Sunday, November 27, 2011

Stark Truth About Our Arcane Tax Rules and Why They Are An Inescapable Labyrinth

As followers of this blog are aware, General Electric was able to avoid having to pay any taxes on the more than $14 billion that it earned in 2010. Its approximately 57,000 page tax return claimed and took advantage of many -- but by no means all -- of the tens upon tens of thousands of credits, exemptions, deferrals, and special deals unavailable to, and mostly unknown by most American and smaller business enterprises. 

Only the very big and powerful qualify for such deals. They can and do hire the high priced lobbyists who get the obscure breaks enacted into the nation's tax laws and regulations, and the equally expensive legal and accounting experts who know about their existence and how to take advantage of, and use them.

Don't expect Congress to change the system or to simplify it. Its complexity serves the interests of the lawmakers in two ways.

First, it is the stock in trade of our politicians. In exchanges for campaign contributions and many other favors they enact multiple obscure provisions to benefit their rich and powerful supporters as well as cudgels to punish their foes, or they authorize their bureaucratic minions to do so. In addition, they swap supporting votes with their fellow lawmakers to do the same.

Second, the magnitude and complexity of the entire structure, the overall system, makes individual amendments of, and additions to it too insignificant to notice. It thus shields what is being done from public notice even though the cumulative effect of such minutiae has created and is inexorably expanding a monstrosity.

To expect our "public servants" to give up this stock in their perfidious trade is about as realistic as expecting one's local supermarket to forgo the food business.

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