Get Rid of the Loopholes... what does it mean?

[Boss]

This meme has been around a while. It started back during the Great Depression as most things progressive, with FDR. The Loopholes are Progressive dog-whistle for tax incentives, credits and deductions. It began with the whole "Robber Barons" thing... all those rich people with advantages the normal guy doesn't get. It's a common thread preached throughout the progressive movement. But it has now made it's way across the aisle to the right. More and more republicans and even conservatives are caught extolling the thought.... we must get rid of these awful and terrible LOOPHOLES!

Now let's study objectively on what exactly a "loophole" really is. We're talking about things mostly in our US tax code laws, which have been put there through the years by previous congresses and legislative actions. While I am sure there are some backroom deals made here and there, lobby efforts paid off, donors satisfied, etc., by and large, you have to think that whenever Congress gains the needed majority support to enact new tax law they probably had a reason better than lining their own pockets. If not, the problem isn't loopholes.

So what happens is, they have some problem they are trying to address... what do we do about this thing that keeps happening that we don't want to happen? Well... let's do a tax incentive to see if we can encourage more of something to keep that bad thing from happening? Like.... when no one was purchasing new homes. It was a major expense and people wanted to save. So in order to get people to start buying homes again, the government made mortgage interest deductible. All these "loopholes" are actually solutions to some problem we were having at some time.

But now we have all these mindless idiots running around screaming... get rid of the loopholes! And they don't even have the first clue as to which loopholes they specifically want to get rid of or what to do about the consequential problem that is going to again arise whenever we eliminate the incentive. They don't want to objectively look at anything... just repeat the mindless rant that it's "not fair" for these people to get this and those people can't. But you can never have total fairness AND total freedom. It's one or the other.

Now don't take me wrong here... I am not advocating for ALL tax incentives (aka: loopholes)! I think the best way to eliminate the loopholes is to just eliminate the taxation. No tax-- no need for a loophole. We should be intelligently discussing why a consumerist juggernaut like ourselves isn't taking advantage of a consumption tax instead of an income tax? Why can't we set aside century-old progressive rhetoric and answer that question?

 

[Dale Smith]

The income tax was never ratified by enough states and that isn't even a disputable fact.....#2 The 16th amendment did not give "da gubermint" any new taxing freedoms as it pertains to one bartering their wages for something of value...that has been upheld by the SCOTUS three separate times.

 

[Boss]

The income tax was never ratified by enough states and that isn't even a disputable fact.....#2 The 16th amendment did not give "da gubermint" any new taxing freedoms as it pertains to one bartering their wages for something of value...that has been upheld by the SCOTUS three separate times.

This is true but even if it wasn't.... taxing income naturally discourages earning of legitimate income. There is an old axiom-- the more you tax something the less of it you get. When you tax incomes, you get less people earning incomes or less taxable income being earned. This applies to consumption tax as well but it's not that big of a deal because a free market will adjust itself. Less consumption means less demand and more supply.

The biggest problem with income tax is how it allows the Progressives to continue waging their war on the wealthy. It perpetuates the Class Warfare rhetoric. A consumption tax takes that off the table which is precisely why most Progressives won't dare touch this thread with any kind of rational argument.

 

[bendog]

The answer is: the two biggest expenditures are employer sponsored health and mortgage interest deductions. Both distort their markets. We have the least efficient health care, and we own increasing large homes despite family size decreases. If you took the money that ending the expenditures would raise, and give it back in the form of direct money to purchase health care individually, the economy would be more efficient, which would translate into more jobs.

And it's not a liberal or conservative issue. It was central to Reagan and it's mainstream economic theory.

 

[eddiew]

This meme has been around a while. It started back during the Great Depression as most things progressive, with FDR. The Loopholes are Progressive dog-whistle for tax incentives, credits and deductions. It began with the whole "Robber Barons" thing... all those rich people with advantages the normal guy doesn't get. It's a common thread preached throughout the progressive movement. But it has now made it's way across the aisle to the right. More and more republicans and even conservatives are caught extolling the thought.... we must get rid of these awful and terrible LOOPHOLES!

Now let's study objectively on what exactly a "loophole" really is. We're talking about things mostly in our US tax code laws, which have been put there through the years by previous congresses and legislative actions. While I am sure there are some backroom deals made here and there, lobby efforts paid off, donors satisfied, etc., by and large, you have to think that whenever Congress gains the needed majority support to enact new tax law they probably had a reason better than lining their own pockets. If not, the problem isn't loopholes.

So what happens is, they have some problem they are trying to address... what do we do about this thing that keeps happening that we don't want to happen? Well... let's do a tax incentive to see if we can encourage more of something to keep that bad thing from happening? Like.... when no one was purchasing new homes. It was a major expense and people wanted to save. So in order to get people to start buying homes again, the government made mortgage interest deductible. All these "loopholes" are actually solutions to some problem we were having at some time.

But now we have all these mindless idiots running around screaming... get rid of the loopholes! And they don't even have the first clue as to which loopholes they specifically want to get rid of or what to do about the consequential problem that is going to again arise whenever we eliminate the incentive. They don't want to objectively look at anything... just repeat the mindless rant that it's "not fair" for these people to get this and those people can't. But you can never have total fairness AND total freedom. It's one or the other.

Now don't take me wrong here... I am not advocating for ALL tax incentives (aka: loopholes)! I think the best way to eliminate the loopholes is to just eliminate the taxation. No tax-- no need for a loophole. We should be intelligently discussing why a consumerist juggernaut like ourselves isn't taking advantage of a consumption tax instead of an income tax? Why can't we set aside century-old progressive rhetoric and answer that question?

I'm not sure about what loop holes to get rid of but can we just start with the ones that let Romney pay only 10-12% on his millions of income ,,,,and do the same to the loopholes trump is using , those so controversial he wont show his tax returns

 

[bendog]

This meme has been around a while. It started back during the Great Depression as most things progressive, with FDR. The Loopholes are Progressive dog-whistle for tax incentives, credits and deductions. It began with the whole "Robber Barons" thing... all those rich people with advantages the normal guy doesn't get. It's a common thread preached throughout the progressive movement. But it has now made it's way across the aisle to the right. More and more republicans and even conservatives are caught extolling the thought.... we must get rid of these awful and terrible LOOPHOLES!

Now let's study objectively on what exactly a "loophole" really is. We're talking about things mostly in our US tax code laws, which have been put there through the years by previous congresses and legislative actions. While I am sure there are some backroom deals made here and there, lobby efforts paid off, donors satisfied, etc., by and large, you have to think that whenever Congress gains the needed majority support to enact new tax law they probably had a reason better than lining their own pockets. If not, the problem isn't loopholes.

So what happens is, they have some problem they are trying to address... what do we do about this thing that keeps happening that we don't want to happen? Well... let's do a tax incentive to see if we can encourage more of something to keep that bad thing from happening? Like.... when no one was purchasing new homes. It was a major expense and people wanted to save. So in order to get people to start buying homes again, the government made mortgage interest deductible. All these "loopholes" are actually solutions to some problem we were having at some time.

But now we have all these mindless idiots running around screaming... get rid of the loopholes! And they don't even have the first clue as to which loopholes they specifically want to get rid of or what to do about the consequential problem that is going to again arise whenever we eliminate the incentive. They don't want to objectively look at anything... just repeat the mindless rant that it's "not fair" for these people to get this and those people can't. But you can never have total fairness AND total freedom. It's one or the other.

Now don't take me wrong here... I am not advocating for ALL tax incentives (aka: loopholes)! I think the best way to eliminate the loopholes is to just eliminate the taxation. No tax-- no need for a loophole. We should be intelligently discussing why a consumerist juggernaut like ourselves isn't taking advantage of a consumption tax instead of an income tax? Why can't we set aside century-old progressive rhetoric and answer that question?

I'm not sure about what loop holes to get rid of but can we just start with the ones that let Romney pay only 10-12% on his millions of income ,,,,and do the same to the loopholes trump is using , those so controversial he wont show his tax returns

You mean like these?

Trump's Tough Talk on Hedge-Fund Taxes Doesn't Match His Plan

 

[Boss]

The answer is: the two biggest expenditures are employer sponsored health and mortgage interest deductions. Both distort their markets. We have the least efficient health care, and we own increasing large homes despite family size decreases. If you took the money that ending the expenditures would raise, and give it back in the form of direct money to purchase health care individually, the economy would be more efficient, which would translate into more jobs.

And it's not a liberal or conservative issue. It was central to Reagan and it's mainstream economic theory.

Well I don't want to get into health care here, that's not really a "loophole" and not pertinent to the OP topic. But let's look at the mortgage interest deduction, since you mentioned that.... why is it there in the first place?

We have to go back to post-WWII America and a generation of adults who grew up during the Great Depression. They learned "A Penny Saved is A Penny Earned." Living most of their young lives struggling to survive, they now enjoy a good paying steady job. They would like to one day own a home but homes are expensive and they can't afford to buy one. Their upbringing cautions them not to finance what they can't afford so they save their money in hopes of one day owning a home and realizing the American Dream. Enter the smooth-talking politician who says... you can own that home TODAY! We'll fix it so that any interest you pay on your mortgage is tax deductible... it's like free money!

And that's where it originated... as a solution to a problem. An idea that was put into place in order to help people and at the same time, stimulate the economy and create new jobs. See...when people are buying homes, they're also building them... and when that happens, thousands and thousands of other jobs are created.... bricklayers, roofers, plumbers, electricians... and so on. Insurance companies pop up... landscaping businesses... subdivisions arise... shops and restaurants go up. That's why "housing starts" are an important economic indicator.

Every so-called "loophole" has some tangible reason and purpose for existing. Any objective and reasonable person should at least want to examine the details of what the "loophole" was intended to do and if it worked. Maybe some things didn't work? I don't know... we've not really gotten into looking... we just hear this incessant screech from the left (and right) to get rid of them damn loopholes!

To me... the whole "Loophole" thing is just treacherous because it gives this connotation of something unethical.... something someone figured out as a way to get around the law... they found a loophole to exploit... but that isn't what is being talked about here... We're talking about legitimate tax incentives, credits and deductions. You get to claim a mortgage interest deduction... that's not a loophole.

 

[eddiew]

The answer is: the two biggest expenditures are employer sponsored health and mortgage interest deductions. Both distort their markets. We have the least efficient health care, and we own increasing large homes despite family size decreases. If you took the money that ending the expenditures would raise, and give it back in the form of direct money to purchase health care individually, the economy would be more efficient, which would translate into more jobs.

And it's not a liberal or conservative issue. It was central to Reagan and it's mainstream economic theory.

Well I don't want to get into health care here, that's not really a "loophole" and not pertinent to the OP topic. But let's look at the mortgage interest deduction, since you mentioned that.... why is it there in the first place?

We have to go back to post-WWII America and a generation of adults who grew up during the Great Depression. They learned "A Penny Saved is A Penny Earned." Living most of their young lives struggling to survive, they now enjoy a good paying steady job. They would like to one day own a home but homes are expensive and they can't afford to buy one. Their upbringing cautions them not to finance what they can't afford so they save their money in hopes of one day owning a home and realizing the American Dream. Enter the smooth-talking politician who says... you can own that home TODAY! We'll fix it so that any interest you pay on your mortgage is tax deductible... it's like free money!

And that's where it originated... as a solution to a problem. An idea that was put into place in order to help people and at the same time, stimulate the economy and create new jobs. See...when people are buying homes, they're also building them... and when that happens, thousands and thousands of other jobs are created.... bricklayers, roofers, plumbers, electricians... and so on. Insurance companies pop up... landscaping businesses... subdivisions arise... shops and restaurants go up. That's why "housing starts" are an important economic indicator.

Every so-called "loophole" has some tangible reason and purpose for existing. Any objective and reasonable person should at least want to examine the details of what the "loophole" was intended to do and if it worked. Maybe some things didn't work? I don't know... we've not really gotten into looking... we just hear this incessant screech from the left (and right) to get rid of them damn loopholes!

To me... the whole "Loophole" thing is just treacherous because it gives this connotation of something unethical.... something someone figured out as a way to get around the law... they found a loophole to exploit... but that isn't what is being talked about here... We're talking about legitimate tax incentives, credits and deductions. You get to claim a mortgage interest deduction... that's not a loophole.

It is a loophole one of the very few legit ones But why give those people buying 20 million ++ dollar homes such big breaks?

 

[Boss]

I'm not sure about what loop holes to get rid of but can we just start with the ones that let Romney pay only 10-12% on his millions of income ,,,,and do the same to the loopholes trump is using , those so controversial he wont show his tax returns

Okay... so now you're talking about the difference in capital gains tax rates and earned income tax rates. (Again, not a loophole but the law) There is a valid and compelling reason we have a lower tax rate for capital gains income. Before we get rid of it, we should objectively look at why it's that way.

First of all, the money that is being gained through capital investment, is being generated with money that was already taxed as earned income. Now, wealthy people who have already earned their incomes and paid their taxes can take the wealth they have and start a home business of making currency-stuffed mattresses if that's what they want to do. It's a free country... they paid their taxes... they can do whatever they please with the remaining wealth... right? Right???

So what SOME of them like to do... since they just enjoy doing it... is to use their wealth (which they've paid their taxes on) to... get this... create MORE wealth! Maybe they are driven by power or greed or maybe they just want more currency for their grandkids to stuff mattresses with? We don't know. But it's a really good thing for a guy who has a lot of money to make it available to guys who don't. We kind of need that in our economy so that guys who have great ideas and aspirations but don't have a lot of money, can bring their dreams to reality.

And this is WHY we have a lower tax rate for profits on capital gains. The owner of the capital needs the incentive to invest his wealth which has already been taxed. If there isn't that incentive, his wealth is more secure and protected in other ways. Therefore, if you just blindly raise the CapGains tax rates to that of earned income, you effectively kill trillions of dollars of investment capital available instantly. *POOF* Gone!

 

[g5000]

Tax expenditures are the greatest fiscal boondoggle of our time.

There are $1.2 TRILLION of them in our tax code. That's the annual government gift program. $1.2 trillion.

$1,200,000,000,000.

It does not take long to acquire a $19 trillion debt when you give away $1.2 trillion in government gifts each year.

Congress has been putting a tax giveaway in the tax code at the rate of one per day for about 15 years now, and Republicans are by far the biggest offenders.

You know why Republicans like them so much? Because a tax giveaway is another form of deficit spending, but the rubes don't catch on.

Every dollar that is given away in tax expenditures has to be made up for by someone else. Someone else has to be robbed to pay for that $1.2 trillion. Basically, EVERYONE has to be robbed to come up with that kind of cash each and every year.

And how is that achieved? With higher tax rates! And deficit spending.

If we eliminated tax expenditures, we'd instantly have a balanced budget. Not just a balanced budget, we'd have a surplus!

But then you take away the incentive for special interests to donate to congressional campaign funds, and we can't have that! Oh, no. That would be REAL campaign finance reform, and there is no fucking way in hell incumbents are going to go for that.

 

[eddiew]

I'm not sure about what loop holes to get rid of but can we just start with the ones that let Romney pay only 10-12% on his millions of income ,,,,and do the same to the loopholes trump is using , those so controversial he wont show his tax returns

Okay... so now you're talking about the difference in capital gains tax rates and earned income tax rates. (Again, not a loophole but the law) There is a valid and compelling reason we have a lower tax rate for capital gains income. Before we get rid of it, we should objectively look at why it's that way.

First of all, the money that is being gained through capital investment, is being generated with money that was already taxed as earned income. Now, wealthy people who have already earned their incomes and paid their taxes can take the wealth they have and start a home business of making currency-stuffed mattresses if that's what they want to do. It's a free country... they paid their taxes... they can do whatever they please with the remaining wealth... right? Right???

So what SOME of them like to do... since they just enjoy doing it... is to use their wealth (which they've paid their taxes on) to... get this... create MORE wealth! Maybe they are driven by power or greed or maybe they just want more currency for their grandkids to stuff mattresses with? We don't know. But it's a really good thing for a guy who has a lot of money to make it available to guys who don't. We kind of need that in our economy so that guys who have great ideas and aspirations but don't have a lot of money, can bring their dreams to reality.

And this is WHY we have a lower tax rate for profits on capital gains. The owner of the capital needs the incentive to invest his wealth which has already been taxed. If there isn't that incentive, his wealth is more secure and protected in other ways. Therefore, if you just blindly raise the CapGains tax rates to that of earned income, you effectively kill trillions of dollars of investment capital available instantly. *POOF* Gone!

Appreciate your post you evidently are on a higher limb than I Now what about the billions made by hedge fund guys paying hardly anything while using other peoples money?

 

[g5000]

So what happens is, they have some problem they are trying to address... what do we do about this thing that keeps happening that we don't want to happen? Well... let's do a tax incentive to see if we can encourage more of something to keep that bad thing from happening?

Exactly right.

Tax expenditures are massive government behavioral control programs, and you are the rat they are trying to control. Sounds to me like you have swallowed it. Hook, line, and sinker.

 

[g5000]

Like.... when no one was purchasing new homes. It was a major expense and people wanted to save. So in order to get people to start buying homes again, the government made mortgage interest deductible

BWA-HA-HA-HA-HA!

The MID is one of the biggest con jobs of all time. It is STEALING from you. Your home price is HIGHER because of the MID. Your deduction ("I get to keep more of my money!" ) is more than cancelled out by a more expensive house and higher tax rates.

And who profits from higher home prices?

Home builders, real estate brokers, bank lenders. That's who.

The MID is a massive wealth transfer from the pockets of the common man UP the food chain.

The real estate lobby spends $110 million on congressional campaign funds and lobbyists every year for a REASON, rube.

So be a good little rat and buy a house that costs you much more than it should. There are starving bankers out there who need your government-induced higher interest payments.

 

[bendog]

The answer is: the two biggest expenditures are employer sponsored health and mortgage interest deductions. Both distort their markets. We have the least efficient health care, and we own increasing large homes despite family size decreases. If you took the money that ending the expenditures would raise, and give it back in the form of direct money to purchase health care individually, the economy would be more efficient, which would translate into more jobs.

And it's not a liberal or conservative issue. It was central to Reagan and it's mainstream economic theory.

Well I don't want to get into health care here, that's not really a "loophole" and not pertinent to the OP topic. But let's look at the mortgage interest deduction, since you mentioned that.... why is it there in the first place?

We have to go back to post-WWII America and a generation of adults who grew up during the Great Depression. They learned "A Penny Saved is A Penny Earned." Living most of their young lives struggling to survive, they now enjoy a good paying steady job. They would like to one day own a home but homes are expensive and they can't afford to buy one. Their upbringing cautions them not to finance what they can't afford so they save their money in hopes of one day owning a home and realizing the American Dream. Enter the smooth-talking politician who says... you can own that home TODAY! We'll fix it so that any interest you pay on your mortgage is tax deductible... it's like free money!

And that's where it originated... as a solution to a problem. An idea that was put into place in order to help people and at the same time, stimulate the economy and create new jobs. See...when people are buying homes, they're also building them... and when that happens, thousands and thousands of other jobs are created.... bricklayers, roofers, plumbers, electricians... and so on. Insurance companies pop up... landscaping businesses... subdivisions arise... shops and restaurants go up. That's why "housing starts" are an important economic indicator.

Every so-called "loophole" has some tangible reason and purpose for existing. Any objective and reasonable person should at least want to examine the details of what the "loophole" was intended to do and if it worked. Maybe some things didn't work? I don't know... we've not really gotten into looking... we just hear this incessant screech from the left (and right) to get rid of them damn loopholes!

To me... the whole "Loophole" thing is just treacherous because it gives this connotation of something unethical.... something someone figured out as a way to get around the law... they found a loophole to exploit... but that isn't what is being talked about here... We're talking about legitimate tax incentives, credits and deductions. You get to claim a mortgage interest deduction... that's not a loophole.

Any loophole, or tax expenditure, affects markets in ways not based solely upon the most efficient means to supply a demand. The mortgage interest deduction helped fuel the suburbanization of America, and the demise of cities. As the cost of energy went up, and commutes worsened, some of that has lessened.

Jobs were created, yes, but mortgages were the heart of the debt crisis, and we'll be paying the price for at least another decade.

 

[eddiew]

I'm not sure about what loop holes to get rid of but can we just start with the ones that let Romney pay only 10-12% on his millions of income ,,,,and do the same to the loopholes trump is using , those so controversial he wont show his tax returns

Okay... so now you're talking about the difference in capital gains tax rates and earned income tax rates. (Again, not a loophole but the law) There is a valid and compelling reason we have a lower tax rate for capital gains income. Before we get rid of it, we should objectively look at why it's that way.

First of all, the money that is being gained through capital investment, is being generated with money that was already taxed as earned income. Now, wealthy people who have already earned their incomes and paid their taxes can take the wealth they have and start a home business of making currency-stuffed mattresses if that's what they want to do. It's a free country... they paid their taxes... they can do whatever they please with the remaining wealth... right? Right???

So what SOME of them like to do... since they just enjoy doing it... is to use their wealth (which they've paid their taxes on) to... get this... create MORE wealth! Maybe they are driven by power or greed or maybe they just want more currency for their grandkids to stuff mattresses with? We don't know. But it's a really good thing for a guy who has a lot of money to make it available to guys who don't. We kind of need that in our economy so that guys who have great ideas and aspirations but don't have a lot of money, can bring their dreams to reality.

And this is WHY we have a lower tax rate for profits on capital gains. The owner of the capital needs the incentive to invest his wealth which has already been taxed. If there isn't that incentive, his wealth is more secure and protected in other ways. Therefore, if you just blindly raise the CapGains tax rates to that of earned income, you effectively kill trillions of dollars of investment capital available instantly. *POOF* Gone!

Boss I might really get to like you {{I mean that in a good way lol} I have a few saved up and I'd love my kids to get it without the gd death tax being involved

 

[boedicca]

I'm fine with getting rid of all loopholes, and reverting back to the original tax 1913 tax tables, adjusted for inflation. Here's what the tax table would be:

 

[bendog]

Well, to use Obama's favorite. We give a tax break to corp's buying new jets. I recall when Reagan ex-nayed the tax incentives for yacht building, "he destroyed an entire industry." Well, if guy can build a boat, I'm pretty sure he can find some gainful employment.

Which is back to coal. And how I came to be a republican (though I won't be voting Drumpf). In the 80s, in part because of acid rain, we began moving from coal to natl gas. And being a young stapping lad with no work or income, I moved to Wyoming and the gas fields - where men are men, sheep are nervous, and all the girls move to Utah or Colo the second they graduate HS. While the coal miners sat home and collected welfare and early pensions.

 

[g5000]

Yep, if we eliminated tax expenditures, you literally could fill out your personal income taxes on a postcard.

But you know who would hate that?

Accountants.

The accountant lobby spends $13 million a year on campaign contributions.


Hmmmm...

 

[g5000]

One widely cited 1996 study by Dennis Capozza, Richard Green, and Patric Hendershott estimated that eliminating the mortgage interest and property tax deductions would reduce housing prices in the short term by an average of 13 percent nationwide, with regional changes ranging from 8 to 27 percent.

How Would Reforming the Mortgage Interest Deduction Affect the Housing Market?


Again, who profits from the MID, and at whose expense?

 

[g5000]

The government gave away $484 billion just in MID gifts from 2010 to 2014.

That one tax deduction could balance the budget deficit for one year.


So let's see...since that money is transferred from your pocket into higher home prices, that works out to $96 billion a year in profits for the bankers, realtors, and brokers.

Quite a return on investment, if you look at their expenditures on campaign contributions and lobbying!