Are tax deductions subsidies? Many people think they are. Do tax deductions cost the government money? Many people think they do. Are tax deductions always a good thing? Many people say they aren’t.
Tax season is about over, so let’s do a little review.
Tax deductions, like tax exemptions, reduce one’s income subject to tax. Deductions and exemptions work the same way, but deductions are generally subject to more limitations, conditions, and exclusions. Subtracting from total income (line 22 on the 1040 tax form) all applicable deductions (lines 23-35) results in one’s adjusted gross income (line 37). Before the amount of one’s taxable income is calculated, from adjusted gross income is subtracted exemptions of $4,000 per person in the household and either additional deductions (itemized deductions from schedule A) or the applicable standard deduction. that we are able to keep away from the government is a good thing, whether it results from lower tax rates or an increase in tax deductions. All tax deductions are good; it doesn’t matter whom they benefit, how much they complicate or clutter up the tax code, or why Congress enacts them.
Only a statist who thinks the government is entitled to a percentage of every American’s income and that tax deductions deprive the government of its claim to that percentage could object to Americans holding on to more of their own money.
According to a new report from the : “Americans will collectively spend more on taxes in 2016 than they will on food, clothing, and housing combined.”
Since the tax code and the IRS aren’t going away anytime soon, since the maximum tax rate will almost certainly never return to its initial 7 percent, and tax rates are unlikely to be reduced any time soon, the American people need more line 24s. They need more tax deductions. Just like they need more tax credits, more tax loopholes, more tax shelters, more tax incentives, more tax breaks, more tax exemptions, and more tax avoidance schemes.
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