Monday, March 5, 2012

What are Loopholes? 09/14/2011

The connotation of this term from older definitions indicates an ambiguity or omission in a tax law through which an obligation may be evaded.  The term as misused by politicians in public discourse would seem to indicate that the tax code writers left a provision out through which sneaky tax lawyers use to evade the paying of legitimate taxes.

Not so - tax loopholes as politician speak of today are deductions, credits, and special carve outs.  They include things like the mortgage interest deduction, energy tax credits, green energy incentives, and corporate and middle class welfare.

These are purposely written into the tax code for specific reasons, most notably to advance an agenda. They are used to pay off political contributors, advance certain industry segments, and promote an ideology.

Don’t let these guys try to convince you that there are just a bunch of mistakes in or creative interpretations of the tax code that simple need to be fixed.  They put them there in the first place.

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