Carrot vs Stick

Tax policy should strategically use both

tax exemption or deduction is a carrot

tax imposition is a stick

Which do you prefer?

Taxes and tax deductions are extremely powerful, just as tariffs. They change behaviors. The government wanted us to buy houses, and therefore, our mortgage interest is not taxed unless it exceeds the maximums.

Inbound taxes/tariffs can be used to reduce outbound taxes/tariffs or to raise revenue.

Do we have the most powerful consumer market? Yes

Do we react to punishment well? No

Do we react to carrots? Absolutely.