If you’re an American, you probably know that this week is income-tax time. (If you didn’t already know that, sorry to tell you, but you missed the deadline.) Most people anticipate tax season with dread, but for me, this isn’t an especially painful time. In fact, I almost look forward to it, because my withholding schedule is set up such that instead of having to pay more in April, I usually get a big refund.
As pleasurable as it is to get that refund, I’m aware this makes no rational sense. I know it’s my own money to start with, so it amounts to giving the government an interest-free loan. But I view it as a check on my own impulses: when the money is given back to me all at once, I’ll save most of it, whereas if I received it distributed in paychecks throughout the year, I’d be tempted to fritter it away. However, all that’s a topic for another day.
I wrote this post to point out something else: A big part of why I get a refund is that, as a homeowner, I can take advantage of the mortgage interest tax deduction. This is by far the most advantageous part of the tax code for me, saving me thousands of dollars per year, and is wildly popular among the middle class in general. And yet, economists have calledfor the mortgage interest deductionto be repealed.
In making their case, they cite four main arguments: It’s an economically regressive rule that mainly benefits the wealthy, since low-income taxpayers either rent or don’t pay enough in mortgage interest to make the itemized deduction worthwhile. It encourages people to buy more expensive houses than they can afford, since it effectively acts as a rebate on mortgage borrowing, and in that respect may contribute to speculative bubbles like the one we just went through. It’s hugely expensive, costing the government on the order of $120 billion per year – money that could be used to pay down the deficit or do more good in other areas. And comparative analysis of other advanced countries, most of which don’t have this benefit, show that it doesn’t even do very much to promote homeownership.
I have to admit, as much as the mortgage interest deduction personally benefits me, I can’t argue with this reasoning. That’s why I’m in favor of repealing it. And I wanted to say this, realizing it goes against the grain, to counter a common misconception that’s increasingly influential and destructive to democracy.
The prevalent political mindset is that all people are opposed to taxes, and that it’s political suicide to ever vote for a tax increase. This belief has been helped along by conservative activists who encourage the fallacious belief that taxation is the equivalent of theft and that money is always better spent by individuals than by the government. The reality is that a free, prosperous and stable society doesn’t just happen; it has to be maintained, and taxes are the price we pay for its upkeep. If anything, I think most taxes are currently too low.
I’d rather be taxed more highly if it means I can live in a more equitable and just society, because in the long run, that benefits me much more. I’d rather be taxed and see the money spent on public education to ensure that America has a well-educated and more prosperous workforce, because a rising tide lifts all boats. I’d rather be taxed and see the money spent on a national healthcare program, if it means we can end the cruel absurdity of medical bills being a terrifying, bankrupting threat to people in the world’s wealthiest nation. I’d rather be taxed and see the money spent on infrastructure, so that we have roads and streetlights, so that we don’t have bridges that collapse or pipes that explode. I’d rather be taxed if it speeds the switchover from polluting, globe-warming fossil fuels to clean, renewable, carbon-neutral energy.
It doesn’t do me any good to be personally wealthier if my country or the world as a whole is becoming more unequal, more unstable, more gripped by poverty, more resentful, more insecure. I want to be successful, of course, but not at the expense of millions of people who didn’t have the same advantages or the same good fortune I’ve enjoyed. As I’ve written in the past, what I want is a society that offers equality of opportunity, and I think we’ve wandered far from this ideal. Anti-tax dogma is causing a dangerous deterioration of the social contract, and we can’t reverse that trend unless we accept that sometimes, yes, our taxes do need to be increased.