Quote:
Originally Posted by MarchHare
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.
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Personally I don't think loopholes work particularly well as an incentive and tend to have been put in the code as a result of lobbying rather than neutral decision making. Punative taxes are far more effective to be frank.
I think a general cull of loopholes would be a good thing regardless of its money raising effect ala the deficit, if there is one thing the US needs right now it is something to encourage them to think of themselves as in the crap together. If the poor and middle class feel they are bearing the brunt of fixing the US's problems while the rich continue to drink champers and buy german cars things will get very ugly down there.