4 ms·

How are tax benefits subsidies? That’s what all the changes are. Changes to amortization, etc. When I get a tax break with my 401k am I get a “subsidy”?

• freeone3000 4y ago
  Tax benefits are definitely subsidizes, yes. The government is subsidizing marriages, children, and saving for retirement (as well as solar panels, owning farmland, donating to charity, and a million other things).
  • nyokodo 4y ago
    > The government is subsidizing marriages, children, and saving for retirement Only if we don't pay any taxes in the first place and the tax benefit is a credit, or if all our income belongs to the government and they just let us keep some of it. Few companies pay no net tax and our income belongs to us and is taken away by taxes for various debatably beneficial/justifiable uses.
  • refurb 4y ago
    So if I increase you taxes one year, then decrease the next, I’m giving you a subsidy?
• triceratops 4y ago
  Yes.
• malfist 4y ago
  Yes you are. The government is saying "You don't have to pay these taxes" when it's not saying the same to something/someone else. Your 401k is subsidized.
• ska 4y ago
  A way of thinking about this is that taxes and subsidies are basic tools government has to encourage/discourage behaviour. Since money is fungible, tax benefits are effectively subsidies offered to productive (in the tax sense) entities. You can try and draw a line between the two but in practice it's kind of inherently fuzzy: if government takes money from company A and nominally gives it to an arts program, everyone agrees it's a subsidy. If it takes the same money and uses it to cover a shortfall due to reducing company B's tax burden (i.e. an incentive) it's pretty similar. I suspect people who really contort themselves to draw a distinction have strong views about taxation as a whole which lead them to dislike the term subsidy, and want to have it not apply to government incentives they like to take advantage of.
• sidewndr46 4y ago
  When you put money in a 401k, whoever manages that 401k is getting the subsidy. They get to manage more of your money than they otherwise would.
• SoftTalker 4y ago
  Thinking of tax benefits as subsidies is the point of view that all money you earn belongs to the government and they decide how much you get to keep. Taxes are mandatory payments for (allegedly) services the government provides. Tax breaks let people/companies keep more of their own money. They are not subsidies. Subsidies would be additional money provided (which could be the case in a refundable tax credit where you end up getting a refund on taxes you never paid).