But boutique credits are smart politics. First, they appeal to people’s sense that they deserve a break, validate their choices, and reaffirm their sense of self-worth. The Children’s Art Tax Credit goes to good parents, ones who enroll their children in Suzuki violin lessons, not bad parents who spend their money on beer and popcorn. Second, they give people a sense of control. Tax liabilities stop being something outside of an individual’s control. Instead, the plethora of credits available mean that taxes can be reduced through planning and wise choices.
Policies are smart politics for a reason: they appeal to voters. If economists want to have a positive influence on the policy debate, they have to understand voter psychology: why do voters like special tax credits so much? “Smart politics” isn’t a criticism. Sometimes it’s a way of saying “I don’t understand why people like this policy.” At other times, it’s a way of saying, “I understand why this policy appeals to people, but if they were well-informed, they would think otherwise.”
There’s no point in telling politicians that a particular policy is “smart politics, bad economics.” They’ll take it as a compliment, and keep on making the same kind of policy choices.
Frances Woolley, “Economy Lab: Why politicians love boutique tax credits”, Globe and Mail, 2011-04-03
April 3, 2011
QotD: The reason not to anticipate a simpler tax system
1 Comment
RSS feed for comments on this post.
Sorry, the comment form is closed at this time.
Funny you should link to this. Received a booklet from Peter Van Loan (my MP) the other day, outlining all of the ways I could reduce my taxes. In a 16-page pamphlet, he outlines the following: Tax Free Savings Accounts, Public Transit Credit, GST Credit, Deduct Medical Expenses, Universal Child Care Benefit, Children’s Fitness Credit, Caregiver Amount, Child Disability & Registered Disability Savings Program, Canada Child Tax Benefit and National Child Benefit Supplement, Deduct Child Care Expenses, Doubling the Pension Income Amount, Increasing the Age Amount, Pension Income Splitting, Increasing the Age Limit for Converting RRSPs to RRIFs, First-Time Home Buyers’ Credit, Home Buyers’ Plan, Working Income Tax Benefit, Canada Employment Amount, Lower Taxes for Small Business Owners, Farmers and Fishers, Apprenticeship Job Creation Tax Credit, Tradespersons’ Deduction for Tools, Meal Expenses for Long-Haul Truckers, Texbook Amount, Scholarship and Bursary Exemption.
Whew! Talk about your boutique credits! It’s the West Edmontal Mall of tax credits! I’m reminded of that scene from The Blues Brothers where where the brothers are smashing their way through a shopping mall – “This place has got everything!”
Comment by Lickmuffin — April 4, 2011 @ 16:25