Just about nobody, persons or institutions, is eager to pay their fair share in taxes, yet, this nation depends upon tax revenues to take care of needed national matters, in which, it is therefore incumbent upon those individual taxpayers as well as corporate taxpayers that everyone thereby pays their fair share. The thing is though when the tax code is rewritten and modified so that one entity gets more favorable treatment than another entity, this seems demonstrative of an unfair tax policy. For instance, individual taxpayers that have taken out personal loans such as done with credit cards, or for a vehicle, are not permitted to utilize that interest expense as a deduction on their taxes. Yet, a business enterprise is permitted to take out loans and thereby pay interest on their loans, in which, that typically is a deductible expense when it comes to their taxes. In short, individual taxpayers that have consumer loans are precluded from the interest on those loans being tax deductible; whereas, businesses that take out loans on behalf of that business enterprise have that typically being viewed as tax deductible.
It would just seem logical that interest expense, whether for a consumer or for a business, should essentially be treated the same, because interest expenses, all initiate from the borrowing of money, and although the purpose behind that borrowing of such may be different, that shouldn’t be the relevant point, for interest has been paid and to therefore to determine that certain interest expenses are somehow not deductible; whereas, other interest expenses for businesses or home loans are deductible, is unfair. It could be fairly argued that interest expense, in whole, should either be fully deductible, or it should not be deductible, at all. Of course, if the tax code were to eliminate interest expense as no longer being deductible for those who own a home and its corresponding mortgage interest expense, there would be some real howling, from homeowners. So too, businesses that are quite adept in the borrowing of money will do so, because they can utilize that borrowed money, for instance, to buy back their own stock, and are permitted thus to write off that interest expense of what they are paying to borrow that money, so if that was eliminated, they too would howl.
The bottom line is that those who take on consumer debt through a credit card, typically have to pay a very high interest rate to do so, yet, they are precluded from deducting that interest paid on their tax return, which doesn’t make any real good sense, because the fact that they are borrowing that money on unfavorable terms, would strongly imply that their monetary position is not strong. That is to say, we have a progressive income tax policy in this nation because it is believed that those who earn more, should pay more, but somehow we believe that those who pay a higher percentage of their income through interest on the loans that they have taken, shouldn’t have the right to deduct any of that; whereas, corporations that are worth hundreds upon hundreds of billions of dollars, are permitted to do so, with impunity. That doesn’t sound fair or right.