TJ Roberts | United States
It is a popular lie that tax deductions are nothing more than subsidies. Advocates of this idea claim that the state funds certain behaviors by eliminating taxes on such actions. The problem, however, becomes apparent when one asks whose money is on the line. It should be abundantly clear that they are not subsidies because tax dollars do not belong to the government. Rather, they belong to the people the state forced to pay.
Tax Deductions vs. Subsidies
A tax deduction is simply a lowering of the overall rate of taxation in society. This is not a subsidy because the government does not own your property. A subsidy, according to Merriam-Webster, is “a grant by a government to a private person or company to assist an enterprise deemed advantageous to the public.” A subsidy is ultimately the state giving money to an entity. If the state cuts that entity’s taxes, that is not a subsidy. That is the state allowing that entity to keep what it owns.
There is ultimately no equivalence between tax deductions and subsidies. To equate the two is to take away the meaning of both and to imply that the state owns 100 percent of what you earn. Since this is not the case, we must differentiate between the two. Equating tax deductions to subsidies is intellectually dishonest and lazy reasoning that justifies the tyranny of overburdensome taxation. Calling a deduction a subsidy creates a negative connotation to something that allows people to afford to live in spite of the parasitic tax system in America.
We Need Loopholes
While conservatives and left-liberals frequently advocate for simplifying the tax code, a libertarian’s goal is lowering taxes overall. To a libertarian, any tax cut is good while any tax increase is bad. By this same logic, any increase in tax deductions, tax credits, or any other so-called “loophole” is a good thing while any decrease in these deductions is a bad thing.
It is important to attack the tax code through both of the following means: lowering the nominal tax rate and expanding tax deductions and making them accessible to as many people as possible. If these loopholes exist, the people have a Plan B. There is no guarantee that the state won’t raise the overall tax rate on individuals. Removing tax deductions, however, is much more difficult because they are more numerous. It is important to call for lower tax rates. But it is also important to call for more tax deductions so that more people can keep what belongs to them. In the same way we celebrate tax evasion, so too we ought to celebrate tax deductions. Deductions allow you to keep what is yours without the risk of legal penalty.
The Government Needs to Stop Spending
Ultimately, these deductions do not cost anyone anything. If loopholes decrease revenue, that is a good thing. The government needs to stop spending. The government’s fiscal irresponsibility is not my problem. If they have to force the people to pay for a program, perhaps it is time that they realize that program is not necessary. If we truly believe in freedom, then it is in our best interest to advocate for lower taxes AND more tax deductions whereas it allows as many people to pay as few taxes as humanly possible.
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