Utah “Tax Reform” II

I need to make a clarification on my own suggestions for tax reform in my last post. Admittedly, neither proposal are directly targeted at helping the poor. Both are focused more on simplification of the tax code and minimizing loopholes.

The first proposal (eliminating tax breaks for charitable giving) is largely motivated by the principle of the matter. Charity should be done for its own sake, not because it benefits oneself. I wonder how often these tax loopholes are exploited in the same manner as the Leavitt family?

The dependent tax credit is certainly a complex issue. Yes, in many places it is the poor who tend to have larger families—though I doubt the correlation between poverty and large families is very strong in Utah. But virtually every time I’ve heard someone in Utah defend the tax credit for dependents (usually by middle-income or higher men), their primary argument in favor of the tax credit is the question “Do you have any idea how expensive it is to raise children these days?” The relative expense of child-rearing these days is irrelevant to the question. For the most part, particularly among these middle-class families, child-bearing is a conscious choice. If you (as I do) feel that raising a large family is rewarding, worthwhile, and even in some senses a moral obligation, fine. You are welcome to make that choice, and I rejoice in that choice. But it is not appropriate for those with the means to provide for that family to try to shift the costs of that choice onto the government. As each additional child increases the cost on the state (a place in school, police protection, etc), those who make the choice should bear a fair share of that cost.

I believe that a moderate progressive tax is generally beneficial to the poor. fewer tax breaks means fewer opportunities for the wealthy to reduce their tax responsibilities, and thus more funds are available to serve the public needs (education, emergency services, social safety nets, infrastructure, etc). The tax burden on the poor is minimized because of the nature of the progressive tax. And the system becomes simpler to implement and follow.

Again, this is a very simple account of what is a more complex issue. I’m not stating a definitive answer. Merely pointing to where I think we should focus our exploration of possible solutions to true tax reform.

3 Responses to “Utah “Tax Reform” II”

  1. Thom Says:

    Thanks! I suspected that was where you were coming from, but I felt the need to call you on it. I hope you enjoyed the opportunity to clarify your points. I think that the child issue is a particularly gnarly one, since I believe that well-raised children (as are more likely to come out of middle-class families) eventually become an asset to the tax base, since they become taxpayers. Therefore, given a middle class a tax break to raise their kids could be seen as an investment, rather than a pure subsidy. But I’m not sure how much that justifies. Anyway, since my intent isn’t to turn this into a tax-policy blog, I’ll go back to lurking, now.

  2. Derek Staffanson Says:

    Isn’t it an investment to provide the funding necessary for adequate education, police protection, emergency services, etc? When we make sure that those services–particularly education, which is always underfunded here in Utah–are widely available to all children, don’t we increase the possibility of all children, not just middle-class or wealthy children, becoming productive?

  3. Jennifer Says:

    I agree that a progressive income tax is preferrable to child tax credits here in Utah, even though I might end up paying more to the state. I have 4 children who attend public schools and I understand the funding problems therein. Moreover I am a part time employee of a school district. I think that the child tax credit at the federal level need not be duplicated at the state level until school funding is back on its feet (meaning not for a very very long time, at this rate) – – -Jennifer

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