Matt Yglesias points us to a great illustration of how much “middle class welfare” exists in American society.
From a social justice perspective, there’s little reason why a homeowner should get a tax-break from the federal government at the expense of non-homeowners or why those who can place money in an IRA get a break at the expense of those who cannot do so. Of course, these are not “hand outs” because they are presumed to have been “earned” in some form.
This is what made the Earned Income Tax Credit in the 1990’s such good policy. It is not perceived as a subsidy when in actuality it means the same thing to the federal government’s bottom line. The public is supportive of matching what poor people earn through a credit rather than providing them with direct assistance. Similarly, we wouldn’t be too happy with the federal government handing us money for buying a home, but that’s what we essentially do.
Comments 2
rkatclu — April 22, 2010
Libertarians and progressives might well be in agreement here (albeit for very different reasons and with very different policy prescriptions).
One might also be able to make a pretty interesting generational justice argument: boomers benefited from an unsustainable system of high social welfare/subsidies and low taxes. (Raising capital gains still gives the current "haves" a window to "cash out" due to the CGT's emphasis on realized rather than accrued gains.)
Kenneth M. Kambara — April 23, 2010
Note how many of these tax breaks also indirectly support industries.