,
6 tweets,
2 min read
Read on Twitter
One thing not clear from this excellent Times read on the abuse of the "opportunity zones" tax break was whether the potential for abuse was sheer incompetence or deliberate malfeasance 1/ nytimes.com/2019/08/31/bus…
Worth remembering that the tax bill was rushed through without hearings or any time for analysis, and it was widely — and correctly — predicted that this would create huge loopholes 2/ nytimes.com/2017/11/13/bus…
Also, any time you try to promote some kind of economic activity with differential tax rates you create the potential for abuse, which only very careful drafting and enforcement — neither forthcoming from Trump etc — can contain 3/
Trump's proposal to index capital gains to inflation — even aside from giving the vast bulk of the benefits to the wealthy — falls into that category. Bc capital gains would be indexed, but other things not, huge possibilities for tax arbitrage 4/
Suppose inflation is 2%, u can borrow at 2%, and have an investment that yields 2% in capital gains. Borrow to invest; this generates no taxable income, but since the full interest cost is deductible, gives you a nice refund from the IRS. 5/
So there would be huge abuse, huge giveaway to the wealthy, and job creation only for accountants and tax lawyers 6/
