The Rittenhouse Review

A Philadelphia Journal of Politics, Finance, Ethics, and Culture

Saturday, January 03, 2004  

About Credit-Card Interest

In a previous post here I linked to an item, “100 Things About Me,” that I published in October 2002 at my second blog, TRR: The Lighter Side of Rittenhouse.

A reader who traveled to TRR to peruse the list writes:

Huh? What’s the deal with number 24? “I believe credit-card interest should be deductible again.” When was it ever? What’s up with that? How can we get in on it?

Ah, youth.

The reader is obviously not in a position to recall that Congress and former President Ronald W. Reagan (R) eliminated the deductibility of credit-card interest through the Tax Reform Act of 1986.

I never understood the logic behind this measure, other than the drive to reduce the massive deficits caused by the Reagan administration’s insane fiscal and economic policies. There was at the time, however, much resentful grumbling among middle-aged and older Americans about the purportedly irresponsible spending habits of Baby Boomers and “yuppies” (yes, from the Reagan White House), the same bitter thinking that appears to underlie the current tax code’s mistreatment of single people.

Anyway, as it happens, 1986 was the year I entered the workforce. I soon accumulated what, at the time, seemed to be an unbearably onerous debt load of $1,000. Ha. There’s been no looking back since.

I once asked esteemed economists and fellow bloggers Max Sawicky and Brad DeLong about this matter but, I’m embarrassed to say, I can no longer remember their answers.

We’ll have to ask them. Regardless of what they say -- in other words, even if we are dismayed by their responses -- their word must be respected, for despite their occupation they are gentlemen.

Perhaps they can explain why this tax benefit -- which, if restored, would represent real and genuine and meaningful tax relief to millions of middle- and working-class Americans -- was stolen from us and why nobody in the past 17 years even has thought about restoring it.

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