Reality Rears Its Ugly Head

Cato's Andrew Coulson, in the process of arguing that I'm wrong to assert that tax credits are a form of public funding, makes the critical mistake of conflating legal opinions on education tax credit programs with the realities of tax credits' practical impacts. I know libertarians sometimes have difficulties with "reality," so I'll explain: Yes, tax credits are appealing to many people because courts have ruled that giving parents or corporations a tax credit for money spent to send a child to a religious school can't be construed as public support for religion. But the critical distinction there is really more about accounting than reality. In terms of practical impact, giving individuals a tax credit for a specific behavior or expenditure is virtually indistinguishable from writing them a check to pay them for the same activity. It has the same impact on both government and individual budgets, and, as libertarians well know, tax credits for specific behaviors can have the same distorting impact on individual incentives. And it's impacts, more than accounting or legal details, that are critical to the public policy question here. If Coulson feels so strongly that I'm wrong about this, he should first trot down to his own organization's fiscal policy shop and explain to them why they're wrong to criticize ethanol tax credits as....a government subsidy.

Btw, I don't know if the Cato education men have a crush on me or think I'm a fool: This is the third time this week they've gone after something I've written. While I'm flattered by the attention, I'm sorry, guys, that I can't actually respond to everything you write about me. There are three of you but only one of me, and I've got actually, you know, work, to do.