Friday, July 22, 2011

Loopholes, not for everyone, just the rich

Loopholes, according to New Webster's Dictionary is: "a textual basis in a document or law for escape or evasion of taxes, legal commitment, or obligation".
For those who would like to read a book about "loopholes" in the Internal Revenue Department, I recommend David Cay Johnston's book" Perfectly Legal--the covert campaign to rig our tax system to benefit the super rich--and cheat everybody else.  This book discusses and explains the various dodges the super-rich and their accountants take to insure they do not pay any taxes.
Perhaps you have heard in the Debt Ceiling discussion, the Democrats saying they want to eliminate the private jet exemption.  What they are talking about is an exemption for the super-rich, that the normal person does not have the option to take.  First, the super-rich can afford a passenger jet, and they get to write off the cost/ maintenance/pilot expense/fuel/ repairs/ you name it, right off their Income.  Second, they get to have many houses in different areas, and get to write it all off because they have to entertain their potential clients, same with athletic tickets. 
Perhaps you or your parents have participated in the mortgage interest deduction, it brings down your gross income down to less of a tax to pay, that one you get to participate in, " however the strategy to broaden home ownership has instead morphed into a vast subsidy for the best-off Americans.   The more the house cost, the bigger the tax subsidy.  And the more owners earned, and thus the higher their tax rates, the bigger the subsidies.  Combining these two factors created a huge benefit for highly affluent Americans but only a minuscule one for those most in need of help to buy their home."
The "Recession" we are in today comes as a result of lending to people who desired that tax "subsidy", however, did not have the money to pay for any increases in interest raises, nor the backup funds to cover them if they should be laid off.
Currently the debt ceiling discussion has talked about eliminating the "Mortgage Deduction" from the tax code.  President Obama mentioned to Boehner that it could be put on the table.  That would really hurt the lower 90% of the population, but not the affluent.  That looks dead now, because the Republicans would not budge on tax increases.
I won't go into all the loopholes discussed in the book.  He has another one out that is newer, I have to get a copy.  I would recommend reading this book as a minimum, then get the next one if you want.

No comments:

Post a Comment