Monday, August 7, 2017

Taxes, Behavior, and Regressive Incentives

Taxes, Behavior, and Regressive Incentives
As the latest attempts to repeal the Affordable Care Act have recently failed, it seems that Congress is moving on to the next item on their agenda: tax reform. I guess that's why I keep stumbling on articles suggesting drastic changes to the tax code: like eliminating the mortgage interest deduction.

My main beef is not with any specific deduction in our tax code. (Though the mortgage interest deduction is curious, to say the least.)

Rather, I think our system of deductions runs counter to the goals of our progressive income tax system itself. Looking at most of the incentives, the more you earn, and the more tax you pay, the more you benefit from the programs.