Thursday, November 23, 2017

Specious Argument

Dean Baker used yesterday the kind of specious argument that is beginning to make me think that economists should simply be shot dead immediately upon graduation from economist’s school, claiming that the proposed increase in the standard deduction would decrease the value of the mortgage interest deduction.

His headline is about the elimination of state and local taxes as deductions, but that only serves as a lead to the taxpayer’s use of the standard deduction, which the tax plan would double in size. He immediately points out that, “The piece notes that doubling the standard deduction will reduce the number of people who itemize and therefore benefit from the mortgage interest deduction,” and thus has changed the subject away from the headline in the first paragraph.

Note the disingenuous argument here, when he refers to people who, “itemize and therefore benefit from the mortgage interest deduction.” If using the standard deduction results in a lower tax burden, how does it cause one to “lose the benefit” from the mortgage interest deduction? They are paying a lower tax.

The sleazy and dishonest part of his argument is what he means when he says that the new tax plan will “decrease the value,” specifically when the standard deduction is not large enough to overcome the advantage of itemizing and using the mortgage interest deduction, in which case he points out that difference between itemized and standard deduction would be smaller, thus making the itemized deduction “of less value.”

So when one thing costs more than another, if you raise the price of the cheaper one you devalue the higher-priced one.

Only an economist could argue that doubling the standard deduction is a bad thing. Just shoot them all and put us out of our misery.

1 comment:

  1. bruice9:21 AM

    Yeah I caught the logic mismatch right away. People are going to use what benefits them the most. The "decrease in value" is meaningful only in the context of it being the only thing, which it is not in this proposed scenario.

    the disingenuous headline just gives him two bites on the journalism apple in one column. Meh.