government and Politics](https://www.cato.org/government-politics), [Tax and Budget Policy](https://www.cato.org/tax-budget-policy) 

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