Big Loophole in Snyder's Plan to End Taxes for Business

Rick Snyder's plan to load down poor people and senior citizens with higher income taxes so businesses won't pay any at all is supposed to create all kinds of jobs. Exactly how, is unclear, since jobs are created when there is a demand for what is being produced and sold. And if poor people and senior citizens have less money in their pockets, they will be able to demand and buy less.

But one thing it will create is a big giant loophole for business owners. And here's the reason. Profits in the business they own will be untaxed. Salary that they pay themselves will be taxed. So it will be even more to their advantage to claim as many business expenses as they possibly can, and reduce their salary and personal income taxes.

The car that most people pay for out of their salary? That's a business expense, along with the license plate fee, insurance, gas, and maintenance. Cell phones? Gotta have one for the business. Home computer? The business just needed a new one so the "old" one can come home. Country club membership and monthly dues? That's essential for networking so it's paid by the business rather than with salary. If the business is a restaurant, the owner can bring home a couple steaks bought wholesale instead of running to the grocery store. There will be all sorts of additional creative accounting to keep money inside the business and not paid out in salary to the owner.

That income will never be taxed, no matter how many demands the business makes on public services -- university graduates educated at public expense, clean water, law enforcement, and so on. Senior citizens receiving pensions, though, have paid income taxes their entire lives. They're getting a break at the end, not a permanent free ride with a big loophole.