Tax breaks are for chumps

Republicans constantly harp on Democrats for advocating programs that try to solve every… Republicans constantly harp on Democrats for advocating programs that try to solve every problem. In contrast to the starry-eyed Democrats, Republicans want to seem realistic, respectable and sober, like how college students feel when they use a coupon. With an equal lapse in good judgement, Republicans nurse an indulgence for tax deductions and credits. Republicans should be mature and realize that tax breaks are government programs of the worst kind: unfair and anti-capitalist.

First, for every deduction the general tax rate must be higher for a given amount of government spending. To illustrate my point, stick a beach ball in a bathtub. The depth falls beneath the ball, but the water level as a whole must rise. A Republican may counter, “That’s for a given amount of government spending. We can cut spending!” You may as well say, “If we scoop some water out of the bath, then the water won’t rise when we put the ball in!” A psychology major told me children appreciate conservation of volume by age seven, but I don’t believe this because many Republicans are much older and don’t appreciate conservation of money.

Second, tax breaks are anti-capitalist. Contrary to popular belief, a market economy is not the opposite of an economy with many taxes and social programs. Rather, a market economy is the opposite of a “planned” economy. In a planned economy, like that of the USSR, the government tries to control how much of different goods are produced and the prices at which goods will sell. Planning is also called socialism, and it’s how things work in a real-time strategy game like Age of Empires III, although that game is really awesome.

The most classic case of specifically Republican socialism happened in 2004 when gas prices were rising: Congress cut taxes just for the oil industry. The declared purpose of the breaks was to stimulate oil production and decrease prices. As I said, socialism consists of government influence over production and pricing.

Republicans give tax breaks because lowering general tax rates is a conservative thing to do, so cutting taxes for a specific industry must be conservative too, right? Actually, socialism means playing Age of Empires with the economy, even if tax breaks are the hotkeys.

Of course, everyone gets behind what I have to say about tax breaks when it applies to shadowy forces like oil companies, who only employ seal-eating orcs. But I oppose even the favorite tax breaks that most voters call “important.” The best such example is the home mortgage interest rate deduction.

As you might infer, the home mortgage interest rate deduction lets you deduct the interest on your mortgage from your tax liability. The declared intent is to encourage home ownership. And since homes can only be owned if they are built, the deduction also encourages home construction.

However, housing is just one of many forms of capital. So are robots and sweet DJ turntables. With no special direction, people create capital in the forms and amounts that other people want the most. However, a tax bias toward housing causes people to create more houses, and fewer pieces of other capital than they would without the tax break, even though the extra houses might not be as desired as the would-be other pieces of capital. Tax breaks can even encourage the formation of capital that people hardly want at all. Consider this recent Wall Street Journal line: “While alpaca fleece is gaining popularity, farmers in the United States make little money on it. But these ruminants yield something even richer: steep tax cuts.”

One might reply: “But people need help buying houses.” However, if people can’t buy houses, then they really need lower overall tax rates. Maybe some people would buy less “important” things than houses if their taxes were lower and there wasn’t a housing deduction, but how “important” are those extra houses if people choose not to buy them?

Finally, the shallowest and most patently Republican defense runs, “Sure, tax breaks create jobs and stimulate the economy. Now someone has a home, these workers have jobs and the lumber company got money! All because we let hard working Americans keep some money in their pockets!”

This argument has the same fallacy that makes people afraid of airplanes: You only hear about airplane safety when airplanes crash. Likewise, you will only hear about the resources for the house to get a tax break, if there is a tax break. With no tax break we can’t imagine what would’ve happened to the workers and materials involved in the house’s construction, but that doesn’t mean they would have disappeared. And we especially can’t imagine what would’ve happened across the whole economy if the general tax burden were lower by the incomprehensibly small amount of the tax break.

Destroy all tax breaks today. E-mail Lewis at ljl10@pitt.edu.