Lower Tax Rates vs. Targeted Tax Credits

The Federalist ^ | August 29, 2014 | Daniel J. Mitchell

[right-wing agnostic]

I wrote a column for the Wall Street Journal last week about the policy debate over whether it’s better to lower tax rates or to provide targeted tax cuts for parents.

Since this meant I was wading into a fight between so-called reform conservatives (or “reformicons”) and traditional conservatives (or “supply-siders”), I wasn’t surprised to learn that not everyone agreed with my analysis.

James Pethokoukis of the American Enterprise Institute, for instance, doesn’t approve of what I wrote.

…why are some folks on the right against giving middle-class families a big tax cut and letting them keep more of what they earn?…Cato’s Dan Mitchell, in a Wall Street Journal commentary today, concedes Stein’s idea would indeed help middle-class families right now… Yet Mitchell still thinks cutting marginal tax rates is the better idea. Pethokoukis accurately notes that I want lower marginal tax rates because, from my perspective, faster long-run growth would be even more beneficial to middle-class families.

He disagrees and offers five counter-arguments. Here they are (summarized fairly, I hope), along with my response.

[PeterPrinciple]

targeted tax breaks assume the leaders know better than the rest of us. Their power is in granting the breaks.

Lower tax rates lets us decided and takes the power away from them, so....................targeted tax breaks will be what happens if anything.

[SSS Two]

I'm a supply sider; therefore, I'm a purist when it comes to lowering tax rates and eliminating all targeted tax credits. My position is very similar to the position of Dan Mitchell (the author of this article).

Most people on FR are reformicons. Try suggesting the elimination of a tax credit that they actually like. (Home mortgage, education tuition, etc.)

[DManA]

I’m sick of being a puppet to guys like this. Dance little puppets and maybe we’ll give you back some of your own money.

Screw you Mithchell. Time to cut the strings and kick the Mitchells asses out the door