In case you comply with discussions about tax coverage that lecturers and politicians interact in, ultimately you’ll come throughout the idea of a “tax expenditure.” The time period appears internally contradictory. How might one thing be each a tax and an expenditure?
It will possibly’t. The time period is contradictory. And considering by way of tax expenditures can lead you to some unusual conclusions.
These are the opening paragraphs of David R. Henderson, “The Bizarre Economics of ‘Tax Expenditures‘”, TaxBytes, Institute for Coverage Innovation, August 29, 2023.
I exploit a numerical instance with the deduction for residence mortgages. I selected that on goal as a result of I assume there shouldn’t be a deduction for curiosity on a house mortgage. However that doesn’t imply that utilizing the time period “tax expenditure” to check with the deduction is a legit use of language.
I am going on to level out some implications of utilizing the time period “tax expenditure” to explain the house mortgage deduction.
Right here’s one:
Equally, elevating his tax fee would improve the tax expenditure. After which tax coverage wonks would say that he benefited massively from the tax expenditure despite the fact that the upper tax fee made him worse off.
Learn the whole thing, which isn’t lengthy.
In case you comply with discussions about tax coverage that lecturers and politicians interact in, ultimately you’ll come throughout the idea of a “tax expenditure.” The time period appears internally contradictory. How might one thing be each a tax and an expenditure?
It will possibly’t. The time period is contradictory. And considering by way of tax expenditures can lead you to some unusual conclusions.
These are the opening paragraphs of David R. Henderson, “The Bizarre Economics of ‘Tax Expenditures‘”, TaxBytes, Institute for Coverage Innovation, August 29, 2023.
I exploit a numerical instance with the deduction for residence mortgages. I selected that on goal as a result of I assume there shouldn’t be a deduction for curiosity on a house mortgage. However that doesn’t imply that utilizing the time period “tax expenditure” to check with the deduction is a legit use of language.
I am going on to level out some implications of utilizing the time period “tax expenditure” to explain the house mortgage deduction.
Right here’s one:
Equally, elevating his tax fee would improve the tax expenditure. After which tax coverage wonks would say that he benefited massively from the tax expenditure despite the fact that the upper tax fee made him worse off.
Learn the whole thing, which isn’t lengthy.