Wednesday, October 15, 2008

So That's What We're Calling Them Now

Neo-Hoovererist Ruth Marcus on "hidden entitlements."

The expiration of the Bush tax cuts in 2011 and the continuing, costly headache of the alternative minimum tax create an action-forcing event; the economic crisis provides extra political cover to build a more rational tax code, one that would broaden the base without raising marginal rates to growth-stifling levels. As Concord Coalition chief economist Diane Lim Rogers notes, the tax code provides for as much spending on "hidden entitlements" -- provisions that give special breaks to items such as mortgage interest or employer-sponsored health care -- as all discretionary spending combined.

Amazing how you can just pick out the two things in the tax code which greatly benefit middle class taxpayers.

If I were creating a fantasy tax code for my Sim Nation, I would scrap the mortgage interest deduction and not have an employer based health care system. Instead I'd have very large personal deductions and standard exemptions and some sort of single payer national health care system. However given that we're in a financial crisis which has at its foundations declining home prices, now would not really be the right time to do away with that particular deduction. And I'd prefer that before we scrap the employer based health care system we... come up with something else!

More generally, the weird disease everyone who works for the Washington Post has, causing them to obsess about the idea that maybe middle class people occasionally get a break from the government, is fascinating.