Tax Breaks for Pets?
In our continuing focus on economic populism in Michigan politics, the following story borderlines on the ridiculous. US Representative Thad McCotter (R-Livonia) has recently proposed House Resolution 3501, the Humanity and Pets Partnered Through the Years, or HAPPY Act, which would amend the Internal Revenue Code to allow an individual to deduct up to $3,500 for “qualified pet care expenses.” How could anyone be against the “happy act?” That’s almost as bad as being against the “Patriot Act,” right?
Sarcasm aside, the great irony about all this, as bloggers on the left have pointed out, is that the GOP’s current proposed deductions for human health care only offer individual tax credits of $2,500, compared to the $3500 amount for pets. Of course, the left has used this point of irony as a battle cry for even more government health insurance, even though Medicare is one of the most expensive programs of an overall insolvent federal government.
And by acting “democrat-light,” by pandering to popular sentiment regarding the “needs of everyday American families”, McCotter has opened himself up to this type of criticism. It seems as though the Congressman is throwing out everything and the kitchen sink in order to win re-election before the critical US Census forces re-districting after 2010. But these efforts have come at the expense of his own advice to fellow caucus members regarding why the party lost its way.
Owning a pet is not a necessity, and these tax deductions are nothing more than a lifestyle subsidy for which someone else indirectly pays for in the end. In these touch economic times, we must re-evaluate what necessities truly are. Proponents of the bill have argued that is will 1) make “it more affordable for people to provide the care their pets need,” and 2) make “it less likely that pet owners who are suffering during the recession will abandon their pets.” This in turn is supposed to save local governments money over the long-term since ”many local communities and counties are overwhelmed by animal control costs, and those costs are exacerbated by people who do not spay and neuter their animals.”
But should people be encouraged to continue owning things that they cannot afford and pass some of these costs onto the rest of society in the form of tax deductions? Why not expect more personal responsibility on the part of each individual instead of creating government schemes that attempt to encourage or discourage personal behavior? Countless government programs that attempt to help those in need simply end up enabling the same negative aspects that the program sought to eradicate. Has LBJ’s war on poverty eliminated the problem after all of the billions that have been spent?
A founding first principle of this country is the rule of law, which requires that the laws of the land be written to apply to everyone equally and that these laws are simple enough for everyday citizens to understand. The Internal Revenue Code is the antithesis of this founding principle. Adding to its complexity with another yet another deduction does nothing to solve the underlying problem with how we collect taxes in this country in the first place.
Economic Populism and the Cash for Clunkers Boondoggle
Michigan politicians, both Republican and Democrat alike, suffer from an urge to please the masses, even when doing so results in long-term harm to government budgets and the overall economy. Even supposed conservative Republican Congressman Pete Hoekstra, voted last fall to bailout the domestic auto industry out of fear of feeling the wrath from his fellow Michiganders for letting GM and Chrysler fall into bankruptcy. So a “bridge loan” was approved by Congress, but despite this bailout money, both companies still went into bankruptcy court for restructuring, which in hindsight appears to have been the best of many poor options all along.
The Cash for Clunkers program was simply another government scheme disguised as a way to help the American auto industry. So it seems as only poetic justice that most of the “clunkers” being turned in are American vehicles while most of the vehicles traded in for are Japanese. And to think, Transportation Secretary Ray Lahood has said “it’s a thrill to be a part of the best economic news story in America…As a result of the program, automotive inventory has been depleted and both General Motors and Ford are ramping up production, adding shifts and rehiring laid off workers.”
And the program is also textbook example of why Congressman Hoekstra has unfortunately abdicated his position as the conservative voice in the gubernatorial primary for governor. This very issue demonstrates the rampant economic populism that has infected Michigan politics for the last 40 years, and not surprisingly, has made Michigan a less attractive place to do business over that same period of time.
Countless people in our state have thought to themselves “if only we help the auto industry and protect good union jobs, then everything in Michigan will be alright.” Well this belief is based upon the assumption that even if the government wants to help those in need, it is effectively able to, as opposed to causing more problems than it sought to fix (see recent article by Ron Paul “The Free Market as Regulator”).
And while Hoekstra has been in Congress for over 16 years, it is still hard to believe that he (being once the only bright-spot in an otherwise lackluster delegation from Michigan) is surprised that the government’s processing of dealers’ requests for rebates has run into bureaucratic red-tape. “It’s not brain surgery, it’s processing a rebate,” he said. “We don’t need another law, we need some competence.” Wow! He expects competence from government? He is more out of touch than initially thought. “It appears that we have to do at least some checking as to whether this whole administrative thing worked the way it was intended to and we just need some more money for it to work.” Spoken like a true “conservative” Republican.
As Tyler Gaastra of redcounty.com has said, this was an example of “politics over principle for West Michigan Republicans”:
[A]s a matter of principle, it is unfortunate that both local congressmen supported the bill. Alternatively, from a local politics perspective, the vote is entirely reasonable. Just imagine the ads that would have been made by the Michigan Democratic Party: ‘Peter Hoekstra says he supports Michigan car companies, but when it came to the successful Cash for Clunkers program Hoekstra said NO to Michigan businesses and Michigan jobs.’…In this case, local politics trumped principle
State Representative Justin Amash Accused of Not Compromising on Film Tax Credit
State Representative, and RLCMI advisor, Justin Amash has recently been accused by critics of “not compromising” on the Michigan Film Tax Credits. During a rally at the State Capitol earlier this week, Deb Havens, chair of the West Michigan Film Video Alliance, accused Amash of being just another politician who plays “off on their own agendas, rather than what is best for the state and the people of Michigan.” Ms. Havens seems convinced that Amash’s ideology has nothing to do with sincerely held beliefs, and she also seems convinced that she, and not Representative Amash, knows what is best for the people of Michigan. The irony is that Havens explains Amash’s argument quite clearly stating he is “committed to no incentives…the idea being that if we get rid of all incentive programs then we can get rid of the Michigan business tax, and we won’t have to tax our businesses to pay incentives, therefore, get rid of all incentives.”
People like movies. They make us laugh, cry, and scream. But is the film industry any more important than other sectors of economy such as manufacturing, which is comprised of companies who have been here much longer, and who are the ones paying to attract to newer, out-of-state industries. No one is holding a rally at the capitol on behalf of the garbage industry, even though importing waste from other states and Canada has been a growing business in Michigan in recent years. It must not be as sexy as the movie industry whose growth clearly furthers Ms. Havens personal agenda as Chair of the Michigan Film Video Alliance (read “special interest” group).
And this issue also touches upon another big problem in Michigan politics, that being economic populism. For example, Michigan State Senator Nancy Cassis has been one of the most conservative voices in legislature over the last decade. And while she has rightfully questioned whether the film incentives are actually working, her proposed solution “that 90 percent of the people working on a movie or national ad production must be from Michigan” is also faulty. A parochial restriction that dicates to business that they must hire locally is likely to discourage them from locating in Michigan in the first place. However, this is the price that the private sector should not at all be surprised of paying when they receive government handouts (see the earlier post “Be Careful What You For” concerning the American auto bailouts).
Nor is Cassis’ argument that we should simply “right-size” the film credits by reducing the refundable amount of production costs from 40 percent to 42 percent, down to 35 percent all that convincing since, according the Anderson Economic Group, “the nominal tax expenditure is, at best, a rough guess, and probably an overestimate of the actual ‘cost’ of the program.”