More Megan McArdle idiocy

by: Paul Rosenberg

Fri Sep 10, 2010 at 16:30

along with the admonition that "Members of Congress cannot simultaneously claim that the tax cuts for people at the top are affordable while the Social Security shortfall constitutes a dire fiscal threat."

Naturally, Versailles has done its level best to ignore this. But the few conservatives who have none-the-less stumbled across it have all had their heads explode.  Trying to put them back together again has been a rather humorous silent-movie sort of affair, but Brad Delong somehow misses the humour as he wails Did Megan McArdle Really Graduate from a Business School?:

Taking Aim At Tax Expenditures--This Time I Say 'Bravo' To Michael Lind

by: Paul Rosenberg

Sat Oct 31, 2009 at 18:30

You probably wouldn't think it would be very politically popular.

You'd be wrong.

Because that's the way that tax expenditures--all manner of deductions, exemptions and special rates combined--affect America's income distribution:

This week, in "The tax breaks that ate America", Michael Lind took aim at tax expenditures-everything from mortgage interest rate deductions, to untaxed Social Security benefits, to the Earned Income Tax Credit (EITC)-and did a decent job of arguing why they're generally a bad idea, even in those cases-such as the EITC-where purposes seem quite noble, and the practical results quite good.  There was one real boner in his argument, which I double-checked with Jim Horney, of the Center on Budget and Policy Priorities, and one rather questionable strategic suggestion.  We'll get to both in a bit, but this time out I really want to stress my agreement with Lind over my differences.  Tax expenditures skew strongly toward the more affluent, even the wealthy. But even beyond that, the use of tax expenditures greatly confuses our public policy debates, along with public understanding of how government works, what it is doing, and why. Thus, even when used for progressive ends, it contributes to an overall political climate in which conservative anti-government attitudes thrive.  What's more, as a Center on Budget Policy and Priorities (CBPP) policy brief "New Analysis Shows "Tax Expenditures" Overall Are Costly And Regressive" argued earlier this year, tax expenditures need to be part of any long-term budget solution.  Otherwise all the pain will be concentrated on those who can least afford it.

But first, Lind argues against the sheer magnitude of tax expenditures, a point that's simply inarguable, as seen by this diagram from the CBPP policy brief:

Given their size, just ask yourself how much discussion you've ever heard about "tax expenditures" as compared to "wasteful" social spending, for example.

Secondly, Lind argues that "tax expenditures warp the market and corrupt private enterprise." (As if private enterprise needed any help on that score.  But I digress.)  He continues: