Do Tax Loopholes Cost American Taxpayers $1.4 Trillion a Year?

In the undercard debate, Former Gov. George Pataki (R-NY) said tax loopholes “cost American taxpayers $1.4 trillion a year.” Pataki is referring to “tax expenditures”, or the sum total of deductions, credits, and other breaks cause in lost revenue to the federal government. These include popular breaks like the mortgage interest deduction, charitable deduction, and hundreds of other provisions.  According to the Joint Committee on Taxation, there are $1.3 trillion of tax expenditures in 2015, growing to $1.6 trillion by 2017 (when the next President will take office). The Office of Management & Budget also estimates the number of tax expenditures, at $1.2 trillion in 2015 growing to $1.4 trillion by 2017. For reference, there was about $1.9 trillion raised via income taxes in 2015.

Pataki correctly identifies this number as the “cost” of having these tax expenditures, but eliminating all of them would likely raise less. Some, such as breaks for health insurance and retirement accounts, would be difficult to immediately eliminate.

Ruling: Largely True