Lots to talk about today.
– I haven’t talked much about the tax reform put out by Senators Marco Rubio and Mike Lee. Veronique de Rugy offered this bit of analysis in which she expresses her support for most of the plan, but also offers some criticism.
The second problem with the bill is that many free-market types are underwhelmed (for lack of a better word) by the huge child tax credits in the bill, in particular since the inclusion of those credits is “expensive” in more than one way. For instance, the projected revenue loss is $1.7 trillion over ten years according to the Tax Foundation. I assume this is the reason Rubio and Lee not only aren’t proposing a bigger reduction in the top income tax rate, but are even raising marginal tax rates on a significant number of middle-class and upper-middle class households. (The 35 percent top tax rate in the plan takes effect at just $75,000 of income for single households and $150,000 for married households!)
It has been noted before, but it is worth repeating: The opportunity cost of expanding the child tax credit in this way is huge, in terms of the possible tax reforms it crowds out. If their proposed child-tax credit were smaller, Rubio and Lee could have also included a low-rate flat tax, for instance. No matter what we hear about top-marginal-tax-rate reductions not yielding as much return at the current levels as they would if the rates were higher, lowering them would still yield more growth than the child tax credit, which does nothing for growth. If bolstering the economic status of families is the point of all this, the way to go is lower tax rates, not a tax credit. So why not solve 100 percent of the problem rather than 50 percent?
To make matters worse, I don’t buy the justification for the size of the tax credit they’re proposing. It is one thing to support some sort of child tax credit in the name of the idea that every flat-tax proposal has some zero-bracket amount based on family size, generally based on the principle that households shouldn’t be taxed on “necessity” or “poverty level” income. But providing giant credits, based on the premise that children are investments in maintaining entitlement programs and that parents should be compensated for the cost of raising their kids goes way overboard.
According to the senators, the tax credit would compensate for ”a parent tax penalty.” They compare it to “the marriage tax penalty.” But while I think that characterization is a brilliant marketing move on the part of those who think that parents should be rewarded/subsidized, it is also misleading. The marriage tax penalty is real and manifests itself in the form of higher taxes for certain people who get married and file jointly. That’s because government taxes the first dollar a married-couple secondary earner earns, often the wife, at her husband’s highest marginal rate rather than at the rate the wife’s salary warrants. The higher the marginal tax rate, the bigger the penalty. However, people aren’t taxed at a higher rate nor do they pay more taxes the moment they have children. In fact, it is the reverse because of personal allowances. So there is no “parent tax penalty.”
I have to concur in large part with de Rugy’s analysis. Ramesh Ponnuru, Reihan Salan and others have been beating the drums for expanding the child tax credit, and I have yet to hear a convincing explanation of how this is anything but more social engineering through the tax code. Indeed that is my beef with much of Salan and Ross Douthat’s book, The Grand New Party, which felt like 200 pages of nothing but pleading for more tax credits. As a father of (almost) four, I would certainly benefit from an expanded credit, but even I have to say enough is enough.
– Attention men: if you are nice, happy man who holds the door open for women, you are clearly signalling that you are nothing but a sexist.
Benevolent sexism makes men more smiley when they interact with women, and that’s bad news. Men who put women on a pedestal may be the wolves in sheep clothing hindering gender equality.
A new study examining the nonverbal cues thrown out during interactions between men and women finds that men who have high ratings of “benevolent sexism” — attitudes towards women that are well-intentioned but perpetuate inequality — finds that smiling and other positive cues increase when this kind of sexism is prevalent.
I clearly missed my calling. Who knew one could earn a living conducting such insightful “studies.”
– Fact-checking the fact checkers, part one million: Speaking of earning a living, I am starting to consider developing a fact-checking website that only fact-checks fact-checkers. Patterico writes of one of the most egregious examples of a fact-checker sneaking opinion into her column, as a manifestly true and simple observation made by Ted Cruz got rated as kinda false. WaPo editor Glenn Kessler at least had the dignity to respond to a few questions about this assessment, and offered up some whoppers.