November 11, 2015
By Tim Worstall
I’ve previously been very dismissive of Ben Carson’s approach to taxation. As here, simply because his numbers don’t add up. The Federal government, even if we strip it down a little, needs to collect some 15% or so of GDP in order to be able to fund itself. And, given that the entire economy ends up as an income to someone or other (yes, it does, it all becomes profits, interest, rent or labour income at some point) you cannot get 15% of GDP by only charging everyone one tenth of their income. Because one tenth of everyone’s income will be only 10% of GDP, obviously.
However, in the debate he made an excellent point. One that needs to be lauded (come on, this is election season, we’re not going to have that many proposals being floated that we can actually applaud now, are we?) so I shall laud it:
He said explicitly that he would eliminate the mortgage-interest deduction and the tax break for charitable contributions, which, combined, will save Americans over $100 billion this year. Those are among the most sacred of the sacred cows of the tax code, and most other candidates aren’t daring to touch them.
“People had homes before 1913 when we introduced the federal income tax, and later after that started deductions,” Mr. Carson said. “And they say there will be no more charitable giving. We had churches before that and charitable organizations before that. The fact of the matter is, I believe if you put more money in people’s pockets that they will actually be more generous rather than less generous.”
His point about charitable giving might be arguable but that one about the mortgage interest deduction is indeed worth applauding. It’s pretty much the third rail of the American tax system but it still needs to go. Because it’s an horrendous distortion in that tax system.
Read the full article at Forbes.com: The Excellent Part Of Ben Carson's Tax Plan: Abolish the Mortgage Interest Deduction