The Corner

Politics & Policy

What’s in a Loophole?

If I can take a moment to discuss something other than Manafortapalooza, I have a pet peeve. In the debates over tax reform, I keep hearing pundits refer to things like the home-mortgage-interest deduction, the tax treatment of 401(k)s, or the deductibility of state and local taxes as “loopholes.”

My understanding of a loophole is some unintended ambiguity or oversight in a law or regulation. (At least, that is, in this context. Originally a loophole meant the slit in a castle or fortress that archers shot arrows out of). None of these things are loopholes — they’re policy. When it comes to all of the above policies, Congress meant to do that. I’m in favor of some of the reforms being discussed, but we should be clear we’re not talking about closing loopholes for most of them. Scrapping the Alternative Minimum Tax might qualify because it was never intended to capture so many taxpayers. But if we get rid of the state and local tax exemption — which I favor — that’s simply a change in policy.


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