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Tax loopholes are still loopholes even if you agree with them.

• SpicyLemonZest 3y ago
  I don't think that's true. Would you call the EITC or child tax credits loopholes?
  • ceejayoz 3y ago
    Intentional provisions with intentional results aren't really loopholes. (Some will argue they're bad policy.) The fact that Jeff Bezos can manage to quality for a child tax credit is a bit of a loophole, though. https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax https://www.propublica.org/article/the-secret-irs-files-trov... > In 2011, a year in which his wealth held roughly steady at $18 billion, Bezos filed a tax return reporting he lost money — his income that year was more than offset by investment losses. What’s more, because, according to the tax law, he made so little, he even claimed and received a $4,000 tax credit for his children.
    • SpicyLemonZest 3y ago
      Almost all tax loopholes people talk about are intentional policies with intentional results. The thing you're quoting is very much an example - it's very much by design that capital gains are offset by capital losses and you're taxed only on the net. (I should note that the article is being imprecise, and ordinary income is much harder to offset this way.)
      • ceejayoz 3y ago
        The people who wrote in the $200/400k income limits almost certainly did not plan for that to be used by Jeff Bezos. You might argue that they considered the possibility and decided closing the loophole would do more harm than good (means testing frequently does this), but it certainly wasn't the intention of the credit to give $4k to the world's second wealthiest person.
        • ryandrake 3y ago
          I think we can all agree legislators need to better "red team" their laws, and try to predict how people will get around the spirit of the law by using technicalities in the wording of the law, so that better words can be enacted. If they did not intend for Bezos to take advantage of income limits, they should have written the law better so that he couldn't.
  • Retric 3y ago
    Yes. Again agreeing or disagreeing with policy doesn’t change if something is a loophole or not. Handouts because someone is installing rooftop solar are still handouts even if they get baked into tax policy.
• orangecat 3y ago
  Not paying taxes on money you haven't received is not a "loophole".
  • Retric 3y ago
    In other situations taxes apply to money you haven’t received. Exercise an options contract and you’re taxed before you sell the shares. At that point you could still ultimately lose money just as with capital gains.
    • seanmcdirmid 3y ago
      RSU grants are taxed even if you haven't sold the stock you are granted. But they commonly deal with this by selling some stock right away to cover tax liabilities. The problem with exercising an option is that the stock might not be traded or can't be sold, then you have to pay the tax out of pocket, since Uncle Sam doesn't want some private non-traded stock.
      • Retric 3y ago
        Sure, but in comparison the unrealized capital gains loophole just becomes more clear. Property taxes based on assessed value are common for other asset classes like cars and land.
• javagram 3y ago
  Unrealized capital gains aren’t income, so it’s not a tax loophole.
  • ceejayoz 3y ago
    The ability to borrow virtually indefinitely against them (and other tax deferment techniques) is a tax loophole. https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax https://www.propublica.org/article/the-secret-irs-files-trov... > So how do megabillionaires pay their megabills while opting for $1 salaries and hanging onto their stock? According to public documents and experts, the answer for some is borrowing money — lots of it. After decades of avoiding taxes on it, there's a final loophole! > The notion of dying as a tax benefit seems paradoxical. Normally when someone sells an asset, even a minute before they die, they owe 20% capital gains tax. But at death, that changes. Any capital gains till that moment are not taxed. This allows the ultrarich and their heirs to avoid paying billions in taxes. The “step-up in basis” is widely recognized by experts across the political spectrum as a flaw in the code.
    • wmf 3y ago
      Step-up in basis is capped (somebody forgot to mention that) so it benefits the rich but doesn't save much taxes for billionaires.
      • ceejayoz 3y ago
        Do you have a a cite for this? Googling "step-up in basis cap" finds very little supporting the assertion, at first glance, and https://en.wikipedia.org/wiki/Stepped-up_basis https://en.wikipedia.org/wiki/Stepped-up_basis doesn't mention such a thing. I think you're may be confusing it with estate taxes. (Which the ProPublica article addresses in the subsequent few paragraphs.)
        • wmf 3y ago
          The step-up itself is not capped but the tax savings are capped by the estate tax limits. If your estate is less than $12M you pay no estate tax and your heirs pay no capital gains tax either; that's the loophole. But if your estate is much larger than $12M it has to pay back your loans, then pay estate tax, then the basis gets stepped up for whatever's left. There's little or no savings. AFAIK.