Tax Reform Is Really Hard

A blog about business and economics.
July 2 2013 4:31 PM

One Man's Tax Loophole Is Another's Invaluable Public Policy Intervention

Somehow tax reform is once again on Washington's lips this week. In a loosely related development, the Treasury Department was proud today to announce the release of new data (PDF) on the performance of the New Markets Tax Credit, a program established in 2000 with the enthusiastic support of Al Gore that provides a federal tax subsidy for equity investments in low-income communities. A bit below 60 percent of this money goes to boost real estate investments, and a bit below 40 percent goes for investments in operating businesses.

The idea is that to be eligible you need to be located in a census tract that meets one of several indicators for "severe distress" economically speaking, and the program seems to be a small-but-effective way of spurring investment in these communities.


And if you think about the urban revitalization process you can see why this is important. Private businesses are first and foremost run for private benefit. But the reality is that the first guy to renovate a vacant building on a block full of derelict storefronts and a liquor store creates some meaningful positive spillovers for the rest of the community. People would rather patronize businesses that are near other businesses, and patronize them in clusters of buildings that look attractive. That's why they build shopping malls in the suburbs. So a round of applause for everyone.

But again note that this program would have to be considered one of those dastardly "tax loopholes" that everyone's talking about closing. And perhaps it should be closed in the context of an overall reform package that raises revenues while lowering tax rates. But it's easier said than done. These loopholes tend to get created for real reasons, and there are real people out there benefitting from them.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.



The Democrats’ War at Home

How can the president’s party defend itself from the president’s foreign policy blunders?

An Iranian Woman Was Sentenced to Death for Killing Her Alleged Rapist. Can Activists Save Her?

Piper Kerman on Why She Dressed Like a Hitchcock Heroine for Her Prison Sentencing

Windows 8 Was So Bad That Microsoft Will Skip Straight to Windows 10

We Need to Talk: A Terrible Name for a Good Women’s Sports Show


Cringing. Ducking. Mumbling.

How GOP candidates react whenever someone brings up reproductive rights or gay marriage.


How Even an Old Hipster Can Age Gracefully

On their new albums, Leonard Cohen, Robert Plant, and Loudon Wainwright III show three ways.

The U.S. Has a New Problem in Syria: The Moderate Rebels Feel Like We’ve Betrayed Them

Homeland Is Good Again! For Now, at Least.

  News & Politics
The World
Oct. 1 2014 12:20 PM Don’t Expect Hong Kong’s Protests to Spread to the Mainland
Oct. 1 2014 2:16 PM Wall Street Tackles Chat Services, Shies Away From Diversity Issues 
The Eye
Oct. 1 2014 1:04 PM An Architectural Crusade Against the Tyranny of Straight Lines
  Double X
The XX Factor
Oct. 1 2014 2:08 PM We Need to Talk: Terrible Name, Good Show
  Slate Plus
Political Gabfest
Oct. 1 2014 1:53 PM Slate Superfest East How to get your tickets before anyone else.
Brow Beat
Oct. 1 2014 2:24 PM The New Interstellar Trailer Is the Most Exciting Yet
Future Tense
Oct. 1 2014 2:26 PM The Apple Graveyard Leave a flower for a dead Apple product.
  Health & Science
Oct. 1 2014 2:36 PM Climate Science Is Settled Enough The Wall Street Journal’s fresh face of climate inaction.
Sports Nut
Sept. 30 2014 5:54 PM Goodbye, Tough Guy It’s time for Michigan to fire its toughness-obsessed coach, Brady Hoke.