(Tax Policy Center)

(Tax Policy Center)

David Kocieniewski calls a certain multimillion-dollar windfall accruing to certain corporations a consequence of a "quirk" in the tax law. As if it were an accident that the companies will siphon tens of billions of dollars away from the U.S. Treasury over the next 10 years. The Japanese have a word for this kind of thinking, sotegai, which roughly translates as "unforeseeable," or "outside the imagination."

Like hell.

Here's the deal: After the stock market took a dive in 2008-09, many corporations gave executives extra-large stock options. Because of the way the law is written and because the stock market has recovered significantly, companies can take larger tax deductions for granting those options than the options were worth when they were issued. Thus, instead of paying the 35 percent corporate tax rate that so many 1%ers whine incessantly about as inimical to job creation and competition, not to mention fairness and liberty, they pay a good deal less.

You can find many such obscure items, as Kocieniewski notes, "buried" in the tax code. Like the "Romney Rate" for money made from breaking up companies, selling the parts and laying off employees. But these items didn't get there by a quirk or by accident. And their results are certainly not sotegai.

In Washington, where executive pay and taxes are highly charged issues, some critics in Congress have long sought to eliminate this tax benefit, saying it is bad policy to let companies claim such large deductions for stock options without having to make any cash outlay. Moreover, they say, the policy essentially forces taxpayers to subsidize executive pay, which has soared in recent decades. Those drawbacks have been magnified, they say, now that executives—and companies—are reaping inordinate benefits by taking advantage of once depressed stock prices.

The fact is that tax lobbyists have for decades been paid big bucks to get these laws written exactly the way they are written to produce exactly these kinds of windfall outcomes. Since the Dutch traded the first share four centuries ago, stock markets have plummeted and soared. So the outcome for this particular tax break was not sotegai, but inevitable.

What else is inevitable—unless Americans who subsidize this kind of nonsense put a stop to it, that is, "persuade" their representatives to put a stop to it or replace them with representatives who will—is the siphoning of the Treasury and demolition of government programs, including the social safety net. As pointed out Thursday, the lobbyists are gearing up for yet another round of writing the tax code in ways that give corporations more breaks.

It's said they'll accept elimination of these breaks for a lower corporate tax rate, say Paul Ryan's 25 percent or Newt Gingrich's 12.5 percent. Believe that if you want. But the loopholes have not been eliminated as the corporate rate has been cut over the past six decades. And there is no reason to believe the code will lose all its "quirks" in the future without a concerted effort on the part of those of us who are forced pay the bills and watch government programs demolished or hamstrung because of them.