I was able to take advantage of a loophole and pay no federal taxes for a year. I only had to spend that year in Iraq. Easy peasy.
What an odd thing to say. Of course I’m differentiating between legal acts. That’s so blindingly obvious that it’s barely worth mentioning. I mean, helping little old ladies across the street and yelling scatological insults at little old ladies are both perfectly legal, and yet most of us differentiate between them.
I prefer to combine the two activities.
An interesting question, and part of why I started this thread was to get people’s input on that type of issue.
I don’t see any point in trying to rigorously define “weaseling” and “loophole”, but I do feel like there’s a pretty clear moral/ethical difference between something like the mortgage interest deduction, which is clearly designed to encourage home ownership, and the situation in the OP. Do you disagree?
What you are defining as moral isn’t universally true. I think the mortgage interest deduction is a terrible program and responsible for a lot of the current economic problems. It also rewards bad behaviour, that is paying more interest, why would we want people to do that? Why not make the portion of your principle deductible? That would encourage people to actually build equity, instead of paying interest only loans. Suddenly a 15 year mortgage looks way better than a 30.
Few other countries have the mortgage interest deduction. In Canada rent was deductible for people in certain income brackets, and home ownership rates did just fine.
Adopting families tend to average older and having been married longer than families who bear children within the marriage, because almost nobody adopts at age 23, and few couples adopt right after getting married. And these days, adoption ain’t cheap, so you’ve got to be financially stable to go that route. Correct for those things, and I bet any adoptive-parent advantage goes away.
And if it was really about investing in future taxpayers, we as a society wouldn’t be cutting back on teachers, Head Start, etc. right now.
ETA: not to mention, I would guess that only for a relatively small fraction of potential adoptive families at the margin does this tax break make the difference. My wife and I would have adopted with or without the help of our fellow taxpayers, and I suspect that’s true of most adoptive parents.
At any rate, the important thing with respect to this discussion is that I regard the adoption tax break as a really stupid tax break that serves no public purpose, and I took the break anyway.
I disagree. You are comparing helping a LOL cross the street by holding onto her left elbow, with helping a LOL cross the street by holding onto her right elbow. And you seem to think one is preferable.
If it’s simply a matter of going to the accountant and checking a box and getting money back, I’d probably do it.
If it’s a matter of doing stuff outside of that to take advantage of a one-time-only exception, I probably wouldn’t. I don’t do stuff now to minimize my taxes, so I don’t know why I’d start.
[QUOTE=BobLibDem]
A good American pays his fair share.
[/QUOTE]
So if paying no taxes is not paying your fair share, and a good American pays his fair share, then those who pay no taxes are not good Americans. Got it.
Regards,
Shodan
I realize it’s unpopular, but of course I would pay taxes, and probably at about my current rate. I feel it would be unethical for me not to support the infrastructure and social systems of this great land of ours.
Yes, I’m serious. And I say this wagering I pay more taxes than 99% of this message board.
I’d even not feel bad paying more provided I had iron-clad assurance it was not squandered, wasted, or stolen.
I do because the OP is vague as to the nature of the rule.
Is there a similar credit for having a child via childbirth? Maybe that’s what the adoption credit is meant to parallel?
Although, the government essentially paying someone to breed strikes me as a bit icky…
I think for it to affect JR’s solvency to that level, I’d have to be making a shit-ton more money than I ever have.
Even when I was making a middle-class-esque income, it was never so much that I’d expect a loophole to give me back, say, $10,000 (or even $5000). I’ve never had that kind of tax burden in any single year. So, if I’m currently solvent (as much as I’ve ever been, which is “enough” but not any more than that) and taking advantage of a loophole requires moving my money around in ways that I likely don’t understand – thus requiring me to pay someone like a financial adviser to do it, and likely involving tying up some amount of money somewhere (likely a fairly large amount, which to me is anything northwards of about $300, and I can imagine something like this would require a four-figure investment, at least) so I can’t spend it on bills, which I have never had enough to do… is all that hassle and extra money spent worth it for a couple hundred extra bucks? I doubt it. Taxes already confuse the hell out of me, takes a long time, and I do it myself because I can’t afford to pay anyone to do it. I couldn’t be sure I was even doing the loophole correctly.
And yes, I still believe that if I make enough to live at at least a low level of comfort, I have an obligation to pay into the system. I get all sorts of benefits from doing so, that are just as important as money. I’d pay more in taxes for true UHC – because I’d bet that it would amount to less than I’m paying for healthcare now.
Of course, as I said, if there was a way for me to swing it financially this year, I probably would take advantage of it, because I have no idea where the money for our tax bill is going to come from. Being in the red is a great motivator to do things that are otherwise too much hassle for an immediate benefit that would come at the cost of other, further removed benefits.
You mean, the nature of the “loophole”, the nature of the law or confluence of laws that allows some subset of people to pay zero taxes? I’m not sure what the relevance is… what are you getting at?
To repeat myself, for this hypothetical:
(a) the loophole comes about because of a totally unexpected interaction between 4 or 5 different laws passed at different times with different motivations
(b) it is 100% clearly legal
(c) it is 100% clearly unintended by the legislators who passed the laws, and in fact none of them were even aware of it until much later on (heck, it’s possible that the loophole existed for 5 years, but no one actually noticed it until this year)
(d) it has already been closed for next year, but remains open for this year
But that’s a very different issue, which is whether the mortgage deduction should exist at all.
As of right now, the mortgage interest deduction does exist, and its purpose is (more or less) to encourage home ownership. So when a family uses that deduction to become home owners, they are quite directly using that deduction precisely for its intended purpose. That’s orthogonal to whether or not it’s a good idea for that deduction to even exist.
All this could just as easily be applied to the mortgage interest deduction. It wasn’t put in place to encourage home ownership, it’s an artifact from when loan interest was tax deductible as part of a business, back before individuals would take out loans or have mortgages. The rest of the deductions were eventually removed, but mortgage interest was left. Encouraging home ownership had nothing to do with the original intent of the law, and it’s questionable whether or not it’s doing that now. It’s now just another loophole that lots of people make use of to significantly lower their tax rate, but a loophole that you see as good and moral, even though it its the rich that benefit from it the most.
So tell me, what if law makers decided tomorrow to get rid of the mortgage tax deduction for 2014, citing that it’s harming the economy and not doing what it was intended to do, would you continue to claim it on your 2013 statement?
Personally, it really bothers me that politicians fail to acknowledge the law of unintended consequences, as I showed with the Economic Stimulus Act. They try to design tax policies to help people that are popular, and hurt people that aren’t, and the result is a lot of people in the middle getting screwed.
In Illinois, you are allowed to estimate use tax based on (I think) your income. So when I go through the TurboTax questionnaire, I usually just go with that number (TurboTax auto-calculates it for you) rather than calculating anything. I figure it’s close enough. And faster than digging up receipts for various minor purchases.
The exception is those years when I know I haven’t made any internet purchases. At that point I’ll put down that my use tax is zero, because as far as I know, it is.
Come to think of it, I don’t remember TurboTax asking me about use tax this year… ?? Given that I got a refund, maybe Illinois didn’t care to find out they owed me more money. 
I did not know that, and (assuming you’re right) agree that my analogy was flawed.
That said, I still think that the history of the mortgage interest deduction has fairly little to do with the topic at hand, unless you’re claiming that there are NO deductions of the type I’m discussing. Heck, I’d say that charity deductions fit pretty well, unless they have some dark side I’m unaware of.
I still disagree. There are lots of situations in which two situations are LEGALLY identical but we view them totally differently.
Note, by the way, that I’m not saying “these two situations are ethically/morally different, therefore someone who takes advantage of one deduction is acting unethically, whereas someone who takes advantage of this other one is acting ethically”. Rather, I’m saying that I think it’s reasonable (although not necessarily necessary) for someone to use different ethical/moral factors while weighing their decision making process in case A vs. case B, if that makes sense.
I don’t believe there are, but then again I’m not a tax expert and the US tax code is freakin massive so maybe there is one deduction in there that no one knows about and is actually being used properly. What it really comes down to is that there are deductions you like, which are good and moral that people should use. And there are deductions you don’t like that evil people use for evil purposes, and those get labeled loopholes.
The other common meme on this board is that if someone in the 99% uses a deduction to avoid paying taxes it’s good. If someone in the 1% uses a deduction it’s evil. Small businesses should get tax breaks, we like those. Oil companies are evil, they shouldn’t get tax breaks.
We want hard working Americans to save for retirement, so we tax capital gains lower. But then a rich person earns capital gains and we break out the pitchforks.
What the scenario in the OP really says is that there is someone you don’t want to get a tax break. You like people who have parents that were veterans. And you like people that own property in more than one state. But for some reason you really hate that there is a group of people who qualify as both.
Very dark.
Why are people drilling the OP about the loophole terminology of the hypothetical when there are people in the thread who are clearly stating they see a difference in various deductions? This isn’t a situation where no one can even comprehend the OP’s question, so what is the relevance?