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Tax breaks and similar incentives exist to nudge the market in the direction the government would like. I may not approve, as a conservative person, as I always
by squirrelicus 7y ago
Tax breaks and similar incentives exist to nudge the market in the direction the government would like. I may not approve, as a conservative person, as I always advocate for a simple flat tax on all entities. But I'm not the politicians who decide they want to incentivize various behaviors in the market.
The real point I want to make is in order to simplify the tax structure, you rob the politicians of their main economic design power. No more tax incentives for solar, high efficiency windows, developing in high crime areas, and the like. I'm willing to pay that price, but are you? (The royal you, i.e. us).
The final point, the real crux of the matter, is that politicians cannot predict all the consequences of the tax breaks they create. If tax breaks exist, people should try to get them, otherwise the whole incentive structure doesn't operate. Then some people who were not intended to get the break find edge cases in the legal language to exploit. If the politicians can't predict all the edge cases of the incentives they design (which they can't) then we end up with things that seem outrageous until you read the law and go "oh, that's the loophole. Shitty, but seems legal.". This is why the federal code is so complicated. People making the tax code more complicated over time to try to specifically target the incentives. Just like a legacy codebase, in fact. Except that it's subjective when you evaluate it.
Edit: typos
- Barrin92 7y agothe other alternative is always to collect taxes in a straight-forward manner and hand out subsidies rather than tax breaks. Not that subsidies are not potentially also subject to abuse, but they seem at least somewhat more robust and controllable than the labyrinth that is the modern tax code.
- squirrelicus 7y agoSubsidies have the same problem if they target a class of recipients. If they target recipients directly, then we are simply in crony capitalist land where politicians' friends and doners get competitive advantages and risk monopolization. It also creates an incentive structure that can have toxic implications for the company and products, since the government is effectively a customer, but the product being purchased is subsidy qualification -- potentially at the expense of the laborers or customers. Imagine if your product manager had to take the politicians' product whims into account when prioritizing your backlog. Edit: my political commentary: this is the fundamental problem that converted me to conservatism from center-leftism. I believe it's not possible to create an equitable structure and a level playing field while the government meddles in the economy.
- TeMPOraL 7y ago> Edit: my political commentary: this is the fundamental problem that converted me to conservatism from center-leftism. I believe it's not possible to create an equitable structure and a level playing field while the government meddles in the economy. I'm trying to understand your change of beliefs, so honest question: is government setting and enforcing safety standards (which otherwise companies would reliably fail at), and pricing in externalities (e.g. pollution) considered by you "government meddling in the economy" and interfering with an equitable market structure?
- squirrelicus 7y agoIt is, however I support both of those things because sometimes it's better to slope the playing field to the advantage of those with the bureaucracy set up to enforce safety and pollution requirements. It harms the competitiveness of the market internally and globally, and it makes it harder to do startups. There is a huge trade-off there. And I believe it's worth it, in general, in moderation, with respect to pollution and safety. And I think we have acheived a historic happy balance on those two issues, in general. So my political philosophy is "things are pretty amazingly great, so let's slow the fuck down and not change anything without deeply considering the trade offs"
- clarkmoody 7y agoThe politics of tax reform are poison as well. There will always be winners & losers with any change, so opponents of change will always be able to say, "this proposals raises taxes on ___." Fill in the blank with whatever polls the best. Of course politics has zero room for nuance, so we shouldn't hope that the tax code will become simpler in the foreseeable future.
- squirrelicus 7y agoPolitics has vastly more time for nuance when politicians are allowed to do their jobs instead of being Twitter celebrities constantly on the lookout for the next scandal, both defensively and offensively. I suspect if we didn't hear from our politicians for 2 years, everyone across the country would like the outcome.
- clarkmoody 7y agoEh, politics was devoid of nuance long before Twitter.
- squirrelicus 7y agoShifting the blame through scandal to take attention away from your failure and ignorance is the longest political tradition of humanity. But in the days of Twitter, you can't take a breather. Devoid is an overly strong word. There has never been zero nuance, and there isn't zero nuance today.
- 1123581321 7y agoSubsidies certainly are complicated and abuseable, and the value of them can greatly exceed the value of a tax deduction, depending on the industry.
- squirrelicus 7y agoI'd love to understand why you think that.
- 1123581321 7y agoMainly exposure to agriculture and corporate tax prep. Subsidies and tax minimization both have more straightforward approaches that you see everyone do as well as more arcane/rule-bending approaches.