Tax credit shenanigans
A press release from State Rep. Mandel (R, Lyndhurst) and Jay Goyal (D, Mansfield):
COLUMBUS – State Representatives Josh Mandel (R- Lyndhurst) and Jay Goyal (D- Mansfield) announced today they will soon introduce legislation to offer state income tax credits to Ohio-educated graduates in return for their commitment to stay and work in Ohio.
Oh, my favorite: tax credits. One of the things that stands out for me about the 2004 presidential election was Al Gore’s mantra “targeted tax cuts.” (Second only to “lockbox.”) This season, tax credits are the fashion, and it seems everybody’s doing it.
McCain’s got his health care tax credit, and he’s got a proposed $5000 tax credit for people who buy new electric or hybrid cars.
Obama, clearly the winner in the tax credit contest, is proposing tax credits for having children ($7000), working ($500), child care (50%), tuition, building hybrid vehicles, and more.
There are two things wrong with targeted tax credits. One, the tax system is already ridiculously complicated, and clearly all these new rules will make it even worse, and will open the door to fraud. But more importantly, this is our money. A government which takes too much money from you, and then deigns to give some of it back- if you jump through some of these hoops they’ve set up- is too involved in our decisions.
Frequently the tax credit is sold as making citizens’ financial burdens lighter. This is a cynical ploy in which politicians pretend to care while they’re really trying to get people to toe the line on this or that government policy. How about this policy- let us keep more of our money in the first place, and then you won’t have to bother yourselves coming up with reasons to give some of it back.
Back to the Ohio residency plan, look at what they’re proposing for tax credits over 10 years:
* Associate’s degree: $5,000
* Bachelor’s degree: $20,000
* Master’s degree or higher: $30,000
I don’t have to point out studies which show that college graduates earn more than non-graduates. So this tax credit plan is also likely to be rather regressive- not good.
Here’s a different idea: reduce everyone’s taxes in Ohio. Then more of everyone will want to stay- including businesses. A plan like that might also help out a little problem like 7.2% unemployment.
UPDATE: Practically on cue, Mary Jo “Kilroy calls for targeted tax relief for middle class:”
Kilroy wants a college tuition tax credit worth up to $5,000 annually; increasing the child tax credit to 35 percent to a maximum of $2,100 for families earning up to $200,000; a $1,200 credit for the first $6,000 in elderly care expenses; $1,000 per person credit ($2,000 per family) for health insurance coverage otherwise lost between job, and finally a 401(k) match from the federal government of 25 percent up to $1,000 per year….
Kilroy said her plan could be paid for by repealing the 2001 and 2003 tax cuts.
Charming. Raise taxes on everyone, only give it back to those whose votes she wants to buy- I mean target.
These clowns are putting a band aid on a gun shot wound.
It’s hard to use a tax credit when you don’t have a job.
Maybe these guys should consider LOWERING TAXES ON BUSINESSES so big time job opportunities will be here for graduates.
Too radical, Gordon.