Thursday, November 12, 2015

Ben Carson's Tax Proposal Takes On The Mortgage And Charity Sacred Cows

Scott Greenberg of the Tax Foundation has a piece entitled Carson Calls for Eliminating the Mortgage Interest and Charitable Deductions. That makes the second thing I have learned about having in common with Doctor Carson this week. I had noted a while ago that one of themes of Republican tax plans is eliminating all itemized deductions except residence interest and charitable contributions. Presumably that is based on polling. Also both of those deductions have pretty fierce constituencies. Carson is willing to take on the notion that the deductions are part of the fabric of American life.
Now I will say that, there are a lot of people who say, if you get rid of the deductions, you ruin the American dream because, you know, home mortgage deduction. But the fact of the matter is, people had homes before 1913 when we introduced the federal income tax, and later after that started deductions. And they say there will be no more charitable giving. We had churches before that and charitable organizations before that. The fact of the matter is, I believe if you put more money in people's pockets that they will actually be more generous rather than less generous.
The historical argument could use some clarification. According to the United States Census, the home ownership rate in 1900 was 45.9% and in 2000 it was 66.2%. Most of the increase occurred between 1940 and 1960. I suspect his main point is correct and that the Greatest Generation would have been out buying houses after they defeated fascism even without tax incentives.

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