I don’t have any specific examples offhand, but the difference seems pretty clear to me, in principle if not always in practice.
A loophole (tax or otherwise) is an expansion of a law or a provision of a law in a direction that was not intended - or envisioned - by the creators and supporters of that law. In the case of tax law specifically, it would be a tax break that is created for the purpose of promoting such-and-such economic activity, but which gets expanded by clever tax lawyers and accountants reclassifying enormous amounts of pre-existing income in a manner which fits that category. This provides none of the envisioned economic activity promotion and results in those who have the economic scale which justifies tax lawyers paying less taxes than they would otherwise pay.
Again, I don’t have any examples offhand. My knowledge here is in small part based on a couple of BILs who are corporate tax lawyers, but it seems that anyone who follows goings-on at major corporations is aware that this is a prime focus of corporate accounting.
I often think those in favor of increasing minimum wage beyond inflation adjustment don’t even consider there is a cost to such an action. I hear “an owner can afford to pay a few pennies more”. I find the argument in favor or raising the rate to be emotional and rarely pragmatic.
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People who are against a minimum wage assume that the labor pricing market is fluid and that the price of labor like any other good is simply a matter of econ 101 supply and demand principles. Embedded in this assumption is that the market will find equilibrium at a “fair” price for the risk adjusted value of the labor provided.
This ignores a shitload of things about labor that makes it different than land or widgets or raw materials and such a simplistic view of labor is bad for people and good for capital.
Disparate impact was born out of the suspicion that people would impose facially neutral requirements or criteria that would result in discriminatory results. Disparate impact analysis does not apply if the thing causing the disparate impact is an otherwise valid criteria.
Tax policy is usually about how much to tax and who those taxes should be collected from. Liberals and conservatives disagree on how much should be taxed and that is a valid argument, different people want to buy different levels of civilization. Liberals and conservatives disagree on how that tax burden should be distributed but even conservatives generally agree that marginal utility argues for a graduated tax rate (though they may disagree on how graduated the rates ought to be).
I don’t think that the “avoided costs” argument for social programs is a bad one. If spending a bit more money on early childhood education results in a lower high school drop out and teen pregnancy rate as well as a higher lifetime incomes and lower crime rate, then I don’t see why we can’t take those benefits into account when we decide if we want more of those sorts of programs.
Recent social experiments with things like paying poor high school teenagers for perfect attendance and staying out of trouble have led to good results and this is a bit more troubling but if the program costs a million dollars and avoid a billion dollars of crime down the rod, then why is it a bad idea?
In some gang ridden neighborhoods we are paying gang members to stay out of trouble and not participate in gang activity. It seems to be yielding some dividends.
My initial instinct was to resist “paying off” people to do what they were supposed to do anyways but frankly we pay off middle class kids to do well in school all the time just not on public funds.
There is a limit to how much good we can do with a war on poverty but we seem to have done a LOT of good with the war on poverty. We no longer have children being raised in squalor the way we used to and this has had significant knock on benefits beyond the direct benefits to the children themselves. I think that everyone agrees that we will reach a point when we are pushing a rope. Conservatives and liberals disagree about when we reach that point.
AFAICT, you are a conservative without the religion and with an extra dash of libertarian. I can’t remember you ever expressing a view that was liberal that was not libertarian.
I don’t think that the labor pricing market is perfectly fluid, but it is fluid enough. The equilibrium may not be perfect, but it is good enough. Additional distortions are not desireable.
I don’t think you’ve stated disparate impact analysis correctly. The analysis can in fact apply if the things causing the disparate impact are an otherwise valid criteria. Unless you using the term “otherwise valid criteria” to a practice or policy that has a demonstrable relationship to the requirements of the job in question.
Sure, that’s a working definition. The burden would be to demonstrate the intention of the creators and supporters, and how a given scenario deviates from that. Since the carried interest rule has been debated and was not changed in congress I interpret the rule and its effect to be intentional.
That’s kind of a misleading criteria. You could also say that I haven’t expressed a view that was conservative that was not libertarian. The common thread is libertarian.
Because those partnership rules were made with wildcatters and oil prospectors in mind not hedge fund managers. Do you think that if congress cold write the rule today it would have enough ambiguity to let hedge fund managers to allow hedge fund managers to pay capital gains rate on significant portions of their compensation?
The hedge fund manager does not own 20% of the fund. They are being paid for their services. Just like the waiter is being paid for bringing me my food.
Technically tips are a gift and NOT income. The IRS has somehow been able to look through the technical details and taxed tips like it was income anyways.
Carried interest treatment for hedge fund managers was not intentional.
Do you know of many cases where people, at least in the West, where people do the right things and end up with seriously negative outcomes? Take Shodan’s list from earlier - stay in school, get married and stay married, work any job consistently, not have kids until they can support them, not get in legal trouble. I’m not aware of large swaths of the population that are doing all the above and living in desperate poverty.
And there are further issues. How is it moral to force one person to bail out another person? How do you account for the unintended consequences that social policies bring?
The death penalty as it is currently practiced in the US isn’t a big deterrent of crime. If the punishment for the crime were more immediate, it would be more effective.
People who commit serious crimes, I suspect at least, seriously discount the future. If instead of decades of appeals, a person convicted of murder knew that within a very short while he’d be executed for his crime, it would be a more serious deterrent.
Good point; I think there’s a certain… nearsightedness/farsightedness to the positions as well.
By that, I mean that in a lot of ways, the conservative position is looking down the road at the reasons for the single mothers, and how to reduce or eliminate making new ones, and to them, the consequence of being a single mother with no partner and often being an effectively uneducated teenager should be reason enough to diminish that state of being. So maybe the answer is to get the word out that being a single mom sucks really bad. And if that’s the thinking, then measures to actually help single mothers in the short term is directly counterproductive to the long-term goals.
Liberals in turn, see these women in distress NOW, and think that they must help them- not really worrying that by cushioning their landing (so to speak) that they’re reducing the impact of the object lesson on other, not-yet-pregnant women.
To use an analogy, if your kid is jumping off the furniture, do you let him bust his ass and possibly get hurt, in hopes that he won’t keep doing it, and so his little brother doesn’t even try, or do you put cushions out so he doesn’t get hurt, thus reducing the consequences, and reducing his chances of stopping? Both are valid approaches, but they’re coming at the problem from two different directions.
This does not accurately describe my approach to single motherhood, which is absolutely as much about preventing unwanted and unplanned pregnancies as it is helping existing single mothers. And considering that liberals are the ones, in general, who strongly push for much better access to abortion and birth control, I don’t think it accurately describes most liberals’ position either. And for what it’s worth, the teen birthrate has been on a downward trajectory for several years now.
That’s why I wrote that it was clear “in principle if not always in practice” - it can be a judgment call in any given instance.
But I think you can generally look to the public commentary at the time, to the issues that were relevant and which it was addressing at the time, and to the initially dominant use of the law, to get a good sense of what it was intended to do.
[Note that this does not apply just to tax loopholes. I think it’s pretty safe to say that a lot of other laws are being used by the government in ways not anticipated by their creators, e.g. RICO and civil forfeiture laws.]
I’m not familiar with the history of the carried interest rule, and was making a general comment. But I would note that it’s easier for a law to gradually expand and morph into something else than it is for it to get a revised version enacted. Especially if it’s not a major part of the public consciousness and there are well-placed lobbyists and big campaign contributors opposed to changing it.
These are not distortions, these are corrections of perceived market failures. There is a monopsonistic effect for low wage workers. There is a significant imbalance in bargaining power. Mostly because low skill labor is so fungible and plentiful (especially with illegal immigration). Whether we impose the cost of a minimum wage on our economy or the cost of taxes to fund larger welfare programs to fill the gap between a lower minimum wage and the cost of living, our economy pays for that extra drag. The question is whether our economy is better off with the extra drag of a higher minimum wage where we know there is significant imbalance or whether we are better off with higher taxes where we know there is significant dead weight loss. There are no costs being avoided when you oppose a poverty level minimum wage, you are merely shifting the costs from wages to safety net programs.
Yes that is what I mean. How would a criteria that DOESN"T have a demonstrable relationship with the requirements of the job in question be valid?
There is no serious person on either side of the tax policy debate supports a flat tax. There are a few fair tax folks but even they are pretty fringe.
What assumption?
How is it a moral hazard? Moral hazards are where people are rewarded for BAD behavior. Here we are paying people for good behavior.
Nope, never heard of it. How is it relevant? We are not ignoring criminal activity. we are rewarding people who are at risk of committing crimes for not engaging in criminal activity. Do you see the difference?
My problem with this program was the whole problem of paying danegeld.
Really? by that definition there is no such thing as a loophole because congress would swiftly act to close anything they didn’t intend. Come on, pull the other one.
I don’t believe for a second that a rule that was implemented SPECIFICALLY to accommodate a practice among wildcatters was intended to apply to hedge funds (that didn’t even exist at the time)was not intended to apply to hedge fund managers. The point is that we frequently look through the form of a transaction to find its substance. We look through the form of tipping and call it compensation for services (because waiters and waitresses are poor and powerless so fuck them). We don’t do this for carried interest (because hedge fund managers are wealthy and well connected so we read the law in the light most favorable to them) and that is a loophole an unintended consequence of laws enacted in the distant past meant to apply to a totally unrelated situation.
Cost shifting assumes a constant benefit level. There is no requirement that the level of benefits be as they are today. The reason low skill labor has a significant imbalance in power is because it is so fungible and plentiful. That’s a feature. And truly, if we as a society determine that a certain benefit level is desired - the appropriate place for those benefits to stem from are general fund welfare entitlements - not as a burden on employers.
A “valid criteria” in this instance means one that is not based on suspect class. A demonstrable relationship with the requirements of the job is a more rigorous standard. Take for example, a background check. If an employer requires a background check and only hires non-felons, that is neutral of any suspect class. However, because certain suspect classes are disproportionately felons, a disparate impact analysis may result in a conclusion that such hiring practices are illegally discriminatory. See EEOC v. Freeman. Fortunately the claim by EEOC was defeated. Or take the Fair Housing Act and distribution of credits to promote construction in low income neighborhoods. Because low income neighborhoods may be disproportionately occupied by suspect classes, focusing credits in these areas may have a disparate impact and therefore be actionable. See Texas Department of Housing and Community Affairs v. Inclusive Communities Project. Simply by focusing tax credits towards low income areas, that can run afoul of disparate impact analysis.
Cruz, Paul, Carson, Rubio, and Santorum supported a flat tax. I think an argument can be made that these candidates were not serious, but they did support it. I don’t know the accuracy of this poll, but it says:
It’s not fringe, but it’s not realistic either.
Avoided costs as a rationale. My assumption was that people approve of this rationale. I do not. You spoke of it favorably - therefore my assumption was correct.
It creates an incentive to be poor. Let’s say the poor highschool person that is paid has a cutoff of X level of poorness to receive this subsidy. The person standing next to them is at X+1, and all other things are equal. The X+1 person receives no subsidy, and the X person does. That is a moral hazard.
There’s a difference - but I don’t care about it. The reward for not committing crimes is you aren’t imprisoned. I don’t care that it costs more to imprison people who behave badly. A bribe that is lower than the cost of imprisonment is still a bribe. The saying is relevant because it encapsulates the principle that justice must be done regardless of consequences.
I personally am not in favor of the current treatment of carried interest. But the idea of calling things loopholes is the same as calling things judicial activism. It’s a loaded term that is rarely accurate. Call it a bad law and that’s fine with me.
I voted for Jerry Brown as CA governor. I didn’t vote for McCain because the Republican party needed to be repudiated for their approval of torture. I live in CA - there’s not many pro-gun Democrats. If I see one that is more pro than the Republican alternative, that’s the thing that will make me vote for them. And on this board most of the arguments in favor of liberal positions I agree with are made by others and I don’t feel the need to contribute to the chorus.
Unless this subsidy makes the poor person richer than the non-poor person who doesn’t receive it (and it could be fashioned so it never does), then it’s not an incentive. Perhaps it’s making the disincentive to be poor lesser, but that’s not the same thing (and the same argument could be made for soup kitchens – it makes it slightly less difficult to be homeless, but that doesn’t mean soup kitchens are an incentive to be homeless).
I’m a conservative and my concerns when it comes to policy is how will the transfer of power from one group to another effect the situation with regards to achieving the stated goal the transfer is supposed to address? What are the unintended consequences? How does the environment of incentives change? Was the process of transferring power a legitimate transfer?
I’m hard pressed to find examples of power transfers to the ruling class for votes from the so-concerned class to work as advertised.
With respect to single mothers or single fathers for that matter. Help away. If the program can be improved fix it or replace it with one better as data of efficiency is collected. Try that in practice and get called “racist” or 'you hate the poor!" Which reveals the true motives. It’s not about fixing a problem. It’s about being seen as a savior in order to gain or maintain political power.