This is the Cato Daily podcast for Monday, April 14th, 2025.

I'm Caleb Brown.

Just ahead of Tax Day, Cato's Adam Michelle is ready to wrap up his informal bracket of which

tax expenditures are just the worst.

And it should come as no surprise.

The taxpayers taking the poll like the tax

preferences that benefit them more than those that don't. We spoke last week. We have many examples of

so-called tax expenditures. They are also called loopholes. They're also called giveaways. But as a technical matter, what are they?

As a technical matter, tax expenditures are deviations from some ideal tax base. So there's debates over what that ideal tax base is, but the government generally

scores them from an income tax base. And they are things that are tax credits and tax deductions

that are given to special interest groups or preferencing certain types of activities. All right. So preferencing

activities is not something the tax code, generally speaking, ought to do, right? This is correct.

The ideal tax code should be a broad base, meaning we have fewer of these holes punched in it.

And that allows you to have a lower tax

rate. And low tax rates are important because as you raise the rate, the economic damage of the

tax increases exponentially. And that's why the classic tax reform recipe is broadening the tax base, getting rid of these tax expenditures

properly defined, and using any higher revenue to lower tax rates.

So there is an almost irresistible impulse by lawmakers to create, extend, expand, special benefits for their friends.

Yes, there's this constant push in, from political constituencies to, to preference, to create implicit subsidies for particular types of

activities or or business types, whether it be politically popular sources of energy or

low-income housing or or children in the case of the child tax credit or or health care spending

in the case of the employer exclusion. All of these things have constituencies around them that are

...