[Speed Gibson,
Friday January 12, 2007 at 12:41am]
Targeted Tax Cuts
Is a Rebate a Cut? asks Residual Forces. Of course not. I posted on this over a year ago, but it bears repeating.
A tax cut is where you get to keep your money, which by extension means that you can spend that money on whatever you want.
Not so with the "targeted" tax cuts, credits, and rebates now being proposed in St. Paul. It looks like your money, being computed on your tax forms and all. You get a bigger refund or pay less in under this program. But you paid for the privilege. You had to spend much more money in an "approved" fashion to get this small kickback.
Do the math. Instead of giving a parent a college tuition tax deduction worth an average $165, what if the legislature simply gave the college $165 to reduce the tuition? Everyone's bank account - the state, the college and the parent - ends up the same under this spending program as it would the "tax relief" program. No, this is a spending program.
A tax cut is where you get to keep your money, which by extension means that you can spend that money on whatever you want.
Not so with the "targeted" tax cuts, credits, and rebates now being proposed in St. Paul. It looks like your money, being computed on your tax forms and all. You get a bigger refund or pay less in under this program. But you paid for the privilege. You had to spend much more money in an "approved" fashion to get this small kickback.
Do the math. Instead of giving a parent a college tuition tax deduction worth an average $165, what if the legislature simply gave the college $165 to reduce the tuition? Everyone's bank account - the state, the college and the parent - ends up the same under this spending program as it would the "tax relief" program. No, this is a spending program.