How to win an election (where only economists vote)
Would you like to win an election among economists? Slate details a few policy prescriptions that most economists like and few politicians would dare touch:
One: Eliminate the mortgage tax deduction, which lets homeowners deduct the interest they pay on their mortgages. Gone. After all, big houses get bigger tax breaks, driving up prices for everyone. Why distort the housing market and subsidize people buying expensive houses?
Two: End the tax deduction companies get for providing health-care to employees. Neither employees nor employers pay taxes on workplace health insurance benefits. That encourages fancier insurance coverage, driving up usage and, therefore, health costs overall. Eliminating the deduction will drive up costs for people with workplace healthcare, but makes the health-care market fairer.
Three: Eliminate the corporate income tax. Completely. If companies reinvest the money into their businesses, that's good. Don't tax companies in an effort to tax rich people.
Four: Eliminate all income and payroll taxes. All of them. For everyone. Taxes discourage whatever you're taxing, but we like income, so why tax it? Payroll taxes discourage creating jobs. Not such a good idea. Instead, impose a consumption tax, designed to be progressive to protect lower-income households.
Five: Tax carbon emissions. Yes, that means higher gasoline prices. It's a kind of consumption tax, and can be structured to make sure it doesn't disproportionately harm lower-income Americans. More, it's taxing something that's bad, which gives people an incentive to stop polluting.
Six: Legalize marijuana. Stop spending so much trying to put pot users and dealers in jail — it costs a lot of money to catch them, prosecute them, and then put them up in jail. Criminalizing drugs also drives drug prices up, making gang leaders rich.
How many of these ideas do you support? I'm for all of them, but some under more specific conditions. For example, eliminating the mortgage interest deduction, the business tax preference for health insurance and taxing carbon emissions would all effectively raise taxes for many Americans. If those tax increases were balanced with a generalized decrease in income tax rates or the elimination of other broad-based taxes altogether, that would be the best way to effect these changes.
One problem with taxing carbon emissions is this: It's a tax no one should want to collect. It's like taxing cigarettes. Politicians idealize a time when no one smokes when they argue for cigarette taxes, but they love tax revenue. The same goes for carbon emissions. It's not a tax that we should be happy to collect since we all idealize a world without carbon emissions. It's a thought we should all have in mind when we talk about taxes on products with relatively steep demand curves like cigarettes or gasoline. The reason is this: Politicians may find themselves favoring policies that encourage carbon emissions for the sake of tax revenue!
Note: One of the professors polled, Russ Roberts, is a professor of mine, but I'm not brown-nosing.
Another note: Here's a podcast on the mortgage interest deduction and why it's a bad policy.