Friday, March 9, 2007 1:33 AM EST by Don Mckee -MDJ

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Did you realize that when you get a tax exemption for whatever reason, it's a "tax expenditure" by the government? In other words, it's actually government spending because the taxes aren't collected.

This inverted view, which prevails in the federal government and apparently most states, is explained in the latest report on "tax expenditures" by the Georgia Budget and Policy Institute, an Atlanta think tank, as follows:

"Tax expenditures are tax law provisions that exempt certain individuals, income, goods, services or property from being taxed. Tax expenditures reduce Georgia's revenue collections and are therefore a form of government spending through the tax system.

"Every dollar 'spent' through tax expenditures is a dollar not available for government services or for a lower tax rate."

All those exemptions - for homestead, for groceries, even for the personal exemptions on your 1040 federal return, etc. - are really "tax expenditures," money being spent that's "not available for government services or for a lower tax rate."

This smacks of what some conservative talk show hosts loudly contend - that liberals believe all our money actually belongs to the government and we are only allowed to keep a certain amount by the generosity of the government, i.e., the politicians in charge.

But the GBPI didn't invent the term or the concept. The truth is the term is used across the board - politicians, journalists, think tanks, etc. And that's part of the problem.

The GBPI report goes on to say:

"Unlike direct appropriations, tax expenditures enacted without sunset provisions are rarely reviewed by policymakers nor included in the public budget process."

But don't worry. "Tax expenditure" reform is on the march. Reports the institute:

"Today 39 states conduct some form of tax expenditure report, which provide data on all tax expenditures annually or biennially. The intention of these reports is to provide state legislators and the public with data required to make sound fiscal policy decisions."

Of course, the point is that Georgia is lagging way behind by not requiring these "tax expenditures" reports.

Let's face it. Aside from the terminology and the underlying ideology, the point is well-taken that tax breaks, also called "incentives" where business is being exempted, should be fully disclosed and reviewed, without a doubt.

Let's agree that our policymakers, i.e., politicians, should most definitely keep informed annually about all tax exemptions, tax credits, tax breaks. No doubt, plenty of them should be eliminated forthwith. Fine. Go for it, elected officials.

But please let's dispense with this "tax expenditures" stuff.

The very idea that if an individual or an industry or other class is not taxed makes it "spending" by our government bespeaks a political philosophy that is downright frightening. The concept and the terminology need to go.

By the way, GBPI is a nonprofit organization under 501c(3) of the Internal Revenue Code, exempt from taxation, or in its words, one of those "tax expenditures" that needs reviewing.

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MDJ