Posts Tagged 'exceptional trees'

Taxes, exceptional trees, and government waste

April 15 is just around the corner — a mere 1 month away! — and that means it’s time to break out your abacus and legal dictionary, and start reading the fine print. I’m always amazed at how unnecessarily complicated the US’s income tax system is. One irate taxpayer compiled this funny list of all the various esoteric tax breaks in state tax codes across the country. My favorite is the Exceptional Trees Deduction in Hawaii, which applies to state tax form line 17:

Exceptional Trees Deduction: You may deduct up to $3,000 per exceptional tree for qualified expenditures you made during the taxable year to maintain the tree on your private property. The tree must be designated as an exceptional tree by the local county arborist advisory committee under chapter 58, HRS.

First, there’s the obvious question: what kind of tree is so exceptional it needs up to $3,000 in maintenance each year?

But more importantly, why on earth is this in the tax code in the first place? If the good people of the state of Hawaii decide that they want to incentivize private property owners to maintain and protect what must be some really awesome trees, cool. Apparently the state already has a system of local arborists, so why not have the arborist team up with the treasurer of the local government to cut people checks for taking care of their fabulous trees?

Because that would be evil, evil ‘government spending’, which is a big no-no in the modern political climate. So instead, we’ve turned to the tax code for a big chunk of our policy implementation. The end result is the same — more money in the hands of people who care for exceptional trees — but instead of directly spending the money by cutting a check, we use tax expenditures. We reduce the dendro-samaritan’s tax burden from what it normally would be and then necessarily keep everyone else’s taxes just slightly higher than they’d need to be, in order to pay for the original tax expenditure. And this is just one of a million other examples: mortgage write-offs, health care benefit write-offs, business investment write-offs, dependent write-offs, blind person write-offs, etc., etc., etc. .

I’m actually a fan of robust government, and I think it’s a net positive thing to incentivize people to do good things they wouldn’t otherwise do enough of, like investing and create new jobs, or providing health insurance to employees. But our myopic and infantile politics means that if we do this by cutting people checks, then we’re socialists. But if we do it through tax expenditures, we’re just good pragmatic capitalists.

When choosing between direct spending and tax expenditures, the net social effect is exactly the same. But which one we choose matters, because the result of our love of tax expenditures is a hodgepodge of refunds, exemptions, write-offs, exclusions, that even forces experts to use TurobTax when they file. Americans now spend a total of 6.6 billion hours and $194 billion every year just to file their taxes. Clearly it’s better for all those normal, non-exceptional-tree-owning, Hawaiian tax payers to not have to waste their time reading through the rules about Line 17 deductions, and to just have the local arborists cutting checks while everyone else gets on with their lives. But I wouldn’t hold my breath waiting for that socialist utopia.


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This is a group blog. JSC5 currently writes from the US. JSC7 writes from behind the Great Firewall of China.

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