What's a Loophole?
We never raised any taxes. We're just saying close the loopholes and collect the taxes that are owed to the Treasury and the United States people.
This was Senator Joe Manchin (D-WV) explaining away the 15% minimum tax on billion dollar companies included in the grossly misnamed Inflation Reduction Act.
It's a reminder that, whenever a politician utters the word "loophole," you should don your skeptic's cap. If you pay attention, you’ll find that "loopholes" are inevitably and always Bad Things exploited by the "other guys," and never anything that benefits the utterer's side of the fence.
Calling something a loophole is intended to elicit an emotional response, as in "they're getting away with something," or "they're getting something I don't get."
The former is guilt-by-insinuation, and has no place in reasoned debate. If you've got proof someone's a cheat, show it. If someone is simply obeying the rules more efficiently than you'd like, well, tough luck. Punishing smart people for being smart is no way to run a nation.
The latter is politics as usual. As in, they play word games and we fall for them.
Is a preferential tax structure for married couples a loophole? Is the deduction for dependent children a loophole? Is the deductibility of charitable donations a loophole?
Yes, yes, and yes. They are all disparate treatments of taxpayers, emplaced to encourage certain behaviors. A reduction in taxation for some is a relative increase in taxation for others, by the way, and tax "loopholes" are not a separate creature from taxation itself.
Are the solar power tax credits in the Manchin bill loopholes? Are the home energy rebates for low income families loopholes? Are the tax credits for buying “clean” vehicles loopholes?
Again, yes, yes, and yes. But Manchin and the other supporters of this bill won’t ever call them that.
Manchin's statement also reflects a common and problematic attitude: that the government "owns" a certain portion of everyone's income, that it is a shareholder in all businesses and a partial owner of all individuals. That, as such, the government is entitled to a portion of the fruits of all our labors.
When understood for what it is, this view point emerges as the gross immorality libertarians have long argued. Taxation is a means of paying for government services, and it should be structured as "fee for service.” If you pay someone to pave your driveway, you are not ceding a part of yourself to him, you are engaging in a finite transaction. While certain government functions (the core ones are national defense, enforcement of contracts, and protection of individual and property rights) are perpetual, and need to be funded in perpetuity, they remain "services" that we all pay for because they enable our free society to function.
This business of sucking tax money out of the economy for whatever else the government feels like doing is at the root of our problems, and the "loophole" business is merely a way to pit us against each other rather than leave us united against the rapacious monster that is big government.
Yes, Senator, you raised taxes on the American people. That you plunked some of those tax increases on "rich" corporations may let you pretend you aren't taxing all of us, but that money has to come from somewhere, and those corporations will pass the taxes through. To shareholders (which usually includes many state and local pension funds, which rely on invesmtent growth to fulfill the promises your cronies made to public workers and their unions) and to consumers. Stop playing word games to hide your greed. We've had enough of it.
"Loophole" is always an excuse to lay claim to more of Other People's Money. When you hear or read it, watch your wallet. And your rights, for that matter.
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