Loopholes

To increase tax revenues some are saying that we should raise tax rates.  Others are saying that we should keep the current tax rates and close tax loopholes.  And then some are saying we should do both.

The term “loophole” originated in medieval times.  A loophole was a slit in a castle wall that allowed archers to fire arrows at attackers without fear of being fired upon.  Tax loopholes are carve-outs that allow certain groups a competitive tax advantage.  These are distinctive from deductions, e.g., the home mortgage interest deduction, or credits, e.g., the earned income tax credit.

While closing loopholes is a good idea, it’s a difficult proposition.  It will require a lot of negotiation on which loopholes to close.  K Street is filled with lobbyists who’s mission is to create loopholes for their clients.  And when one loophole is closed, another is opened by House legislation.

The debate on tax reform will certainly be fascinating to watch.

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36 Comments

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36 responses to “Loopholes

  1. tempebev

    Warren says he thinks the wealthy should pay more. Not sure how many agree with him. Interesting to see how many repugs are ditching the G. Norquist pledge. Guess blood wasn’t used when they signed it. Someone asked me, “Who is Grover Norquist, where did he come from, and why does he have such power?” I didn’t have a good answer. Sad to think one man has such power to make all repugs sign this pledge. Mitch Mc is again trying to use his “muscle” and threatening the filibuster use for the Financial cliff. Will he never learn? He’s up for re-election in 2014. It seems that more repugs are realizing they lost the election and need to change and think of the country instead of party. However, that may be words only. Time will tell.

    • dnd

      Bev,
      Grover has power because he has a big pile of money that he gives to Republican campaigns. The fact that Tom Cole (R-OK) in the House and several Republican Senators have tossed the “pledge” makes me wonder if those who give Norquist money to hand out may be rethinking where they give their political contributions.

      • dnd

        Something is seriously wrong with Senators John McCain, Lindsey Graham and Kelly Ayotte. This little game they’re playing with Amb. Rice is gonna backfire and they will look like fools and losers.

  2. The age of Grover is coming to an end, he’s taken to making some very pissy comments on TV.

  3. tempebev

    D-the three of them already look like fools. They are truly representative of the old white men of the repug party. Not sure if Kelly is M or F. Another one is Susan Collins who just won’t let it go. We got over “it” when GWB was elected, but most of them and some of my die-hard friends, just can’t let it go. Don’t know what they hope to achieve, but it’s not helping people or the entire nation. They only think of party and ways to punish he winners.

  4. I hope the McCain-Graham-Ayotte vendetta does backfire.

    I worry, though, that the first two, camera-loving Sunday show hogs, know from years of observation that the press is (mostly) lazy, controversy-loving, and insecure, and are using that to advantage.

    Heard a snippet yesterday on NPR (!) sounding like a “moderate Republican” also had trouble with Rice (and her implied problem with veracity.) Couldn’t turn NPR off fast enough.

    No one should forget this is a Fox News-manufactured outrage, and that it’s only Republicans (with a “moderate” fig leaf or not) pursuing it.

  5. tempebev

    So, is the “fiscal cliff” a deadly game of chicken or will the nation take the big plunge into the abyss?

  6. It’s more a gentle slope that a cliff!

    • dnd

      I think it’s more of a fiscal bluff. And boy is it a butte!

      Since it’s gonna take a year for the whole thing to kick in, I think the damage will be minimal as the House will soon cave once the bond market goes in the dumper and the threat of huge layoffs at the military industrial complex loom.

  7. tempebev

    There are some really weird people on that site. Scary!

  8. Watching the Speaker on Chris Wallace, he knows the prez has him by the short hairs, fun watching him squirm.

  9. tempebev

    Finally the repugs have given some details on what they want. Boner is sweating bullets!

  10. tempebev

    The GOP have their collective heads in the sand. Our newspaper headline read “GOP refuses to raise tax on wealthy.” I just saw on MSNBC, the “GOP’s right flank warn Boehner: Don’t cave on tax increases.” I think Obama should let “Thelma and Louise” go over cliff. The GOP will be the party that is blamed. I’m so tired of the wealthy being protected by the GOP. Obama is doing what he should have done the first four years.

    • dnd

      What I’m so confused about is that they say that the 4% increase in the top 1%’s marginal tax rate will provide so little revenue, so why bother. So if the minuscule rise in taxes, why the big huff?

      I’m guessing this is all posturing.

      I like Warren Buffet’s ideas about increasing the tax rates on cap gains and dividends for the wealthy, and getting rid of the carried interest loophole.

  11. tempebev

    Brian, great article in Forbes. We eat lunch at the neighborhood Applebee’s often. May have to find somewhere else.

    It’s hard to understand how the younger generations (teens, grade school) will ever learn what “compromise” means if the major example is our elected officials. Yesterday Bush sounded like the only sane person in the GOP with his immigration speech.

    I am assuming, which is probably a mistake, that this will be solved by 11:59pm on Dec 31. If not, off we go! I am glad to see that O is sticking to his guns, even acknowledging the G’s philosophy is to do nothing that will agree with O. What a bunch of —-heads.

    • dnd

      Bev,
      You might want to ask your servers at the neighborhood Applebee’s if their or others hours are being cut due to Obamacare. My understanding is the Terkel owns 35 franchises in NY, so other franchisees may have other thoughts on Obamacare.

  12. What a loss for the Senate

  13. I’ve become a big fan of David Pakman’s online broadcasts, he’s worth following.

  14. Hello out there. What’s up?

    Getting into the holiday spirit. So in the mood to send out Christmas cards and at least put out the window lights today.

    Am most grateful we have President Obama re-elected (biggest gift), and who knew Mr. DeMint would self-deport? It’s sinful that he gets a Congressional pension. Since Congress is pretty much a millionaire’s club, cutting Congressional benefits severely should be one of the first reforms on the block. Take away their high quality group healthcare, and they can save for their own pensions.

    We as taxpayers should not owe DeMint a damned thing for his [lack of] service. (And yes, I realize DeMint was one of the least wealthy senators — not overly surprising, given his skills. But he can dig for gold elsewhere; we should not be making Congress a financial aristocracy. If anything, they should be less secure than the average American. Skin in the game.)

    Feeling positive. Cannot imagine zeitgeist if Romney prevailed, or the Senate turned. Never got around to seriously researching moving to Canada, or another country, but pretty sure I’d be doing that by now if sanity had not prevailed with 2012 election.

    However: it’s December, it’s the holiday season, and only good things ahead for us.

    How are you guys today? Cheers.

    • dnd

      Sra Dog,
      Can’t agree with you more that congresscritters should have to find and buy their own health insurance (no piggy-backing on a spouse’s plan). We’d have universal health care in short order.

      Ditto on retirement pensions. Let ’em fund their own 401k’s. It’d change their tune about Social Security and Medicare.

  15. tempebev

    Hi Dog – life in Tempe is pretty nice. Temp’s are fine and sun is shinning. We’re celebrating my hubbies 70th BD today and getting ready for mine in Feb. Glad to still be alive, but realizing we’ve passed the 1/2 way mark. Happy Holiday season to you!

  16. Happy birthday to Mr. Bev.

    Wondering if dnd is seeing a beautiful snowfall.

    Maybe 50 and overcast and wet here. Nothing special.
    =====
    I think we should start agitating for means testing Congress for benefits. This one could have legs.

    And I don’t want to hear any whingeing (from them) about the sacrifices involved in having to maintain two homes, and thus no money left over. And we don’t appreciate them enough. Waaaaah.

  17. tempebev

    Rub, Rub, Rub. Forecast for tomorrow is 65 high, 38 low. It’s getting chilly here!!! Mr. Bev says thank you.

  18. hey gang, been rather gray and soggy here all weekend but mild temps.

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