* a little Republican hypocrisy
Topics: Subsidy
16 Dec 1994
From: "DG Ervan Darnell"
The Bill Clinton hypocrisy of jumping on the tax cut bandwagon and claiming
he was for it all along is obvious enough.
The Republicans are committing a more subtle hypocrisy. It is the usual
conservative analysis (and in this particular case correct, IMO (1)) that
welfare is causal in the breakdown of families and encourages people to bear
children into impoverished circumstances. That is, welfare has artificially
underpriced children and 'consumption' is too high.
Now we come to the tax cut proposal which is another big kiddie handout.
Having children will cut your tax burden from its baseline and appear as a
windfall. The same social forces will be put to work in the middle income
brackets as in the lower income brackets. There, effects will probably not
be as pronounced but it is interesting that they are not even being considered.
I can already hear people objecting that couples do not make such cynical
decisions. Maybe. But my contention is that economics drives behavior (in
the sense of desire and not merely purchases). That is, it will become
socially acceptable, just as surely as it has for welfare recipients, to
have children when now it would not be. This happens even though no one
consciously decides they want to have another kid just to get the bucks.
Even if you don't believe that, my real point here is that it is a
(conservative) Republican hypocrisy to believe in such mechanisms in one
case and not the other. Ironically, Gingrich said tonight that the flat tax
proposal was on the table as the next step. Next step? It is going in the
opposite direction!
Returning to Bill Clinton, his current and historical support for kiddie
deductions (as opposed to credits) is rather curious because the more money
you make the more this is worth because of a higher tax bracket. Thus, the
effect is to tax poor single workers to pay for the children of wealthier
parents (effective next tax increase).
Clinton also said that he wanted another big kiddie deduction because
raising kids is expensive, he wanted a tuition deduction because everyone
wants an education, he wanted to allow IRAs to be used for home mortgages
because everyone wants a home (2). Why doesn't he finish that reasoning?
People want to keep their money because they like spending it on things they
want, what a surprise! Why not let people have IRAs for everyting? In
other words, how about an across the board tax cut? But, noooo, the
temptation to meddle and tell people how they have to run their lives is too
great. You can have your tax money back (via the IRA mechanism) only if you
spend it at a government approved school, or buy a home in a government
approved neighborhood with the right quotas, etc.
---------
(1) no 'H' ;-)
(2) BTW, I have been telling people for years to put money in an IRA even if
they weren't interested in retirement because the rules would change to
allow frivolous uses. I stand by that as good advice.
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