You owe me a hundred dollars. I owe you ten. We can settle in one of two ways. Either you can deduct the ten from the hundred and hand me $90. Or you can give me the hundred and I will pay you back ten therefrom. If we were talking about taxes and money due, the first method is called “providing a tax deduction” and the second method is call “providing a subsidy.”The end result is the same: out of that hundred, I have $90 and you have $10. Every tax deduction is a subsidy. This is a point I am amazed so many people don’t get. Change the name, change the procedure, but the underlying nature is precisely the same.
May 3, 2017