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Both pedals to the floor at the same time

December 11, 2009

TaxVox points out how tax breaks, like those in the House "extender" bill, often work at cross-purposes:

Finally, there are my favorites—the contradictory energy breaks. The bill tries to encourage the use of alternative fuels by extending a subsidy for hybrid trucks at the same time it attempts to keep the cost of fossil fuels low by continuing breaks for marginal oil wells. This, I guess, is symbolic of the entire exercise. It only makes sense if you are in Congress.

Outside the extender bill, there are lots of examples of this sort of thing; for example, the Homebuyer Credit to increase demand for unsold homes while the low-income housing credit increases the supply. One credit works to keep homes from becoming more affordable, the other tries to provide affordable housing. Go figure.

More on extenders from Robert D. Flach and 21st Century Taxation.

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