Reihan Salam brough to my attention this morning the fact that two ideologically odd tax breaks are worth considerably more money in the aggregate than I’d realized. These are tax deductions that overwhelmingly put cash in the pockets of rich people, but also serve—in effect—to subsidize big government at the state and local level.
That’s the tax exempt status of municipal bonds, worth about $124.4 billion over ten years and the tax deducion for state and local income taxes, which is worth about $900 billion over ten years.
These aren’t exclusively tax breaks for the rich but the aggregate financial benefits overwhelmingly flow to rich people. In a nice sane compromise-friendly world, the parties might be able to come together on these issues. But instead we have an insane compromise averse politics in which neither party wants to rescind these.
