Analytics wrote:
Do you really not see the fallacy in your logic? I’m sure you must, but I’ll play along, just for fun. Your fallacy is this: your argument is based on the idea that the government reducing your tax liability by $5,000 is inherently different than the government sending you a $5,000 check. Sure, one is a “transfer” of cash, but that transfer of cash is worth no more nor less than the reduction in the tax liability. If a $5,000 reduction in a liability is worth the same as a $5,000 check (and believe me, it is), then whether it is a “transfer” or a reduction in a liability is irrelevant.
Its monetary worth has nothing whatsoever to do with my main argument. There are several major problems with all of this that could make for endless argument into the wee hours, but to cut to the chase, the primary problem here is framing a targeted tax cut to an individual as a
subsidy to the commodity or service the individual uses the retained funds to buy. Its value is immaterial. The use of those funds is a purchase, or exchange of property between the individual and the insurance company. Nothing has been "subsidized" by the government as the government does not own the money represented by the tax cut in the first place. It may dictate the purpose for which that money must be used, but that does not amount to a subsidy, only to a command to purchase according to government decree.
If the government reaches into its piggy bank and pulls out some of Analytic's money and transfers it to me to buy health insurance, it is now technically subsidizing my insurance with government (yours, in this case) funds.
Further, the economic dynamics implied by your argument are just another socialist camel's nose under the tent, which can be easily seen if we take your claims to their logical conclusion.
If there is no difference whatsoever in the government giving me $5,000 of other people's money (or taking my own and purchasing in my behalf) to buy health insurance, and mandating that I buy a $10,000 policy, or, alternatively, cutting my taxes by $5,000 so that I can add the $5,000 saved in taxes to my net earnings to spend on the $10,000 policy, then there is no difference whatsoever between the state taxing me at a 99% rate and then sending me a PLE (personal living expense) card that, like an EBT card, allows me to spend government money equal to my gross earnings, on what I need to live, and cutting my taxes by 99% and then mandating, on pain of massive fines, what I use the funds to buy across a broad range of goods and services.
The economic, political, and moral derangement of that should be obvious to anyone but a committed leftist.
There is no real difference between a $5,000 reduction in a liability and a $5,000 payment in cash—none whatsoever. You are using the word “subsidy” in an artificially restricted sense.
I'm using it as the dictionary defines it and as it is used commonly in political discourse.
But this implies that there is something inherently different between two things that are worth exactly the same.
You mean the number of the denomination on the bank notes? No, there's no difference at all. In the incentives, economic behavior, and political implications of the political and economic control of those banknotes, and of the choices and behavior of the individual, there are tremendous differences.
Free-market economics is based on the concept that people are rational.
Bosh. Free-market economics is based on the concept that people are
self-interested. Some economic decisions are rational, and some are purely subjective and irrational.
“Simply not collecting the $5,000 at all” is what causes our tax code to be so complex, which results in citizens paying $140 billion dollars and spending 7.6 billion hours to file their taxes.
This is utterly bizarre. What you have just claimed is that the reason the U.S. tax code is nearly seven times longer than the Bible is because compliance costs go up as less tax is collected. By this argument, at a zero income, payroll, and corporate tax rate, compliance costs would soar and H&R Block would be doing record business.
Free market economics is based on the premise that people are rational. If they are, then the incentives are identical.
And a substantial portion of your argument goes into the wastebasket right here. They are rational but also self-interested, and they respond to incentives and to perceptions of the relative value or worth of things based upon perceptions of economic risk and need. When they become decoupled from the actual cost of goods and services, or when they are forced to purchase goods or services they otherwise, as rational and self-interested economic actors, they would defer or avoid altogether, the nature of their economic decision making has been altered and this will have effects throughout the entire economy.
Dude! Did you forget which position you are arguing? You are supposed to say that direct subsidies have these negative effects, but tax deductions don’t!
The real problem here is the federal government forcing private citizens to buy things that have no bearing on the protection or guarantee of the rights of their fellow citizens.