ABSTRACT
Few people realise how much revenue is lost through the special provisions in the tax law. Because these provisions are disguised payments to individuals, they are officially called tax expenditures. This chapter explains what is wrong with the income tax system and how it could be revised to meet the USA’s future needs. There is considerable support for what may be called ‘comprehensive tax reform’, but few people understand what such reform really means and how it would affect them. There are many provisions in the tax law which are ‘loopholes’ in the sense that most people use that term. Many other special provisions in the tax law erode the tax base and also produce great distortions in the economy. Economists and many other observers have concluded that the economic distortions created by the tax laws are serious and should be eliminated as quickly as possible, even if no additional revenue is obtained from the corporate tax.
