… “loopholes” is a term most often used by people who don’t understand accounting or tax law, to complain about how somebody else used the existing laws created by congress to pay less than what that person thinks is “fair.” Regular people have heard the bullshit term loopholes tossed around so much that they start to believe that it is some magical easy button that rich guys can just push that makes it so they don’t have to pay taxes.
Nope. They’re just laws. These “loopholes” exist because at some point in time congress (both democrat and republican both!) decided that they wanted to promote some type of behavior or discourage some other behavior. So they basically put a reward into the law saying if you do this thing we like, you’ll pay less taxes! Or the opposite, congress wanted to discourage some behavior, so if you do that thing we don’t want, it will cost you more.
Both sides have done this forever, state and federal. We want you to drive electric cars so if you buy an electric car you get a tax break this year. YAY! Uh oh, we want you to stimulate the economy by buying this kind of machinery faster, so you have to depreciate your assets this other way or you’ll pay more! BOO! You get a discount for paying your employees health insurance, YAY! Oh, wait … Not that kind of health insurance. BOO!
So on and so forth, up and down, these perks come and go, all based upon whatever behavior congress is trying to promote at that time (or what favors they are doing for their friends). Why was mortgage interest deductible? Because at one point congress said “we really want people to own houses!” Even regular people have things that are considered “loopholes” to somebody.
So when the blue check mark journalism major (who probably dropped out of PoliSci because “there’s too much math”) declares that it is immoral that some rich dude didn’t pay his fair share because he used loopholes, those are basically a bunch of meaningless buzz words strung together to prey on the feelings of the gullible.
Larry Correia, “No, You Idiots. That’s Not How Taxes Work – An Accountant’s Guide To Why You Are A Gullible Moron”, Monster Hunter Nation, 2020-09-28.
January 5, 2021
QotD: Tax “loopholes”
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