You Don’t Have to Take Every Tax Deduction, and You Shouldn’t

Alejandro Narváez is OK taking less. He hires only contractors who pay their workers a living wage, even if that means a larger bill. A Seattle-based dentist, he’s promoted cost-effective practices to expand dental care to the underserved, even if those practices cut into his bottom line. And when it comes to paying taxes, he forgoes many deductions afforded him.

For much of Mr. Narváez’s life, money was tight. When he began his practice, he made $30,000 a year, out of which a large chunk went to paying off student loans. But today, Mr. Narváez and his wife, a retired elementary school principal, live comfortably. Last year, they earned approximately $550,000 and paid roughly $155,000 in federal income taxes. Upon seeing those figures, Mr. Narváez’s financial adviser told his client he was overpaying and introduced him to an accountant.

But after hearing the accountant’s spiel, Mr. Narváez politely declined his offer, filing his taxes with TurboTax, not to save money but to lose it. “I see it as my responsibility to pay my fair share of taxes,” Mr. Narváez, who is 70, told me. “I have so many opportunities to reduce my taxes, but I choose not to.”

Tax season is upon us, a time to gripe, moan, procrastinate, file for extensions and salve the pain with dark humor. (Mark Twain once joked that the difference between a taxidermist and a tax collector is that the former takes only your skin.) But this time of year also provides us the opportunity to ask ourselves: Is it ethical to take tax breaks that primarily make the rich richer?

Yes, tax breaks benefit the billionaire class, which has the lowest effective tax rate in the country. And yes, they benefit large corporations, many of which pay no federal income tax. The outrageous tax shenanigans of the ultrawealthy have deservedly drawn the ire of the American public, further aggravated by congressional inertia on the matter.

But we should recognize that tax breaks also prop up the wealth of millions of affluent Americans who take advantage of exemptions that are very hard, perhaps impossibly hard, to defend on either practical or moral grounds.