Taxes And Incentives

Bill

Your ongoing tutorial on the relation between taxation and incentives is deeply appreciated. There's no question that we all respond to the incentives created by tax policy. A good part of the time, (whether one agrees with the incentive created or not), that seems to be the point of tax policy. I certainly wouldn't buy mini bonds, or fund my kids Roth IRAs if it weren't. Now I imagine you see that as part of the problem. The government's efforts to guide the economy, to reward some behaviors and punish others creates inefficiencies that the marketplace, left to its own devices would resolve.

Whatever my sympathies (and here my fiscal conservatism is ascendant), I think the Democrats are overreaching in their current brinkmanship over the taxation and spending cuts. Victors, it seems, always do. I like the idea of a cap on deductions as a way of limiting those incentives without wading into the minefield of deciding which specific deductions to cut. I am equally sympathetic to having a minimum tax for upper upper income earners. You might call that envy. Others, including myself, would call it justice. The Dems however seem determined to once again avoid the hard choices on entitlements, especially Medicare, that got us into this mess in the 1st place.

Eli