As a matter of federal tax policy, I oppose permitting deductions for state taxes. I would rather see lower federal rates across the board, and let the full impact of state taxes rest on the residents of the states that have high taxes, rather than have the entire nation subsidize a quarter or more of the tremendous tax rates paid by New Yorkers and Californians, thus reducing the pain of higher state taxes and allowing local politicians to escape the political consequences of profligate spending (not to mention preventing tax-cutting state politicians from realizing the full benefit of their policy).
But come April, I promise you that on my 1040 Schedule A, I’m going to deduct the thousands of dollars of state income tax I paid and collect the resulting refund. Does this make me a hypocrite? Of course not: it just means that I’m not an idiot.
I’m not arguing that people shouldn’t take deductions that are available to them; I’m arguing that the deduction shouldn’t exist. Self-flagellation on my taxes doesn’t make me any purer or my policy arguments any more correct, it just means that I suffer all the costs of a tax policy I oppose without realizing any of the benefits.
Cyrus Dugger, however, makes precisely this mistake when he criticizes a reformer for being a plaintiff in a lawsuit as a “hypocrite.” (Or, more accurately, thoughtlessly parrots the West Virginia Trial Lawyers Association’s accusation of hypocrisy.) That one argues that the law should be changed for the good of society doesn’t at all require that one refuse to take advantage of a bad law. There’s no requirement that reformers who find themselves in the situation of being plaintiffs abstain from receiving legally available non-economic damages. Reformers aren’t arguing that individuals are bad people for seeking non-economic damages, but, rather, the legal system’s award of unlimited non-economic damages is bad public policy. (For that matter, it’s far from clear that Stephen Roberts is even seeking non-economic damages above and beyond the cap he proposes—I have seen no one make that accusation.)
Similarly, Senator Trent Lott, an occasional reform supporter, sued his insurance company over Hurricane Katrina damage, seeking to rewrite the terms of the insurance contract that he agreed to, and using his power as a Senator to threaten the industry as a whole because State Farm refused to give him special treatment. However, the only thing Dugger can think to find wrong with Lott is “hypocrisy.” It strikes me that hypocrisy is the least of Lott’s sins compared to bringing an illegitimate lawsuit and abusing his authority as a Senator to punish the nation’s economy in order to seek personal gain for himself and his trial-attorney brother-in-law.
Filed under: Katrina, politics, State Farm, West Virginia