A Trickle-Down Program the Left Rarely Complains About
Government support of secondary mortgage markets is the worst form of trickle-down economic policy. Many very wealthy people profit from it, and the benefits to low-income people are at best tiny.
Other good sentences by Arnold Kling at the EconLog blog.
I don’t have to read any more. I’m already convinced.
Kling is a pretty smart guy.
I’ve always liked Kling. He has a good mind. Always sounds reasonable. He’s an economist’s economist.
The same can be said for just about anything to do with federal housing policy. Who benefits most from the mortgage interest deduction? The main effect seems to be to encourage larger houses, inflated prices, and longer commutes.
Bart:
The same can be said about the employer exclusion for medical epenses – by far, the largest exclusion of income in the budget.
Don Levit
Don, I agree. Some musings…
Like the mortgage interest deduction, the employer exclusion serves a partial purpose– making it economically attractive for healthy employees to accept more-or-less community-rated benefits. But does so badly, in that it’s discriminatory toward those who are ineligible, it’s regressive, and the tax benefit is not sized to accomplish this specific purpose, but is instead an accident of one’s tax bracket.
All of the above is also true of the mortgage interest deduction. The mortgage interest deduction is also a barrier to class mobility, in that it taxes renters who are trying to save for a down payment, while subsidizing those who have long since made the transition to ownership. It tends to help owners remain owners, and renters renters.
I haven’t thought through whether tax breaks on employee benefits create a similar barrier to socio-economic mobility, but it wouldn’t surprise me. Perhaps through occasional medical bankruptcy.