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Mon Nov 26, 2012, 12:00 PM

The Tax Loophole Loophole of logic

I never ceased to be amazed at how stupid republicans think people are and how stupid their voters turn out to prove them right.

To raise revenue the republicans want to close "tax loopholes" instead of raising taxes on the wealthy.

Their argument, then, is that higher earners are getting away with avoiding paying taxes they should be, but that the rates are high enough (or too high). And that they could make up a huge portion of the debt, pay for programs in place, etc. simply by closing these loopholes. They argue that they could raise more by closing these loopholes than by raising taxes a few percent.

OK. So, accept that as true for a moment. If they were able to do this, the wealthy would pay MORE in taxes under their plan, than by raising the tax rate a few percent.

And seeing that the entire premise of their platform is based on the fact that the wealthy should not pay more they are clearly full of shit on one, or both of their arguments.

I still don't see why they aren't called out on their simple bullshit like this

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Reply The Tax Loophole Loophole of logic (Original post)
WestCoastLib Nov 2012 OP
unblock Nov 2012 #1
Igel Nov 2012 #2

Response to WestCoastLib (Original post)

Mon Nov 26, 2012, 12:15 PM

1. not true. many of the "loopholes" they want to close are the loopholes affecting the less rich

they're not talking about shutting down the loopholes regarding funds in the caymans or carried interest, and they'll fight like hell to keep capital gains and dividends taxed a ridiculously low levels.

no, the "loopholes" they want to get rid of are things like the mortgage tax deductions that affect millions of ordinary homeowners.

yes, rich people benefit from that one as well, but not nearly as much on a percentage basis.

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Response to WestCoastLib (Original post)

Tue Nov 27, 2012, 06:41 PM

2. Theory.

The idea is that tax rates matter. Temporary tax reductions--tax rebates, credits, that sort of thing--are less important in economic expectations than tax rates are.

I.e., you plan according to the tax rates on paper, not the effective tax rates after taking into account deductions and the like.

This is part of their criticism of the Obama tax "compromise"--raising marginal rates is bad economics. It was also part of their criticism of a portion of the Obama tax-related stimulus--all the "tax reductions" were in terms of credits and rebates.

When I was in high school my girlfriend's father watched the marginal rates closely. At one point he turned down a promotion--by having a small increase in pay he'd be bumped to a higher tax bracket. He did the math; he'd pay more.

When I graduated college, I was concerned not with the tax rates but with short-term things like temporary tax credits and deductions. When they altered the charitable giving deduction it hurt.

To Bud, the long-term effect of higher marginal rates was greater than the immediate need of a kid struggling to buy food and pay rent.

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