Re: Gibson raided
I think a lot of the loop holes are related to certain industries that get special tax credits or exemptions for the work they do. I'm at a loss to name any but I think it more relates to corporations in certain industries (especially renewable energy).
Additionally, wealthy people often gift money to family members or use other means to essentially hide money they've made in interest or otherwise. Often it's just a matter of being able to afford a lawyer that knows how the system works.
How effective is this? I personally know people that do it, often every tax year, to skirt taxes. Is it legal? Yes. Is it ethical? *shrug*
The point is this is the inherent problem with income tax systems. Tax laws are enacted, special interest gets a loophole, revenue goes down, rate goes up a little, wash, rinse, repeat.
Eventually you get to the point where certain people/organizations pay no tax at all and others can't start a business because its too costly to comply with the laws and current tax code.
I'm in favor of a sales based tax because it can be applied much more fairly (IMO). The other reason it has advantages is that in theory prices should go down. If the manufacturer, distributor, wholesaler, and retailer all do not have to pay income tax on their profits, they don't have to charge as much for their product. Another clear advantage is that the only people that file tax returns are the collectors (retail sales points). This drops the number of returns from a hundred million or so down to several hundred thousand or a million or so. This could vastly reduce the size and power of the IRS.
