It just don’t pay

Politics + Other Mistakes
By AL DIAMON  |  May 9, 2012

Diamon_TaxBreaks_main
The only thing worse than taxes is tax breaks.

That seems as contradictory as Newt Gingrich saying fundamentalist Muslims are trying to turn the United States into a country of atheists. But unlike much of what Newt says, there's a rational basis for my contention.

The amount we're taxed by state and local governments isn't determined solely by how much those entities spend. The tax rate is also influenced by what they decide not to tax. Every exemption, no matter how worthwhile, increases the bill for everyone who isn't eligible for it.

You may think that doesn't have much impact. Likewise, you may believe there's an organization called Imams for a Godless America that supplies the text books for your high school's government class.

In both cases, you are an idiot.

A 2010 study by the Maine Legislature found the state offers tax breaks — the bureaucrats call them "tax expenditures" to make it look less like they're giving away your money — that total $6.6 billion. That's more than the entire two-year state budget.

If all those sweet deals were eliminated, your tax bill would be less than half what it is now.

Well, not really. The net result of ending all tax exceptions is that you'd pay less one place and more another. If you're a typical Maine resident, you're almost certainly getting the benefit of some of these breaks: no sales tax on groceries and health care, no property tax on a portion of the value of your home, income tax exemptions for everything from mortgage interest to business supplies.

As a journalist, I can write off any expenses I incur in researching my columns, such as last Saturday evening's beers (research into the drinking habits of god-fearing Americans) and an excellent Cuban sandwich (research into whether the embargo against Cuba should be lifted). Then there was the hotel stay (watching to see if any Secret Service agents checked in accompanied by floozies), the Portland Sea Dogs tickets for the following afternoon (trying to find out whom Slugger is supporting for US Senate), a steak-and-cheese sub (research into whether the Portsmouth Naval Shipyard could do repair work on something besides nuclear subs), and more beers.

I trust my accountant took note of the preceding paragraph and is even now notifying the Maine Revenue Service that it can forget about making anything off the $266.54 I spent on all that.

And right there is a fine example of what's wrong with tax breaks, namely that there's no evidence that letting me deduct questionable expenses (oops, forgot the eight bucks for dessert — research into obesity) produces anything of value to society (although, all the money I spend on beer is cash that isn't secretly funding radical Islamists) or the economy (to tell the truth, I'd have bought those beers even if I couldn't write them off on my taxes).

That's also the trouble with virtually all the other tax dodges that exist. Whether it's a tax increment financing deal saving a sandwich shop in Rumford $10,000 on next year's property tax bill, questionable use of the Tree Growth Law so State Treasurer Bruce Poliquin avoids $30,000 per year in taxes on his land in Georgetown or Governor Paul LePage's shaky proposal to cut $93 million from the tax on retirement income, there's nothing to indicate there's any public benefit.

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  Topics: Talking Politics , Taxes, Newt Gingrich, Money,  More more >
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