William Thien

Are Tax Deductions a Form of Socialism or Worse, Communism?

Posted on: December 8, 2012

During a conversation with a number of liberals the subject of tax deductions arose. Their position is that if the government provides a tax deduction for certain types of activities or behaviors, that tax deduction is a form of conservatism, or in this particular case, small government. I disagree.

One gentlemen suggested that were the government to offer you a tax break for purchasing your own health insurance instead of offering government health care, that would indicate that the government is conservative, of smaller government, since they are not providing the health care themselves. Again, I disagreed. “What!,” they all were astounded?

They’d all been told by the constabulary, the media, the two major parties, that such deductions indicated small government and therefore conservatism.

I think that understanding of government, that deductions are a form of conservatism or small government, is wrong. If the government offers you a tax deduction for purchasing your own health insurance, that is neither liberal or conservative. To me, such deductions are a form of socialism or communism. Why? Because the money has to come from somewhere. And in the way tax codes, all tax codes are written, such social engineering comes at a price. Someone, somewhere has to pay for that deduction, which involves a distribution of wealth, therefore it is by definition a form of socialism or communism. The end result is that tax rates must go up in order to compensate for those deductions. Finally, those deductions appear to make the products, health insurance for example, more affordable and they drive the cost of products and services in the marketplace up. So, not only are tax deductions for purchasing certain types of products a form of socialism or communism, they stimulate inflation. Tax deductions for purchasing certain types of products and services are very costly in the long run, they drive up tax rates, stimulate inflation, and they are a form of socialism or communism.

True, “small government,” true “conservatism” means to get the government out of things from the very beginning. Deductions are a form of marketplace interference and they merely drive the price of things up. Deductions stimulate buying behavior and as the demand increases, so do the prices. Deductions require others to pay for the behavior of others and so are a form of wealth redistribution. Deductions are a lose-lose proposition in the greater realm of the tax code.

It is time to rewrite the tax code and make it fair for all, not just those the government wants to see succeed or believes due to some antiquated perception of one social class or another that some are less fortunate and others more.

I am often surprised by those who scream when the government makes cuts but then are silent when they find out they are getting all kinds of deductions to which people such as myself are not privy. “That’s just the way it is,” they like to reply. They rant and march up and down and act as if they have a philosophical position from which to argue when it is quite obvious that really all they care about is themselves. Though they don’t realize it, the government knows that.

Copyright 2012 William Thien

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