Subsidies and you

( – promoted by Rob “EaBo Clipper” Eno)

You get plenty of subsidies.  

But just to make sure we agree what subsidies are, the government “spends” in a couple of ways: Subsidies #1, government collects taxes and spends Subsidies #2, government collects less from certain special groups.

When it’s a corporate subsidy, liberals or progressives or whatever they’re calling themselves these days wail and lament the corporate greed.

I agree with them.  Subsidies are bad policy.

Subsidy #1: Governor Patrick announces big hand outs for Evergreen Solar. (Only later realizes that more jobs and energy would have been generated by if they’d hired people to shovel the cash into ovens for heat.)

Subsidy #2: Government subsidizes residential tenants in Massachusetts. A Renter can deduct the cost of rent from taxable income.

“Hey, waitaminute, I rent!  That’s not a bad subsidy.  Think of the poor!”

So, in another thread far, far away, AmberPaw (Ms. Paw?) suggests that we look at the subsidies to figure out which make sense.

Response:  none of them make sense.

Here is the Massachusetts Expenditure Budget.  It’s worth noting that recipients of Social Security don’t pay tax on their benefits.  That’s a subsidy to old and disabled people and the subsidy totals $700 million annually.

How can you possibly disagree with that subsidy?  Look at their picture; fear their vote.  

Another one.  There’s no tax on gain from home sale up to $500,000.  That costs the state $292 million, subsidizing people who sell their home.  That makes sense; it costs real money to sell your home and retire to Florida.  Let’s give them a hand; they only made $500,000 on the sale.

The allowed deduction for Self-Employment tax or FICA costs the state $308 million annually.

The list of subsidies goes on and on.  Sales tax exemption on clothing, food, booze, lottery tickets.  Mass state pensions aren’t taxable.

If you wish to know how much YOUR subsidy is, then take your income, all your income and multiply it by 5.3%   Then, look to see how much income tax you actually paid on your 2010 Form 1.  The difference is approx equal to the income tax subsidy given to you.

Or, a calculation requiring some effort.  Take the total dollars you spent on consumption and multiply it by 6.25%.  Compare that to the actual sales tax you paid and the difference is your subsidy, given to you by the government because you bought clothing, services, food, booze, lottery tickets, etc…all things not subject to sales tax.

As far as eliminating those items that don’t make sense.  They may not make sense to you, but there are another group of people who think they make lots of sense.  Levy sales tax on clothing and I bet you’d be pissed; levy sales tax on booze and perhaps not so much.  Take away the “rent paid” deduction? Renter might mind.    The non-taxability of the mass pensions paid?  Take that away and hear from Billy Bulger.

Better yet, eliminate all subsidies:  levy, say, a flat 3% tax on all income and a 1% sales tax on all consumption and end the political gaming.

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