Lobotomy via Tax Break?

Wednesday, April 09, 2014

John Stossel writes a column -- I mean, just barely scratches the surface -- about what's wrong with the tax code (and would be, even if taxation were a proper function of the government). A quote from Yaron Brook of the Ayn Rand Institute within sums things up quite well on that score:

"What the tax code is doing is trying to choose our values for us," complains Yaron Brook from the Ayn Rand Institute. I think I choose my own values, but it's true that politicians use taxes to manipulate us. Million-dollar mortgage deductions steer us to buy bigger houses, and solar tax credits persuaded me to put solar panels on my roof. Brook objects to every manipulation in the code: "It's telling us charity is good!" [bold added]
That's annoying enough to me, but what really drives me batty is the fact that you have to go looking for most of these "breaks" (or waste money paying someone to do so). And then media people and other fans of paternalistic government act like these scraps -- I learned last year that many tax "breaks" are chump change compared to what one must fork over to get them -- are good deals. News flash: Having less of my own money confiscated is less of a bad thing than it could have been. That is not a good deal or a gift or a windfall any more than having a branch in my window (rather than a whole tree) is a good deal from a tornado.

Not to sound like I'm castigating anyone who (as he should) tries to minimize his wallet's exposure to Uncle Sam, the family kleptomaniac, but ...

It's bad enough to see government manipulation of private spending decisions carried out on such a massive scale. It's worse, in the same embarrassing way watching a bad comedian is, to see people so enthusiastically lap up such government "largesse". Do people check their brains at the door en masse at tax time, or does the habit of doing everything with an eye for scamming a few cents' worth of tax relief just make most people more pliant?

This is a serious question. It's one thing to live in the world as it is, but quite another to forget that we aren't living in the world as it might and ought to be. The tax code is huge and it is the law, but it is a law made by men and subject to change -- not a law of nature.

-- CAV


4-10-14: Corrected a typo. 


Steve D said...

'I learned last year that many tax "breaks" are chump change compared to what one must fork over to get them'

Based only on doing my taxes I noticed the same thing. Usually the break is a small percentage of what you pay out. For example, my wife takes courses and we can deduct only a percentage of the tuition which changes my overall bottom line even less. In this respect, you could say the tax system isn’t manipulating me since no one in his right mind would pay out $6000 to save $500 on their tax bill. On the other hand, in that example it does reduce the cost the courses by $500 but personally that didn’t even cross our minds at the beginning. The same goes for child care expenses, charitable donations. None of these are done with taxes in mind. (I guess the bottom line is I am unsure how well that manipulation works)

And, collecting first and giving some money back later is the stuff of evil genius. It’s almost impossible for humans to get or anticipate a large check in the mail and not feel good about it. Every year, I force myself to look at the lines on my state and federal tax form entitled ‘total tax’, add them together along with my property tax bill from the county and ponder that number for a moment or two. And this doesn’t even come close to the real total you’d get if you included sales taxes and all the other taxes which I’m sure are there; hiding just under the surface.

So above all the other problems with the welfare state/mixed economy; it’s also annoying.

Gus Van Horn said...


You'd be surprised how much "selling" of things like donations and classes gets done by touting the "tax benefits". I think it often works a little like the refund checks do: There's a sufficient time delay that it doesn't register for most people that they are being fleeced. (e.g., Any time I drop something off at Goodwill, I get handed papers that help me track my donations for tax purposes.) And of course, people with tax preparers who find/ask about things get pleasant surprises on things they weren't aware of. That happens enough that lots of people I know almost compulsively save receipts for use at tax time.

And yes, the refund checks are, as you say, evil genius.