Quote:
Originally Posted by afc wimbledon
Every tax 'loophole' is for some laudable purpose, they are all there to encourage something or other, investment, savings, getting people to buy houses etc, they are all still loopholes though.
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This is exactly the point I was making. Tax credits and other deductions exist because the government wants to provide a financial incentive to encourage a particular behaviour from individuals and businesses. I'm sure if we looked at any of them in light of that purpose, we'd likely agree many are beneficial (although they can be abused by creative tax accountants beyond their original purpose, such as using farm equipment tax credits to buy Hummers as cited earlier).
Saying "we just need to close the tax loopholes and that will solve the deficit problem" is a naive statement at best. What you're really saying is that you want to eliminate government incentives to adopt certain practices. On this very forum, we've had many self-described conservative posters argue in favour of this type of taxation policy. For example, if reducing CO2 emissions is a desired societal goal, people have suggested that the government should provide a positive incentive in the form of a "clean energy" tax credit rather than enact a punitive measure like a carbon tax.