Congress cooks the books on taxes

  • Article by: PAUL GUTTERMAN
  • Updated: February 21, 2013 - 10:49 PM

The tax code is filled with provisions that are temporary under the law but permanent in practice in that they are continually extended. Why would Congress do this?

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comment229Feb. 22, 13 4:39 AM

"The tax code is filled with provisions that are temporary under the law" Ahhhh, wrong word that "provisions" comment. You meant to say "loophole" but I guess we are creating new words for everything these days.

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comment229Feb. 22, 13 4:42 AM

There is a major difference between a small business and IBM when it comes to "research" and the way the funds are achieved. If I want to experiment and research into a new area, I have to cut something in my existing budget to have the funds to do this. IBM apparently just relies on a government loophole to continue. By the way, what were the earnings of IBM last year? This is indeed one of the best examples of corporate welfare that you will ever see. No doubt IBM will call it something else, or invent some new phrases to describe it. Welcome to the new America.

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tupelohoneyFeb. 22, 13 6:25 AM

The reality is that our government is full of lawyers that not only speak in ways which are deceptive but write laws that are deceptive. They pick and choose their words carefully and craft bills that are not what they appear to be. Both sides do it, but I suspect liberals will deny that democrats are as guilty as republicans. As usual, they will blame the other guy.

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elmore1Feb. 22, 13 6:27 AM

You are right. The deficit is much worse than we think. We need moderate (common sense) leaders in Washington to create a realistic budget, reduce spending and where appropriate, get new revenue. Instead, both parties play games with taxes and revenues to payoff campaign debts to special interest groups. Look at the insane amount of taxation that Dayton is proposing. Good article!

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tupelohoneyFeb. 22, 13 6:27 AM

comment229: Are you a tax payer? If not it is probably because you are using your so-called loopholes to avoid paying taxes. 49.1% of filers pay no net FIT because of deductions, credits and other legal provisions which you call loopholes. Perhaps you pay taxes, but use your so-called loopholes to reduce your legal liability. Mortgage deduction? Dependents?

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kleindropperFeb. 22, 13 6:35 AM

The answer to this is easy. How are politicians going to threaten and shake down the citizenry for campaign dollars if the tax code is simplified and consistent?

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godtlaFeb. 22, 13 7:12 AM

Excellent article! Short-term thinking by government (and business) is absolutely scary and terribly inefficient.

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mark44Feb. 22, 13 8:08 AM

The author is only focusing on lost tax revenue in the future. He neglects to point out that billions are invested tax free today in IRAs and 401(K)s and the gov't has to wait 20-40 yrs to collect any revenue. What if tax rates are lower or exemptions higher 30 yrs from now, how much would the gov't lose by not taxing that money now? It's a trade-off in the gov'ts eyes, tax revenue now (Roth) and tax revenue later (IRA). And why did the author choose to focus on the one investment tool where middle income people can gain retirement income ground while ignoring such things as offshoring billions in profits by many companies? That's lost revenue now and in the future.

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gandalf48Feb. 22, 13 8:31 AM

This whole conversation leads right back to the issue of uniformed voters. People don't understand what the purpose of the tax code is (or what the US Constitution was originally intended to do) and demand changes without understanding the full ramifications. The oil and gas "subsidies" is a perfect case, no one really understands how the business tax code was intended to work (or taxes in general). The whole point was that the cost of doing business is deductible to avoid double taxation. The business can buy (or payout) whatever it needs to in order to operate their business as a deduction, the logic is that the taxes will be paid out when the money progresses through a business and is paid out as a salary. If the business hangs onto the money as a profit (not paid out as a salary or an investment in equipment/land/benefits) then it will be taxed as corporate income. In general, the things that are deducted are passed onto other businesses which can either pay employees (which will then have their salaries taxed) or hold onto as profits (taxed at the corporate rate). Think about it like this, if you added a tax onto everything a business buys...you'd have another layer of taxes when a business buys or sells a product. That would create an unfair business environment so that businesses that depend on multiple levels of products being bought and sold would add another tax into the price of their product vs a business that pulls the natural resources out of the ground themselves.

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marcymmbFeb. 22, 13 9:20 AM

comment229**** By the way, what were the earnings of IBM last year? This is indeed one of the best examples of corporate welfare that you will ever see. I guess you left out general electric, talk about subsidies and tax breaks.

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