Should there be a tax break for pet expenses?

Last night, I received an interesting e-mail from a publicist looking to schedule interviews as part of a push for a new bill — the HAPPY Act.  No, that’s not some new twist on Hope and Change; in fact, it’s a bill introduced by Republican Congressman Thaddeus McCotter from Michigan, a reliable conservative.  McCotter and actor Robert Davi want people to get HAPPY over tax-deductible … pet expenses?

ACTON, CA – founders Leo Grillo and Robert Davi are pleased that the Humanity and Pets Partnered Through the Years (“HAPPY”) Act was introduced last week in the U.S. House of Representative.  The legislation introduced by Rep. Thaddeus McCotter (R-MI) is a federal bill that would reward pet owners by allowing them to deduct up to $3,500 for pet care costs, including veterinary services.

Leo Grillo has been at the forefront of animal welfare for more than 30 years, and his sanctuary, D.E.L.T.A. Rescue, has more animals than the American Society for the Prevention of Cruelty to Animals and the Humane Society of the United States combined. It is the largest animal sanctuary in the world and the first no-kill, care-for-life sanctuary.

Actor-Director Robert Davi, best known for his roles in “Die Hard,” “License to Kill,” “The Goonies,” and “Profiler,” and directing the award-winning movie “The Dukes.”  Davi first wrote about the Pet Exemption in the Washington Times in April 2009.  “Every city in America spends tens of millions of taxpayer dollars on programs for abandoned animals. Like many government-funded programs, they overspend and underperform. By contrast, a tax exemption for pets would add to the education and rescue efforts and bring an added incentive to responsible prospective pet owners…  Let’s begin a national dialogue on this issue.”

Nearly 63 percent of American households have a pet. More than 44 million homes have a dog, and an additional 38.4 million have a cat. Most owners spend up to $1,000 each year on food, veterinary care and other costs, according to the ASPCA.

In 2008, the American Pet Products Manufacturers Association estimated that Americans spent more than $41 billion on their pets. Being allowed to use these expenses as deductions would positively affect the tax burden on a majority of American households.

Using the tax code to encourage positive behavior is a common practice. About 500,000 Americans are able to receive a tax credit for up to $3,150 for owning gas-saving hybrid cars. Many cities and states also reward hybrid-vehicle owners with access to HOV lanes and additional tax breaks. A tax exemption for pets would reward Americans for behavior they already are following to improve their health and well-being.

I like both Davi and McCotter, but this seems rather misguided, especially for a conservative Republican like McCotter.  Republicans have been demanding tax simplification, not further complication, for the last few years, and for good reasons.  The problem with the current tax code is precisely that “using the tax code to encourage positive behavior is common practice.”  Congress and presidents routinely press for tax breaks for their ideas of social engineering, which is why we now spend hundreds of billions of dollars in tax compliance.

In all of these cases, tax breaks essentially mean that taxpayers subsidize activities that get the tax break.  Taxpayers without children pay more than taxpayers with children, because we value procreation and population growth in the US.  Taxpayers without mortgages subsidize the tax breaks given to those who do, as the tax revenues have to eventually replace those lost through deductions.

Even if one grants that as a legitimate mechanism for critical economic issues, would that include pet ownership?  What critical purpose gets filled by owning a cat, dog, or a bird?  How should one family’s pet get them off the hook for taxes that others pay?

This will likely not go far, mainly due to the lack of access given Republicans in Nancy Pelosi’s House.  In this case, that’s a good thing.  Republicans need to stop contributing to tax-code complexity and unsupportable tax subsidies and focus on tax simplification.  We don’t need to get HAPPY; we need to get serious.

Update: Jazz Shaw wonders about fraud:

One other area which Ed doesn’t touch on is the question of verification and fraud. I suppose the vet bills could be tracked readily enough if we’re going to put enough people on the job, but what of the pet food and other normal household expenses? Are we to save every week’s grocery receipts for the year and mail them all in? And the IRS has to go through them all? And what of people who decide to claim they had a pet even though they don’t just for the new deduction? I can just see the IRS agents coming around to people’s homes each spring.

Jazz offers some hilarious thoughts on how an audit would go.  Like me, Jazz loves his pets, but doesn’t expect the rest of us to foot their bills.

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David Strom 10:01 AM on February 04, 2023