Saturday, October 24, 2009

Can dollar for dollar tax credit work?

If you don't know what it is, it is a welfare/taxation system wherein the government is in no way responsible for welfare and social services directly but instead allows for individuals to write everything off of their tax returns. It basically privatizes everything from education to disability services in to a competitive, non-bureaucratic free market and leaves all the spending up to the individual.





I myself am in a wheelchair and can not express how crappy government agencies are with providing things etc. what with all the red tape. Sometimes it'd just seem like it'd be easier for me to go out and buy what I need and somehow charge it on a magical government credit card.





So would a system like this work? I understand it leaves more room for tax fraud but that's nothin' good ol' coercion can't solve.

Can dollar for dollar tax credit work?
If it is a refundable tax credit (if your credit is greater than your taxes they send you a check) it would work in principle. The earned income tax credit works that way now. The IRS spends a lot of resources to control fraud in the program even though it is easy to keep track of income records with social security numbers and the amount is a fixed formula. I don't think the IRS can monitor government payments for other purposes, and the fraud problem would be massive. Part of the reason that "crappy government agencies are with providing things etc. what with all the red tape" is to discourge people from using them.
Reply:I'm all for competitive free markets in place of government operations wherever possible. The problem with tax credits though is that 1) they don't help you pay for things up front when you need the money -- they reimburse you much much later; 2) it wouldn't help someone with who doesn't make enough money to have taxable income in the first place.





A similar alternative is vouchers: if we feel the government should fund something like education or other services, then government supply a voucher so the consumer can choose where to spend it.


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