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November 21, 2010

“The Blur Between Spending and Taxes

N. Gregory Mankiw’s column in the Nov. 21st discusses the relationship between “tax expenditures” and tax rates.  The basis of the discussion is that a balanced budget implies that income (taxes collected) equals spending (expenditures).  Bringing both into balance requires that the supporters of each source of income and each expenditure has their own supporters.  Complicating the process is that the different proponents of each expenditure and source of income have a different view on what is fair/proper.  To illustrate his point he asks if the tax deductions for homeownership is fair to those that rent. 

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