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PAVING THE ROAD TO PERDITION

April 26, 2005

Victor Fleisher at A Taxing Blog continues the discussion of the merits of taxing away the pounds of America's gravitationally-challenged population:

Joe Kristan and others question whether taxes should be used for any reason other to raise revenue. In other words, is it permissible to use tax policy to encourage or discourage behavior? I think it is okay so long as you have a strong justification for distorting behavior. Now, I must admit, given the complexities of food taxes, maybe the better route would be to push to remove existing subsidies that encourage the production of HFCS. Removing a subsidy is the equivalent of adding a tax, but somehow it seems to offend people less.

Subsidies and tax breaks are two sides of the same coin. While we're no fan of subsidies, they are at least transparent. You can look up who benefits from farm subsidies. The beneficiaries of tax breaks, in contrast, are cloaked by tax confidentiality rules.

While we can concede the principle that using tax laws to affect behavior is ok with sufficiently "strong justification" (I could get behind a tax law that somehow stopped the aging process and made me smarter and better looking), sufficiently strong justifications abound when Congress is in session. Complexity and unintended consequences follow.

Mr. Fleisher describes the flaws of a well-intentioned tax policy in his post: Time to Repeal the Charitable Deduction?

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