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Originally Posted by Tribesman
You have problems understanding some very basic concepts on tax and business.
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No, I don't. The loopholes were specifically created to incentivize certain businesses—often (always?) as payback by politicians. Pol A will vote for a certain bill in return for votes to add a new tax code that allows the principle employer in his district to pay lower taxes. That is
exactly how such loopholes are created.
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That shows you have very little understanding of what they are.
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The good reason would be (as I said) incentives. Economists love incentives, but they are poorly understood in reality, such that they always have unexpected consequences. Such unexpected consequences are NOT "abuse." In fact, there should be no unexpected consequences—they know everyone who possibly can will take advantage of every possible loophole. That is a given, it's why tax attorneys are on staff for every major company (and retained by every smaller one).
I think that a fair tax system eliminates the need for incentives. I also think that incentives are bad in general. If, for example, "green" energy is viable, then it does not need to be incentivized. It should sink or swim on its economic merits, not based on government subsidy by " tax incentives."
BTW, there is a reason why some companies get to use the loopholes who congress didn't mean to. It's because congress cannot single out specific businesses. They want to (because of the political payback/give-and-take mentioned above), but the code must be written to look like it doesn't single anyone out. So they can give a break for making widgets of a certain material using a certain process, thinking that only their target firms will get the break, but then another type of firm figures out they can alter what they make to fit the broadly written law, and then they get it too.