A Bit More on Education Tax Credits

In response to my 8/11/11 post, Education Tax Credits: Taking the Political Offensive, Ari Armstrong posted Another Look at Education Tax Credits. Much of his essay reiterates objections he already voiced against my proposal for universal education tax credits. However, he does make some points that I thought could be answered without being redundant. So, I’ve posted the following comments on his website:

Ari,

I appreciate your attention to this subject. Most of what you’ve said here I have already answered in my 8/11/11 post, and I refer the reader to that: http://principledperspectives.blogspot.com/2011/08/education-tax-credits-taking-political.html.

But, let me state that we are in complete agreement in regard to principled incrementalism. There is no confusion in my mind about “the relationship between principles and incrementalism”. That was the main point of my recent essay. However, people who agree on basic principles can differ widely on their application to practice – ex. personal accounts within SS.

Yes, they are government-enforced savings. But, what we have today is forced redistribution backed only by hollow promises of old-age benefits, rescindable at any time by congress. At least the taxpayer would have possession of, and a right to, his/her own money, rather than the politicians. I consider SS personal accounts to be a step toward individual rights, especially property rights - preferably without, but even with, basic investment controls. They can be advocated as a step in the phase-out process. Personal SS accounts are consistent with your statement that “tax credits advance individual rights … because at least they expand the individual’s control over his own resources.” Incremental reforms must certainly be anchored to explicitly proclaimed principles, lest we advance statism. On that we agree. As I’ve said before, I have yet to see an education tax credit program that meets the test of (free market) principled incrementalism – certainly not ones advocated by conservatives and Republicans!

This brings me to my “misunderstandings” about your positions. Any assumptions I’ve made are rooted in my analysis of things you wrote. Without going into too many details, let me just say in my defense that, as you acknowledge, your tax credit position is ambiguous. I’m still not clear on exactly where you come down on them. Your strenuous objections in your last piece seemed to preclude any support for tax credits, yet now you say you’d support “a decent tax-credit proposal”. Here we seem to agree again: A properly structured tax credit program would be a step in the right direction. What would a “decent proposal” include, in you view? Otherwise, I think you confuse “misunderstandings” with disagreement, such as on the issue of “inherent controls of tax credits”. If – and I can’t resist repeating myself here - “a universal tax credit program with absolutely no controls is pie-in-the-sky, rationalistic, detached-from-reality, utopian thinking”, then how on earth can anyone believe that “an actual legislature would [ever] institute” the complete separation of education and state?

By the way, what do you mean by “phasing in means testing (with lower taxes)” as one of “many concrete political strategies”?

That last question was not answered, so I still do not know what he has in mind.

That aside, notice that the issue of Social Security has surfaced as another area of disagreement. I’ll address that subject in more detail in a subsequent post.

In the meanwhile, I have a few additional comments. Toward the end, Armstrong writes:

LaFerrara points out that free-market elements of the economy routinely fall under increased political controls, too. But this misses the fundamental difference. In the market segment, the default is that the individual owns his own resources, and the government then overrides his rights for some alleged greater good. With tax credits, the default is that the individual does not own the resources in question, and the government is merely setting limits on how to allocate the government's money. With tax credits, the default and the inexorable condition is control.

I understand his point. But, isn’t this a distinction without a difference? The fundamental issue is not taxes. It is individual rights, with all of the principles that that implies. When a culture’s predominant political value is individual rights, the default is toward greater freedom. When individual rights are not valued, the default is toward steadily increasing government control. Today, most people would probably claim to be for individual rights. Unfortunately, few people have a real understanding of what rights are. Since one can’t value something that one doesn’t understand, “the default and the inexorable condition is control” throughout the economy, not just where tax credits are concerned.

Armstrong concludes:

If you think advocating tax credits will open people's minds to the idea that they actually own their own wealth, then I wish you well in that endeavor. But, in the interim, let's recognize tax credits for what they are: political controls on how people spend their money.

Opening people’s minds is exactly the point of advocating tax credits for the right philosophical reasons. I grant that “in the interim”, and lacking the proper philosophical backing, tax credits can coincide with political controls. But that need not be the case.