Closing Loopholes Tightens Their Grip

With the fiscal cliff fast approaching, all eyes are on Washington as the two major parties attempt to strike up a deal on taxes and spending. The fiscal cliff is the point in which the Bush-era tax rates and the spending mechanisms defined in the 2011 Budget Control Act expire, resulting in extensive across-the-board tax hikes and spending cuts. The nation is set to fall off this cliff on January 1, 2013 unless the Democrats and Republicans agree to a solution this December.

The problem of the fiscal cliff emerged out of the previous debt ceiling deal. Since the deal was not a long-term solution to the nation’s debt troubles, the fiscal cliff was put in place to secure a future solution to the debt problem and scare the public into accepting whatever Washington eventually decrees on the matter. Complaints against the partisanship and division on Capitol Hill have resonated loudly over the past few years but Democrats and Republicans seem to agree on one thing: you are not allowed to keep your own money.

Could anyone have guessed that Democrats and Republicans have found common ground in the face of the impending fiscal cliff? After rounds on the Sunday morning talk show circuit, it is becoming clear that ending “tax loopholes” is something Democrats and Republicans can both happily support. Closing “loopholes” for the wealthiest Americans alone does not even come close to fixing the deficit and it is only a matter of time before both parties attempt to close “loopholes” for the middle class and for all.

Since outright tax increases are unpopular across the political spectrum, Democrats and Republicans have found this nifty little political ploy of arguing for the closing of supposed “tax loopholes” to appear responsible but effectively raising taxes on everybody anyway. In this case, “loopholes” are any of the available exemptions and deductions the average American citizen and business can take advantage of on tax day; this includes deductions for things like charitable giving, credits for things like mortgages and exemptions for things like the money that goes to one’s 401(k). The many tax deductions/exemptions end up balancing out and sometimes even paying out for many American families, resulting in a percentage of the population who pay no tax on their income at all.

According to many within the Republican Party, tax loopholes should be closed to insure that every American has some “skin in the game.” Many GOP members have been quietly singing this song for years while simultaneously boasting to be the champions of limited government and individual rights. The inconsistency here is staggering. The Democrat Party also has a unique difficulty with this issue. Closing loopholes to raise taxes fits snuggly inside the Democratic docket of increasing power and resources to the central government. However, raising income taxes on those who currently do not pay would conflict with a chief Democratic tenet of providing services for the lower classes at the expense of the wealthy. Suddenly many would be required to chip into a system that they have been previously benefiting from at no cost. Such a change of events would not translate well politically.

This argument to close “loopholes” is based on the misconception that the government is the true owner of private property. Few would accept anything but the fact that they have the rightful claim to that which they earn. However, the income tax operates under a false assumption that the government is entitled to every paycheck in America, first taking what it deems fit through the income tax and then appropriating to the rest to the lowly citizenry. The view that tax exemptions and deductions are “loopholes” or another kind of sneaky doing is a fallacy since they merely provide a way for the average American to hold onto more of what they rightfully own. If anything, the very “loopholes” that the Democrats and Republicans wish to close should be expanded so people can keep more of their own property at no risk of retaliation from the State.

Nothing works better to bring both Republicans and Democrats together in a warm embrace like a good-old-fashioned crisis. Unfortunately, bipartisanship seems to hurt the nation more often than not – as is the case with the War on Drugs, No Child Left Behind, the Patriot Act and the National Defense Authorization Act to name a few – and broadening the tax burden to more Americans will likewise do nothing but make a bad situation worse. This two-party scheme to deprive Americans of the lawful ways to keep more of their own money is no answer in a free society.