Conservative Logic

An economic guide to politics, designed for post-Baby Boomers

Our Tax Laws are Unfair to the Young

Posted by A Hamilton on April 16, 2008

It’s April 15th. For 2007, I ended up paying 24% of my adjusted gross income to the federal government. As near as I can figure, based on extrapolation from IRS data, the average taxpayer at my same general income level paid an effective rate of only about 15%.

24% versus 15% for the same income level? That doesn’t sound fair. Why the difference?

It’s simple. I’m young. I don’t have children, so I can’t take advantage of deductions for dependents. I’m in good physical shape, so I’m less likely than older people to have significant medical expenses to deduct. And I haven’t purchased a house, so I don’t have mortgage interest — the granddaddy of all deductions — to deduct either. The list goes on.

The problem here is that the tax code is written to benefit older people. You’ll never see the numbers from the IRS, but I guarantee you that at the same income level, the effective tax burden for younger taxpayers is invariably higher than for older taxpayers.

The mortgage interest deduction is particularly galling. Here is a deduction that younger people without homes can’t take advantage of. There is no parallel deduction for rent payments. And the market impact of the mortgage interest deduction is to actually inflate housing prices — thereby making it more difficult for younger people to buy homes in the first place.

Are there any deductions out there designed with young people in mind? The ony one I can think of is the student loan interest deduction. But if your income is above a certain level (which mine happens to be), you’re not eligible for this deduction. I have a friend who could have taken this deduction — but he found it was better to just take the standard deduction rather than itemize. Conclusion: the student loan interest deduction is useless for large numbers of recent graduates who either earn too much or don’t have enough other deductions to make it worthwhile!

As it stands, our tax system is biased and unfair. Once again, America’s younger generations are carrying a disproportionate load. It’s time to close the loopholes that are the source of this unfairness across the board. Implementing a flat tax (above a certain threshold income) that eliminates deductions and other loopholes would create fairness and equality in our tax system that is sorely lacking.


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