Sunday, April 11, 2010

"Targeting" Solutions

The Obama Administration seems wedded to the notion of "targeting solutions." What this means if that if you are going to give a tax break, give it for a specific activity and confine it to what you call the "middle class." The problem with this is the tax code is beyond complexity. It is a completely hopeless, non-sensical jumble of special gimmicks that were embedded by previous "targeted solutions."

Such "targeted solutions" are great for tax accountants and folks like Turbo Tax, but are a disaster for a citizen attempting to understand his/her obligations under the tax system of the United States. He/she has no idea what she pays or why, but he/she knows that its a lot. It is.

"Targeted solutions" have unintended consequences. The few that understand the "targeted solutions," inevitably "game" them. Much of the stimulus package (tax and spending) simply went to reinforce the income and wealth of folks already on top of the pile -- the poor and the unemployed were, by and large, ignored by the Obama stimulus -- not an unusual result of programs designed to help the unfortunate, they mainly end up helping the fortunate (friends of the Administration).

That's why targeted solution are inappropriate in a free society. In a free society, the tax rules are transparent and broadly applied. You don't single out special groups (or states or localities) to be treated differently than others. The same rules apply to all in a free society. No one is "more equal" than anyone else.

Obama and most (Democratic and Republican) politicians don't get this. A free society presupposes that people understand what their government is doing, including how it is getting its money. In a free society, all citizens are treated equally under the law. "Targeted solutions" are fine for Russia or Venezuela, but not for a free society.