I don't think we can take that as a given. Moving money has its overheads, of course, but so does every added complexity in law.

Ok let’s do away with withholding then. Instead of just letting the government keep the money we will all take it from the government and give it back at one time on tax day. Much simpler.

I believe you severely underestimate the complexity of actually administering a complex tax system.

Especially because the way a lot of deductions end up working in practice is that you withhold the money from people in the first place and cash it out in the end of the year when you calculate your actual tax burden.

It is not a problem. Just give subsidies as a tax credit.

That's still a problem, if you think companies minimising their tax is a problem. The game shifts to creating the correct structure to qualify for tax credits.

Uhm, I am not sure what you are talking about. Frictions that arise from taking money and giving them back by design don’t arise if you don’t take anything because you provide a tax credit.

I'm talking about the fact that this doesn't address the base problem.

Sure, I simply addressed this point

>It is more efficient to let people keep money than it is to take it from them and give it back

Direct subsidies in the form of tax credit don't incur any costs of moving money because no money are moved, but functionally it is almost the same.

The base problem being that tax law is gameable. That's what the article and comments are about.

My reply was inside a thread on direct subsidies. I still don’t understand what’s your problem.

I don't have a problem, but if you're phrasing things like that then perhaps you're seeing an exchange like this as the equivalent to squaring up outside a pub. Disengaging.