Pets? ...Pets???

My play-by-play on a foolish idea in yesterday's Parade magazine:

A Tax Break for Pet Owners

Animal shelters across the country have reported a sharp surge in abandoned animals, many cut loose by owners who can no longer afford to care for them. Now, Rep. Thaddeus McCotter (R., Mich.) has introduced a bill that would use the federal tax code to help.

Sad, the sharp surge in abandoned animals. Odd, that Rep. Thaddeus McCotter (R., Mich.) has introduced a bill to use the federal tax code to help relieve the sadness.

The idea behind McCotter's plan is that when people "can no longer afford" something, tweaking the tax code can help. I do agree we need to change the tax code. But all sorts of changes are possible, and not all of them are improvements. McCotter's bill is not an improvement.

The Humanity and Pets Partnered Through the Years (HAPPY) Act would allow pet owners to deduct the cost of food, veterinary care, and other pet-related expenses from their income taxes—up to $3500 per year. McCotter says the bill would provide tax relief for pet owners while at the same time strengthening “the human-animal bond.”

I'd have to be an idiot to turn down a tax break for the cost of food, veterinary care, and other pet-related expenses, wouldn't I? But McCotter has introduced a bill that should never have been proposed. It is not appropriate to use the federal tax code to manipulate “the human-animal bond.” The purposes of the tax code are to raise revenue and to help the economy achieve our economic goals: growth, and price stability.

Warm and cuddly as it may be, "the human-animal bond" is not an economic goal.

Leo Grillo, an animal-rights activist, says a tax break for the 60% of Americans who own pets will help keep pets in the home, where they contribute to the emotional well-being of families. “If Americans are happy and emotionally stable, they are going to be more productive, and that helps the economy,” he says, adding that the bill also could ease the cost of local animal-control services.

Sure, and maybe the tax break will induce the 40% of Americans who don't own a pet to go down to the animal shelter and adopt something. But it's not the government's place. And it uses economics to tweak people's lives, rather than to tweak economic performance.

As I see it, if the tax code is used as part of a plan that keeps the economy productive and growing, keeps living standards rising, keeps people employed, and keeps prices stable, that helps people. Americans will be happy and emotionally stable, and able to afford to feed their pets. The cost of local animal-control services would be lower, and more affordable too.

If we want to use the tax code to "help the economy," the way to do it is to look at the big picture, not some petty detail.

William Ahern, director of policy and communications at the Tax Foundation, says the tax code should not be used to make people “happy.” He adds, “It’s just another snowflake in the blizzard of unjustifiable tax deductions, exemptions, and credits that congressmen propose to curry favor with a particular group of voters.”
— J. Scott Orr

I don't know anything about the Tax Foundation (even after googling it). I note that the motive William Ahern expresses -- "to curry favor" -- emerges from Ahern's imagination, not McCotter's. But I do agree with Ahern that "It’s just another snowflake in the blizzard of unjustifiable tax deductions, exemptions, and credits."

The concept being applied is that when people "can no longer afford" something, tweaking the tax code can help. This is altogether the wrong notion of what the tax system is for.

Me? I want to use the tax code to create incentives that accelerate the repayment of debt. If we did it 20 years ago, we could have prevented the credit-crisis.