I saw some write ups about how certain Obama changes, notably reducing or eliminating Tax Deductions for mortgage interest and charitable giving, were big mistakes. Frankly I don't care about these changes.
1. If you believe in a free market, then Gov't regulation through the tax code bothers you. On the mortgage interest (and I'm enjoying the benefit, so this is an argument against self interest) it's a contributor to encouraging people to buy, and it creates upward pressure in the home market. Like subsidizing student loans this distorts the market, and IMO drives prices too high. It also subsidizes home owners at the expense of renters. Renting is probably a better choice for people in the lower brackets and with certain lifestyles (i.e. jobs that move you a lot.)
2. On charitable giving - yes this will effect churches and good organizations, but most people doing this kind of donations, probably will still find a way to give. The whole charitable corporation is so corrupt these days, I'd like to see the entire industry take a hit. Every time you see an article about some charity funneling money to terrorists, or really being a front for a political group, etc - it makes the whole thing seem dirty.
Now I do agree that these changes happening over night and in isolation are probably bad policy, but again - that's not a surprise. Obama has zero experience in anything other than pandering - so why would expect anything different? For at least the next two years, expect bad policy ideas to be the topic du jour.
How would I deal with these? Phase out any changes of this magnitude.
1. Shift all corporations to be tax free - but none to be charitable (i.e. you can't give money to a company and then not pay taxes on it, no matter what). It's our government and we should (individually) pay for it.
2. Set all personal tax at the same rate and allow no deduction, tax all income at the same rate (no special treatment for investor class income.)
3. Use the
no speed bump approach to make the tax code somewhat progressive and handle welfare issues. Have the federal government remove itself all together from any other welfare issues. (Think of this as the Gov't taking out an insurance policy on you.) Note this approach removes the regressive nature of todays biggest welfare policies (payroll tax, medicare, SSN.)
4. Reform campaign finance and speech: allow any organization to campaign on it's own behalf with disclosure. Require all campaign contributions be from individuals directly. Require reporting on all funds over $100 within 24 hours via the campaign website. Charge an audit fee on all non-traceable funds (anything that comes in as cash or is under the $100 reporting limit and not reported) in the amount of 2* the personal tax rate. Candidates should be personally responsible (civil or criminal) for any behavior of their campaign. Any money later moved from the reported to the non-traceable category should be subject to the same payment, plus a matching fee charged to the candidate.