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THEY ARE UNCLEAR ON THE CONCEPT IN IOWA, TOO

May 06, 2008

So House Republicans in Washington are preparing to propose a $10,000 tax credit for first-time homebuyers -- outbidding the Democrats' $5,000 - $7,500 subsidy plan. The funny part? They call this plan "market based." From the Tax Policy Blog:

According to a press release from Rep. Lee Terry (R-Nebraska) (emphasis added):

This Republican proposal offers a market-based plan with a tax credit and other reforms that will stimulate the housing market[....]

So the idea is to use government tax policy to give subsidies to one group of people, paid for by extracting taxes from others, with the goal of distorting the decisions that would otherwise be made by individuals. That's the opposite of "market-based."

Republicans in the Iowa Legislature have the same blind spot. They think a subsidy provided through tax credits is somehow not a subsidy -- even though taking less tax from your friends or giving cash grants to your friends is the same thing. That's why there has been so little opposition to the dozens of special favor credits in Iowa, in exchange for high tax rates for those of us without lobbyists. Sure, the other party supports the credits (mostly) too, but they actually believe in big government, so they have an excuse.

Tags: iowa tax policy.tax policy.

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