Wednesday, June 29, 2011

Why I Support Tax Credits

By Ron Paul

As the economy continues in its downward spiral and talks in Congress about reducing spending have only amounted to political theater, the subject of how the tax code treats energy has become a topic of controversy. Specifically, should we subsidize, enforce mandates, or give tax credits and deductions to industries like ethanol and natural gas? Having a thriving energy market domestically is a good thing and something the government should not hinder. Not only would decreasing our dependence on foreign oil simplify our foreign policy, but it would greatly enhance our anemic economy at home.

Of course, the government should neither inhibit nor subsidize any particular type of energy. While many people agree with that statement, there is much confusion over the difference between government subsidies and tax credits or deductions. The difference is night and day, yet so many times they are all lumped together as evil government handouts. A subsidy IS a government handout. It amounts to the government taking money from the people and giving it to a favored interest. It is the worst sort of market manipulation and it is something I can never support. This kind of government mischief is anathema to the Constitution and the principles of freedom and the free market.

By contrast, with tax credits and deductions, industries, business, and individuals simply get to keep more of the money they have earned. Ideally, the tax code should not be used for social engineering, but, until we have true tax reform, I will always support tax credits and deductions that keep more dollars in the private sector where they are spent, saved, or invested. This means I will support tax credits and deductions for energy producers, farmers, homeschoolers, family child care expenditures, expenses of evacuees from disaster areas, and even adoption expenses. I've almost never met a tax cut, deduction, or credit I didn't like. Any measure that keeps money in the private sector to spend, save or invest, rather than allowing the government to waste or misallocate is a win for the economy.

Inequities in the tax code dealing with tax credits should be solved by giving all participants equal treatment. Removing tax credits is nothing more than a tax increase.

Read the rest here.


  1. If a government official could and did give out tax credits based on how much he liked the public relations, headquarters building and promise of free wireless, it would distort the return on investment of various companies and their ability to attract capital and make a profit and expand.

    If he disliked Walmart and liked Whole Foods and made Walmart pay full taxes while he exempted Whole Foods from all taxes, more monsy would flow into Whole Foods to the detriment of the preferences of consumers.

    The number and size of Whole Foods Markets would exceed what they would have in an equal tax system. The number and size of Walmarts would shrink.

    You can say the tax credits should apply actoss the board to all retailers, but that is not the reality. Tax benefits are methods of government control. The more thay can very the tax bite the mmore they can tell any business what it must do to remain in the government's favor.

    You can say every tax reduction is a benefit. So too, is every pardon of an innocent man, but if the powers who run the pardons give them to innocent men who do as they say and not to innocent men who resist them in any way - the pardon of innocent men is merely an instrument of control for the powerful against the law abiding.

  2. This guy is a genius.

    "Any measure that keeps money in the private sector to spend, save or invest, rather than allowing the government to waste or misallocate is a win for the economy."

  3. @Munch1

    I don't think RP and you disagree in any way. It's a matter of emphasis in the current matter.