Since many people continue to unwittingly promote socialism with their misguided insistence that "every tax cut is good," I'm going to illustrate why a TARGETED (e.g., just for one entity) tax break is welfare, economically equivalent to a subsidy, and a cost to other taxpayers.
-
-
Advocates of Di's special tax break are saying that, ALL ELSE EQUAL, they would rather give Di a very large tax break (75%) than give everyone a modest tax break. In other words, they believe that government central planners can outperform the market by shifting money to Di.
Show this thread -
If your reply is "give others a tax break, too," then you've missed the point. You can't give others a tax break AND hold all else equal. The budget must be balanced; government spending would have to be cut. The relevant analysis is how best to tax at a GIVEN level of spending.
Show this thread -
We could rerun this illustration at a much lower level of government spending, and the relevant analysis again would be how best to tax at this level of spending: Is it best to give one person a very large tax break or to give everyone a modest tax break?
Show this thread -
For a primer on why the free market is superior to central planning, read this: https://fee.org/articles/the-use-of-knowledge-in-society/ …. In short, keeping more money in the hands of everyone produces better economic outcomes than giving a special advantage to one person.
Show this thread -
When advocates of Di's special tax break talk about the economic growth and jobs it will create, they commit the broken window fallacy: https://fee.org/articles/the-broken-window/ …. They ignore the break's opportunity cost; the government has deprived Al, Bo, and Cy of a tax break. That's a net loss.
Show this thread -
We can imagine variations of this illustration. For example, maybe Al, Bo, Cy, and Di already live in the same state, and then the government gives Di a special tax break for "economic development." The end result, however, is the same: The special break is economically harmful.
Show this thread -
This illustration is not meant to suggest that humans can design a perfect tax code. But when the government intentionally gives a special tax break to one entity, not only is the government undermining the Rule of Law, but it also is knowingly harming the economy.
Show this thread -
Bottom line: Targeted tax breaks are bad.
Show this thread -
Happy birthday, Frédéric Bastiat!
Show this thread
End of conversation
New conversation -
-
-
Your argument falls down here. You just move to “central planning bad”. The Wisconsin deal is terrible- but sometimes these deals make sense. The free market would determine where best for a business to operate - it doesn’t say that providing incentive is negative for the state.
Thanks. Twitter will use this to make your timeline better. UndoUndo
-
-
-
Oh shit you're right
Thanks. Twitter will use this to make your timeline better. UndoUndo
-
-
-
"Many people continue to unwittingly promote socialism. For example, corporations are inherently collectivist institutions. As we all know, all collectivism ultimately leads to socialism. Sole proprietorship is the only true capitalism!" - Justin Amash, a few tokes over the line
Thanks. Twitter will use this to make your timeline better. UndoUndo
-
Loading seems to be taking a while.
Twitter may be over capacity or experiencing a momentary hiccup. Try again or visit Twitter Status for more information.