Re: “Government should help poor to save for retirement” (Katie Baird column, 12-21).
Baird states that the wealthy receive hundreds of billions of dollars of subsidies in the form of home mortgage deductions, favorable taxation in capital gains, and tax breaks for contributions to retirement and college savings plans.
I think that Baird is confusing tax deductions with subsidies. The items she mentioned are deductions, which reduce an individual’s taxable income, whereas a subsidy is a payment by the government to an individual. Unless one assumes that all money belongs to the government, there is a clear distinction between the two.
She also states that it is possible to get low-income people to save through the use of tax credits. Tax credits reduce the amount of taxes owed to the government. Since most low-income people do not pay any income taxes, tax credits have no effect. However, if she is referring to a refund which exceeds the taxes paid, the term subsidy or payment, rather than tax credit, is appropriate.