The Code excludes from a taxpayer’s gross income certain benefits that (seem to) encourage taxpayers to make certain decisions that foster development of a certain type of society and government. You might see in such provisions as §§ 102, 103, 107, and 121 the policies of generosity, federalism, spiritual growth, and home ownership. Consider:
- Whether these are policies that the government should pursue;
- Whether tax benefits are the appropriate means of pursuing these policies. After all, those who choose to avail themselves of the benefits of these tax benefits do so at the expense of taxpayers who do not;
- Whether the tax provisions by which Congress pursues these policies lead to unintended consequences and/or capture by those other than the intended beneficiaries.