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Envy Gap Politics: Media Carps Over Tax Loopholes

August 25, 2008

With the need to inspire envy among Americans, the media is blasting tax loopholes once again. Reuters is reporting with an emphasis on rich taxpayers and companies. Reuters asserts that tax loopholes cost U.S. taxpayers $20 billion yearly.

Reuters falsely claims that the biggest loss in tax loopholes comes from a

“stock option accounting double standard” that allows corporations paying executives stock options to deduct more than their actual expenses.

Reuters then uses United Healthcare as a prime example of corporate largesse claiming a tax deduction of $317.7 million while reciting that this stock option double standard costs the “U.S. Government” $10 billion yearly. Reuters then nitpicks on a practice called “deferred compensation”, a means that allows executives to defer an unlimited amount of pay, with an estimate of costing the “U.S. Government” $80.6 million. Reuters and report writers ignore entirely the debacle of the tax code that, since 1991, allows corporate inversion, earnings stripping and offshore banking which remove far more than tax deductions from the United States economy. The losses are estimated, but not tracked. Based on immense U.S. legal loopholes, the whole lot of corporate conduct is fully legal. So why are writers carping at a small part of the perceived problem?

It is all about election politics as reporters seek to get the ire of middle-income Americans. Meanwhile, the corporate income envy gap grows ever larger. Our politicians have elected to do little or nothing for nearly 20 years while claiming increased taxation on the upper class and corporate bodies. Our political candidates have discussed lowering the corporate tax rate in order to promote the creation of more U.S. jobs, as if the corporate tax rate is really the issue. Remember that the U.S. taxpayer is the “U.S. Government.” Taxpayers pay for the debt that U.S. Government incurs; hence, taxpayers are ultimately responsible for lax conduct of politicians not only morally, but fiscally.

~ E. Manning

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