The fatal conceit of selective tax breaks
Oregon legislators are eager to review existing tax breaks. The thinking is, some breaks may have outlived their usefulness.
A state representative questioned, “Are there things on the books that could be limited or eliminated to find revenue to apply to other tax credits?” He noted that perhaps the legislature could better target tax breaks to stimulate the economy.
Elected officials and public servants who believe the economy is to be molded and managed by government are a dangerous lot. Their actions may produce visible benefits for the politically well-connected, but the wider harm caused by such manipulations is less obvious.
Nobel Prize-winning economist Friedrich von Hayek wrote The Fatal Conceit in 1988. One of Hayek’s key points is that no person, no institution — not even a government — has the ability, has enough information, to direct a viable economy. To attempt to do so is to suffer a fatal conceit. This concept is also succinctly captured in Leonard Reed’s classic essay, “I, Pencil.”
Legislators keen to see a flourishing economy have other options. They can reduce spending and leave more money in workers’ wallets, erase counterproductive rules and regulations, and terminate government-sanctioned monopolies.
Politicians should lower taxes for everyone, not give selective tax breaks to some. They would further serve us well if they recognized how wealth is generated, upheld property rights, and let markets work. Picking economic winners is a task best left to private, voluntary decisions made by banks, investors, venture capitalists, and customers.
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