People in the liberal media are using the term “loophole” incorrectly. It’s time for us to set the record straight.
You SHOULD NOT use the term “loophole” for these things:
The 1993 CEO Compensation Rule: When Congress tried to cap the deductibility of executive compensation to no more than $1 million per year, somewhere along the way a special provision was entered in so that the limitation was only applied to performance-based pay. So, CEO’s started getting paid bonuses in the form of stock options instead of cash, and the “limitation” became completely useless.
This loophole feature of the tax code costs the U.S. Treasury saves corporations $8 billion a year. Honeywell made $5 billion from 2009-2012 and paid only $50 million in federal income taxes – a tax subsidy of $1.7 billion – which they were able to do in part because of this loophole.
Everyone knows that CEO’s should not pay any taxes. They are delicate and dainty, and if you get them mad then they might hire even fewer people. You wouldn’t want that, would you?
Therefore, this is a “tax feature” not a “tax loophole”.
The Off-Shore Tax Laws: When companies build stuff in other countries, they do not get taxed by the United States. This was originally set up to encourage American companies to go and build stuff abroad. However, in the last few decades they have also been registering patents and trademarks in low-tax countries, even when the discoveries that those patents represent were really made in the United States, so that the income the company receives for those patents and trademarks does not get taxed.
This loophole feature of the tax code costs the U.S. Treasury saves corporations $90 billion a year. Citigroup had $42.6 billion in profits offshore in 2012 on which it paid no U.S. taxes. ExxonMobil had $43 billion in profits offshore in 2012 on which it paid no U.S. taxes. General Electric had $108 billion in profits offshore in 2012 on which it paid no U.S. taxes. Honeywell had $11.6 billion in profits offshore in 2012 on which it paid no U.S. taxes. Just to take four examples.
This also should not be called a “loophole”, because everyone knows that corporations are over-taxed already. Just look at the four examples given above. They obviously need these tax breaks because they are struggling oh so badly.
You SHOULD use the term “loophole” for these things:
Employee benefits: Employer-paid health insurance are a HUGE loophole. Also pension plans, plus life insurance, vision and even group legal plans.
These are loopholes because the costs are tax-free unless you pay for them yourself. Plus, they benefit middle class and poor people who obviously don’t need any help with money, those lazy useless creeps.
Home Ownership Exemption: When selling a primary residence (effective 1997) capital gains are totally exempt up to $250,000 ($500,000 if married) Congress keeps increasing this exemption to include a majority of middle-class voters. The cap on that exemption targets it to the middle class only — which makes it a loophole for middle-class people.
Who do these people think they are, asking for tax breaks? I mean, it’s not like middle-class people do anything useful or productive the way Exxon Mobile does.
When you use the term “loophole” to apply to those poor, put-upon rich people and corporations, it’s really just showing your liberal bias!!!
sources: Institute for Policy Studies, Liberty Issues
