The Closet Moderate: Loopholes and technicalities

Thursday, February 26, 2009

Loopholes and technicalities

Turns out President Obama is not just for vague things like "hope" and "change" and "responsibility." He's also come out recently against "loopholes" in the tax code. Well, that's a relief. I suppose "waste and inefficiencies" are next on the chopping block. His only opponents in this crusade quest will be the pro-loophole, pro-waste party, a/k/a, Congress.

When I hear this kind of simpleton politics from people who don't know better, I don't say anything, but as a former Senator and law professor, Obama knows that what's a loophole and what's not is very much in the eye of the beholder, except in a few rare instances. Loopholes were originally those things that allowed crafty tax practitioners to take advantage of some mistake or unforeseen possibility in the tax code. Congress usually fixes these pretty quickly.

What Obama means by loopholes isn't terribly clear, but I suspect it's along the lines of when some criminal gets off "on a technicality." People speak as though these things are random events, like a meteor striking your house. They're not; they are the law. Congress (or in criminal law, the Supreme Court) put these things in on purpose.

What we should do is reform the whole Tax Code and remove some provisions that make it complicated and allow rich dudes to not pay any tax. These things aren't loophole, they're decades of Congressional back-scratching given to their rich buddies and favored industries. They're the green bullshit the Dems just put in, the ridiculously favorable oil well depletion schedule the Republicans favored years ago, and the mortgage deduction that all smarty-pants Manhattanites (renters, all) decry.

Targeting tax havens, on the other hand, is a more concrete proposal from the President, but legislation is not the answer. A better idea is to treat the Cayman bankers like we used to treat pirates, as hostis humani generis, and take those flyspeck islands over. Now, that's change I can believe in.

No comments: