Dan Popp
Loopholes bad, Leninism good
By Dan Popp
July 26, 2011

A just security to property is not afforded by that government, under which unequal taxes oppress one species of property and reward another species. — James Madison

Liberals do not have principles; they have an agenda. This was proven again recently when President Barack Obama said that he wants to close "loopholes" in the tax code.


Very Madisonian, and indeed, very Jeffersonian and Hamiltonian and Founding-Fathers-In-General-onian of you, Mr. President. Lower those tax rates, broaden the base, and close loopholes. It's not like you and your party have been doing the opposite for the last 90 years.

One question, Mr. President: If all species of property should be oppressed equally (per Madison), then what are all these waivers granted for Obamacare? Aren't they just loopholes, some as large as an entire State?

If loopholes are bad — and they are — they're bad because they violate the principle of "equal justice before the law." That is, government should treat all citizens the same. If loopholes are immoral, then waivers and set-asides and carve-outs and earmarks are immoral. And if differential treatment is wrong, then the entire progressive income tax is wrong.

But the hypocrisy is much deeper than that.

If loopholes are bad, then subsidies are worse. If it's a little sin to exempt certain people (and companies) from taxes that others must pay, then it must be a great big, slimy sin for the government to pay some, to do things for which others are taxed!

Let me say that a different way.

A tax loophole is an unfair advantage to one producer. But it's only a passive advantage — the government refrains from taking something. A subsidy, on the other hand, is an active advantage. It is doubly unjust because your company pays taxes that go into your competitor's bank account. Not only did your cost of doing business go up, theirs went down, just because someone in the government wanted to "invest" other people's money.

So if our Dear Leader's newfound anti-loopholism were a stand on principle, he would try to eliminate all the subsidies for wind farms and ethanol and whatnot. When you see that happen, duck — there will be some flying monkeys in the general vicinity. Cut "tax breaks to oil companies?" In a heartbeat. Cut involuntary taxpayer assistance to "green energy" startups? Not a chance. Obama likes — no, he seems to live for — picking winners and losers. He fancies himself a social engineer, and loves "spreadin' the wealth around." After all, what fun is being king if you can't "reward your friends and punish your enemies"? But it's not just the President. Democrats, and many Republicans too, love to buy votes from Group A with money stolen from Group B. Those lousy loopholes didn't get into the tax code by accident. They were created intentionally to micromanage your behavior.

To many of our elected representatives, a policy that doesn't overrule free choices is not really a policy at all.

No, I'm confidently predicting that loopholes aren't going away soon. Nor are subsidies, grants, or giveaways of nearly infinite variety. The knowing and unknowing Marxists in DC are going to keep using the tax code as both a carrot and a stick, deranging the market in literally millions of ways — which leaves everyone less well off than if we were allowed to make our own decisions. By diverting limited resources to less efficient uses, discriminatory tax breaks and subsidies alike are, in effect, "a tax increase on everybody." That's something else that President Obama really wants to avoid now, after spending the past three years piling up trillions upon trillions of dollars of more taxes on everybody.

Loopholes are bad. Government control of every aspect of your life, from pre-cradle to post-grave, is good. Because when you've constructed your ship of state entirely out of badly-spun yarns, it's important to close loopholes.

© Dan Popp


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