Itâs Not A âLoopholeâ Just Because Dems Donât Like It
David Harsanyi @davidharsanyi
August 02, 2022
(I hope the all of the citizens of West Virginia, that Manchin betrayed you all for green energy and more money in his bank account. The only dem I had a certain amount if respect for. They all betray in some way)
While peddling the ludicrously named âInflation Reduction Actâ on CNN this past weekend, Joe Manchin claimed that Democrats were merely trying to âclose the loopholes and collect the taxes that are owed to the Treasury and the United States people.â
In Washington, a âloopholeâ is a euphemism for some perfectly legal policy that Democrats have decided they want to regulate or tax. The word âloopholeâ suggests that some ambiguous wording or omissions in the text of a bill have allowed people to exploit the law. Few of the Democratsâ âloopholesâ meet this definition. Indeed, in most cases, the âloopholesâ theyâre talking about were deliberately written to exist in their present form.
Take the âcarried-interest loophole,â which intentionally functions in tax code as a means of incentivizing investment, risk, and âsweat equityââownership stakes generated through work rather than just capital investment. Manchin might be looking for ways to raise ârevenueâ so he can tell constituents his bill wonât add to the deficit. And those who subscribe to zero-sum populist economics might want to punish private equity and redistribute wealth (though the American Investment Council says more than 74 percent of private equity investment went to small businesses in 2021). Whatever the case, no matter what Manchin says, none of the new taxes found in the reconciliation bill are now âowed to the Treasury and the United States people.â
That goes for the 15 percent corporate minimum tax, as well. First off, it needs repeating that corporate taxes are passed on to consumers or employees. Moreover, manufacturing companies, who spend lots on up-front capital investmentsânot the euphemistic âinvestmentsâ preferred by politicians when talking about subsidies, but the real kindâare the ones who are going to end up being hurt (the Tax Foundation says this tax will kill 27,000 jobs). The bill Manchin supports will also reinstate the long-expired, failed superfund tax on crude and imported oil, which will also be tacked onto your energy bills. Itâs unclear what âloopholeâ Manchin is claiming the superfund tax is closing.
That said, the âloopholeâ charade isnât new. Itâs been most effectively deployed in attacking gun rights, which, letâs face it, the left sees as a loophole in the Constitution. There is no âgun-show loophole,â since the law was written so that only commercial transfers, and not private ones, would require a federal background check. If the Senate rejects your efforts to accommodate your preferred background check policies, as it did in 2013, itâs not a âloopholeâ itâs just âthe law.â There is no âCharleston loophole,â since the shooter didnât exploit existing law, he took advantage of a data entry mistake. The three-day waiting period for background checks was negotiated and then intentionally written into law that way at the time of passage. And there isnât any âNo-Fly List Gun-Ownership Loophole,â either. There are the Second, Fourth, Fifth, and Sixth amendments of the Constitution.
Framing these debates as a struggle between those who support closing âloopholesâ and those who want to keep them, as the media always does, is a way of circumventing debate and advocating for policy. Itâs intentional. After all, the word âloopholeâ strongly insinuates a policy is unjust. Reporters wouldnât call laws that legalize abortion into the ninth month of pregnancy â as a number now do â a âviable-baby termination loopholeâ simply because Republicans say it is.
Now, itâs a senatorâs prerogative to vote for a bill that pumps hundreds of billions more into an economy experiencing spiking inflation or raise taxes on consumers, energy producers, and manufacturers during a recession. What he isnât doing, however, is closing any âloopholes.â
https://thefederalist.com/2022/08/02/its-not-a-loophole-just-because-dems-dont-like-it/