CHAP18 Taxation in the United States and Around the World 公共金融与公共政策课件.ppt

Externality/Public Goods Rationales for Deviating from Haig-Simons 18 . 5 Housing The most common justification provided for this subsidy to home ownership in the United States is that home ownership has positive externalities that renting does not. Why Subsidize Home Ownership? Effect of Tax Subsidies for Housing Despite wide variation in this tax subsidy, the home ownership rate has remained essentially constant since the 1950s, at about 65%. It appears that the tax subsidy is inducing individuals to spend more on houses they would have bought anyway, even without the tax subsidy. Externality/Public Goods Rationales for Deviating from Haig-Simons 18 . 5 Tax Deductions Versus Tax Credits Tax credits allow taxpayers to reduce the amount of tax they owe to the government by a certain amount (e.g., the amount they spend on child care). tax deductions Amounts by which taxpayers are allowed to reduce their taxable income through spending on items such as charitable donations or home mortgage interest. Externality/Public Goods Rationales for Deviating from Haig-Simons 18 . 5 Tax Deductions Versus Tax Credits Efficiency Considerations For those who are giving less than $1,000 now, the credit provides a much stronger incentive to increase giving up to the $1,000 level, since it is free (tax payments fall by $1 for each dollar of giving). Once a person gives more than $1,000, there is no more benefit from the tax credit. Which policy, deduction, or credit is more efficient is dictated by two considerations: The first is the nature of the demand for the subsidized good. Second, policy makers must decide how important it is to achieve some minimal level of the behavior. Externality/Public Goods Rationales for Deviating from Haig-Simons 18 . 5 Tax Deductions Versus Tax Credits Equity Considerations On vertical equity grounds, tax credits are more equitable than deductions. The value of a deduction rises with one’s tax rate, making deductions regressive. Credits, on the ot