Subsidizing the Rich

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"Subsidizing the Rich"

1022 N Edison Street, Arlington VA 1

I think he ultimately winds up taking the idea in a direction that doesn’t hold up, but much of Ross Douthat’s column on government intervention in the economy to benefit rich people is something progressives should eagerly embrace:

Consider the spread that the Giudices currently occupy (pending potential foreclosure proceedings, of course). The first million of its reported $1.7 million price tag is presumably covered by the federal mortgage-interest tax deduction. Intended to boost middle-class homebuyers, this deduction has gradually turned into a huge tax break for the affluent, with most of the benefits flowing to homeowners with cash income over $100,000. In much of the country, it’s a McMansion subsidy, whose costs to the federal Treasury are covered by the tax dollars of Americans who either rent or own more modest homes.

This policy is typical of the way the federal government does business. In case after case, Washington’s web of subsidies and tax breaks effectively takes money from the middle class and hands it out to speculators and have-mores. We subsidize drug companies, oil companies, agribusinesses disguised as “family farms” and “clean energy” firms that aren’t energy-efficient at all. We give tax breaks to immensely profitable corporations that don’t need the money and boondoggles that wouldn’t exist without government favoritism.

If you actually want to reduce unjust and inefficient government intervention into the economy, you have to take this stuff on. Most of it isn’t “spending” but it does lead to higher tax rates and distort the allocation of resources.

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