Is the homebuyers tax credit immoral?

Should government incentivize/disincentivize behavior?

My girlfriend dragged me to a bunch of open houses on Sunday. At each, the real estate agent eagerly advertised the federal government’s homebuyer tax credit, which gives up to $8000 in tax credits to first-time homebuyers and long-time homeowners buying a replacement principal residence before April 30, 2010.

The tax credit is an example of the government incentivizing certain behavior – in this case purchasing a home in order to stimulate the economy.  And it got me thinking: what other kinds of behavior does the government incentivize…and should it?

Government can incentivize and disincentivize behavior through a variety of avenues – taxes, tax credits, fees and regulations, and legal punishment (monetary or otherwise).  Look at the tax code for a host of things that have been incentivized – marriage, procreation, higher education, health care, long-term saving, giving money to charity, the list goes on and on.  At the same time, taxes are used to disincentivize many things as well – alcohol, tobacco and gasoline, for example all incur federal taxes and increases on standard state sales tax rates.  Fees and regulations can be used to promote certain behavior.  For example, cities use parking time limits and meter fees to encourage turnover so that more people frequent neighborhood stores and restaurants.  Finally, laws and punishment are used to disincentivize behavior: the fact that speeding carries a fine or murder a prison term is at least part of what causes us to think twice about performing these activities.

For the public philosopher, there are two questions more interesting than “what behavior does government incentivize/disincentivize?”: “what behavior should government incentivize/disincentivize?” and “to what end should government incentivize/disincentivize behavior?”.

At issue in the first question is whether personal behavior should be subject to government promotion or hindrance, regardless the reason.  Should whether I wear a seat belt or whether I get married be relevant to the government at all?  Even if, say, the children of married couples had a greater chance of success in life, would the government have grounds to incentivize or disincentivize marriage when it is a purely personal act?

On the second question, we can identify a number of ends toward which the above examples of incentives/disincentives are directed – economic growth, neighborhood development, community safety, personal safety, personal development, personal financial stability, personal health, environmental protection, population growth/control, social justice and the list could go on.  These seem to fall into two categories: community goods and personal goods.  Economic growth, community safety and environmental protection, for example, are all community goods – their benefits are inevitably to everyone.  Personal development, health or financial stability, on the other hand, are just about a single individual (though there may be indirect effects on those with whom they interact).

There are a few moral questions here: 1) should government incentivize/disincentivize behavior to achieve goods at all, since almost no good (ex. environmental protection) will never have universal support?; and  2) should government incentivize/disincentivize behavior toward personal goods when these are necessarily based on a conception of the good life (ex. marriage, risk aversion) that the individual may not hold?

There is much more to be said about these questions and the philosophical debates about perfectionism and personal/public morality on which they touch.  I will address these later.  For now, as I consider buying a house, I ask you to consider the initial question for me – is the homebuyers tax credit immoral?

-Marc

Photo by Flickr user The Truth About used under a Creative Commons Attribution license.

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January 19, 2010 · Filed Under Distributive Justice, Marc, Personal vs. Public Morality, Punishment

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One Response to “Is the homebuyers tax credit immoral?”

  1. Government incentives revisited : The Public Philosopher on January 26th, 2010 8:12 am

    [...] week I wrote about government’s use of taxes, tax credits, fees and regulations, and legal punishment to [...]

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    Jacob Bronsther is a law student at NYU, a former Fulbright Scholar to Mauritius, and a graduate of Cornell University. He has an MPhil in Political Theory from the University of Oxford.

  • Sam Gill is a consultant in Washington and a graduate of the University of Chicago. He studied Political Theory at Oxford as a Rhodes Scholar.

  • Marc Grinberg is a Presidential Management Fellow with the U.S. government and a graduate of Princeton University. He earned an MPhil in Political Theory from the University of Oxford.

  • John Rood is the founder of Next Step Test Preparation and a graduate of Michigan State University. He has an AM in Political Theory from the University of Chicago.

  • Luke Freedman is a student at Carleton College, pursuing a double major in Philosophy and Political Science.


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