A Tax Break Attacks Like A Tax

          Let’s say you loan your pickup truck to your brother so he can haul some stuff and won’t have to spend $103.00 to rent a truck for the hauling. It happens all the time. Good people help out friends and family members.

           In this case, you have done something nice that saved him $103. You have communicated $103 dollars worth of value to him and you have foregone receiving any money. Economists would say you have actually spent whatever money that you might have charged him or that he might have offered you.

           Now, let’s say your city wants to promote improvement of blighted areas and passes tax-increment-financing. Or say your fed gov wants to promote home ownership and allows taxpayers to reduce their taxable income by the amount of their home mortgage interest. These are good examples of how tax benefits can help individuals and communities. In economic terms, these government entities have, by foregoing tax income, actually spent the money they agreed not to collect.

           Every year, America spends about $83 billion on tax incentives for businesses (companies like Wells Fargo, General Electric, Capital One Financial, DuPont, Verizon, and others). And all that money has to be collected elsewhere—from ordinary Americans. You could say that’s about a quarter of a trillion dollars spent every three years, on your behalf by your elected reps, on their constituents, friends and families in business! Around here, we think you might spend it differently, if you had any say.