Tax "Loopholes"

[UnknownXV]

It's not a theory, it's a natural flow. Money is like water, it follows the path of least resistance because people are lazy and self serving.

The problem is when people make a distinction between the economy and the people. They are one in the same. If you understand people, and on a collective level people are very predictable, you understand the economy. Of course, you can't get complete precision like this, but the broad picture; certainly.

Tax people more, and they have less money to spend; but worse of all, less money to invest in their ideas or hobbies or companies. It's very bad.

But like I said, even if increasing taxes didn't affect the economy, there's no way that would be enough to balance the books. Again, even if we entirely cut social security, we wouldn't have them balanced. It's crazy.

AS you said, you can't just cut programs without hurting people who've become dependant on them. The dilemma is, do we keep the gravy train going as it is now, so as to not hurt those who did not plan for their own retirements, or do we cut off the deadweight that will eventually cause the gravy train to sink?

It's not a pretty picture, but it's the truth. Either major cuts happen, or eventually the entire boat will sink. I know what the majority seem to have decided on; but that's because they think this path is sustainable.

[elessar78]

It's not a theory, it's a natural flow. Money is like water, it follows the path of least resistance because people are lazy and self serving.

The problem is when people make a distinction between the economy and the people. They are one in the same. If you understand people, and on a collective level people are very predictable, you understand the economy. Of course, you can't get complete precision like this, but the broad picture; certainly.

Tax people more, and they have less money to spend; but worse of all, less money to invest in their ideas or hobbies or companies. It's very bad.

But like I said, even if increasing taxes didn't affect the economy, there's no way that would be enough to balance the books. Again, even if we entirely cut social security, we wouldn't have them balanced. It's crazy.

AS you said, you can't just cut programs without hurting people who've become dependant on them. The dilemma is, do we keep the gravy train going as it is now, so as to not hurt those who did not plan for their own retirements, or do we cut off the deadweight that will eventually cause the gravy train to sink?

It's not a pretty picture, but it's the truth. Either major cuts happen, or eventually the entire boat will sink. I know what the majority seem to have decided on; but that's because they think this path is sustainable.

Wow, if you're this knowledgeable about how people behave collectively you should be teaching an Economics course at Princeton or heading up the Federal Reserve.

It's a phantom argument. Yes, in theory, people will spend that extra money or invest it and spur the economy but in practice it hasn't played out that way. As I said, the economy grew when taxes were high. Economy boomed pre and post Bush tax cuts.

By your logic, when taxes have been higher the economy and stock market should stagnate but it hasn't. The stock market continues to grow and grow. So the evidence says that stock market growth is more or less independent of taxation.

[chrisburke21]

Loopholes

All of the tax loopholes you have listed would fall under this category. The reason they are considered loop holes is that everyone cannot afford these deductions. For example, the interest on a home loan is considered to favor the wealthy because you have to be able to afford to buy a home. The same can be said about student loan interest, etc. I hope this helps.

[GrimJack]

For social security and medicare, more money goes out than comes in. Not only this, but more people are retiring than starting to work. It's not sustainable. Besides, retirement should be the individuals responsibility, not the governments. Even if you were to argue that we'd end up taking care of these people who don't save in one way or another, the simple truth is the government is not very efficient. I'd rather take the money and invest it myself.

Social Security is fully funded until about 2038 - and that can be extended by raising the limit on what income is subject to FICA; the Medicare Trust Fund is good to 2024 and could use some tweaking - I do not know of any privatization of government services that have worked

Right now, if I work, I am forced to pay into a retirement fund that will not exist when I reach the retirement age.

Social security wasn't meant to be a full retirement fund anyways. It was meant to provide a minor supplement to it.

Social Security was meant to keep old people out of poor houses allow them something to eat food that was not pet food.

The truly scary thing to me is, even if we cut the entirety of social security out, we'd still have a deficit of almost 500 billion left.

How the hell things are this bad, and why people are not panicking more. I don't think anyone realizes how much money we are talking about here. A deficit of 1.2 TRILLION dollars... it baffles comprehension. This is not sustainable. Not even remotely. And all the talks about the fiscal cliff.. it's nothing. We have a fiscal impass at hands here. What we need to cut to balance the books, it's more than anyone will ever accept. People would rather ride the gravy train until it crashes than get off now.

Well, for one thing all we have to do is set the tax rates back to what was current during Reagan's administration - Heck, just setting them back to the Clinton era would take care of it.

[UnknownXV]

Wow, if you're this knowledgeable about how people behave collectively you should be teaching an Economics course at Princeton or heading up the Federal Reserve.

It's a phantom argument. Yes, in theory, people will spend that extra money or invest it and spur the economy but in practice it hasn't played out that way. As I said, the economy grew when taxes were high. Economy boomed pre and post Bush tax cuts.

By your logic, when taxes have been higher the economy and stock market should stagnate but it hasn't. The stock market continues to grow and grow. So the evidence says that stock market growth is more or less independent of taxation.

When the tax rates were higher back then, for higher income earners, less people fell into those brackets. Less people were actually paying those ridiculous tax rates.

It's not how you solve the problem.

Oh, and even if it didn't adversely affect the economy (which by pure math it has to since government is less efficient than the private market) it's totally immoral. The basic income tax itself is leeching off of work done to pay for expenses no one gets a vote on. We vote for people, but they're all the same.

[Bob B.]

A couple of you appear to think that capital gains rates at 15% is a tax loop hole. I doubt it.

A couple of you make the case that tax loop holes are when tax payers take advantage of credits and deductions in a manner that congress did not originally intend. That's probably right, in the traditional sense of "tax loop holes".

BUT ... I'm sure that I heard John Boehner say something close to the following in a sound byte: We (the house Republicans) are going to work on closing some tax loop holes to avoid this fiscal cliff.

Closing off a hand full of tax loop holes that tax payers take advantage of in a manner that congress did not originally intend cannot do anything to avoid this fiscal cliff.

So, I guess my real question is: what did John Boehner mean in Nov. 2012 by "tax loop holes"? My guess is that it's reducing things like the standard deduction, exemption levels, the level that home interest and charitable giving can be deducible, child credits, energy credits, adoption credits.

The capital gains rate, and the tax rates on high income earners will also probably be increased through negotiations with the Dems as well.

[elessar78]

When the tax rates were higher back then, for higher income earners, less people fell into those brackets. Less people were actually paying those ridiculous tax rates.

It's not how you solve the problem.

Oh, and even if it didn't adversely affect the economy (which by pure math it has to since government is less efficient than the private market) it's totally immoral. The basic income tax itself is leeching off of work done to pay for expenses no one gets a vote on. We vote for people, but they're all the same.

Gov't is less efficient than business but business has no conscience. The bottom line has never been a good guiding principle for what is best for people. Gov't needs to act as a check on business—it's the premise of our whole system, freedom BUT with checks and balances.

For what it's worth, about $3 trillion of the current deficit is because of the (Bush) tax cut that is under discussion now. A third of Medicare's long-term deficit is because of the Prescription Drug Benefit program. Add to that two wars, and they chose to cut taxes while funding two wars. If you wonder what set us down this path with the national debt—it's these policies. And we haven't even gotten to the financial crisis of 2008 and we've been digging ourselves out of since.

You can argue that taxation is immoral but the evidence indicates otherwise. Just like many of the people here asking for advice: you can't do things without a way to fund it.

[Bob B.]

business has no conscience.

And government does?