Re: Who Knows Tax Law?
The reason is simple. Everyone wants the simple tax where you list your income and calculate your tax easily with one or several percentage rates (depending on whether one believes in a flat tax or progressive system)
The hitch comes because most people believe certain levels of income and certain things should be exempt from taxes, or taxed at a different rate. Or the government wants to encourage certain behaviors like saving for retirement or your kid's college education, upgrading your home to be more energy efficient or use renewable energy, giving money to charity, etc. Once the door has been cracked open to deductions, there will be more and more of them as time goes on. Some of them, even if well intentioned, will end up allowing certain people to pay little no tax, so when that comes to light that's seen as a problem by those who are paying full whack and the tax code must be fixed to prevent that. And eventually you end up with the mess we have in the US, and you guys over in Blighty no doubt have as well.
For corporations it is a lot more complicated, because you can't tax based on revenue. Well, I suppose you could, but that would pretty much eliminate all low margin businesses like grocery stores or restaurants, where expenses are typically 90%+ of their revenue. So once you accept that you must tax on profit, the question is: how do you calculate profit? Well easy, revenue minus expenses, but then people get clever and say certain things should be expenses - if you buy a new car for your business expected to last years they'll want to depreciate it over its expected lifetime instead of taking the full cost off this year's revenue. CEOs are getting paid too much so you only allow deducting the first $1 million of salary, which leads to them getting compensated in other ways with options so you have to come up with even more complicated rules about how to handle stock based compensation.
Then it is further complicated by that fact that many companies do a lot of business overseas, where they have their own tax laws and companies have to file taxes in many different countries, and something that is a deduction in one country is not in the other and vice versa so minimizing your tax burden becomes a super complex problem that is worth paying people a lot of money to solve. When things are that complex of course loopholes will eventually be found.
And that ignores the problem of companies lobbying for favorable tax treatment, or doing special negotiations for special treatment like Apple did with Ireland.