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ON THE UNWISDOM OF TAX BREAKS FOR GOOD DEEDS

February 14, 2006

The Tax Policy Blog succinctly states why state tax benefits for "good causes," from E-85 to historical rehab, are bad policy:

Filled with deductions and various specific incentives for certain companies and industries that are not provided to other companies or industries, these specific “breaks” are merely the government controlling the allocation of resources through the tax code. Many on both sides of the aisle often call any deduction good policy because it is cutting taxes for someone. However, with the government initially taxing everyone at a high rate, then deciding arbitrarily who gets something back, this is essentially central economic planning by lawmakers -- something few policymakers would be willing to explictly endorse if not disguised in the tax code.

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