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When politicians can’t see their own loopholes

by Matt Mitchell on February 13, 2013

in Government-Granted Privilege, Tax and Budget

TaxesAccording to a 2008 IRS report, the Federal Tax Code “has grown so long that it has become challenging even to figure out how long it is.”

A search of the Code conducted in the course of preparing this report turned up 3.7 million words. A 2001 study published by the Joint Committee on Taxation put the number of words in the Code at that time at 1,395,000. A 2005 report by a tax research organization put the number of words at 2.1 million, and notably, found that the number of words in the Code has more than tripled since 1975.

In last night’s State of the Union, President Obama spoke eloquently about the need for tax reform to clean up the code:

To hit the rest of our deficit reduction target, we should do what leaders in both parties have already suggested, and save hundreds of billions of dollars by getting rid of tax loopholes and deductions for the well-off and well-connected.  After all, why would we choose to make deeper cuts to education and Medicare just to protect special interest tax breaks?  How is that fair?  How does that promote growth?

Now is our best chance for bipartisan, comprehensive tax reform that encourages job creation and helps bring down the deficit.

The American people deserve a tax code that helps small businesses spend less time filling out complicated forms, and more time expanding and hiring; a tax code that ensures billionaires with high-powered accountants can’t pay a lower rate than their hard-working secretaries.

Amen. Unfortunately, a few minutes later, the President said:

Through tax credits, grants, and better loans, we have made college more affordable for millions of students and families over the last few years.

And a few lines after that:

We’ll give new tax credits to businesses that hire and invest.

The tax code didn’t get to be as complicated as it is by accident. Every complication; every loophole; every deduction, exemption, and credit got there because some elected official had a clever idea. It got there because someone dreamed up an innovative scheme to use the tax code as a way to encourage some sort of behavior.

The code is the way it is because politicians who decry loopholes and special-interest privileges can’t see that their own clever schemes are part of the problem.

photo by: John-Morgan
  • Lis

    There are no loopholes. Every line was put there by a politician.

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