While peddling the ludicrously named Inflation Reduction Act on CNN this past week, Sen. Joe Manchin claimed that Democrats were merely trying to “close the loopholes and collect the taxes that.
While peddling the ludicrously named Inflation Reduction Act on CNN this past week, Sen. Joe Manchin claimed that Democrats were merely trying to “close the loopholes and collect the taxes that are owed to the Treasury and the United States people.”
In Washington, a “loophole” is a euphemism for a perfectly legal policy that Democrats have decided they want to regulate or tax. The word “loophole” suggests that some ambiguous wording or omissions in the text of a bill have allowed people to exploit the law. Few of the Democrats’ “loopholes” meet this definition. Indeed, in most cases, the “loopholes” they’re talking about were deliberately written to exist in their present form.
Take the “carried-interest loophole,” which intentionally functions in tax code as a means of incentivizing investment, risk and “sweat equity” — ownership stakes generated through work rather than just capital investment. Manchin might be looking for ways to raise “revenue” so he can tell constituents his bill won’t 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% of private equity investment went to small businesses in 2021).
