Bird-Feeders Maybe?

The final wording of the tax bill that Congress will vote on next month is still being woven together by staff experts, but already the hunt has begun to find holes in its loops that will let the deserving rich keep more of what they’ve got. Tax advisers are polishing their magnifying glasses, preparing to study the final bill with the same intensity that Sherlock Holmes gave to examining the scene of the crime. Some loopholes, otherwise known as tax shelters, undoubtedly will be found, not necessarily because they were deliberately put in but because devising a tax code that is air-tight and tamper-proof has proved to be virtually beyond the wit of man.

The somewhat frantic search for tax dodges is under way even now. From what we read, the high-priced advice at the moment is to get into something called cattle-feeding shelters. Just what these involve isn’t entirely clear, but apparently they have something to do with the fact that, like everyone else, cattle like to eat, and if you play your cards right you can take a tax loss by getting in on the ruminative action. As we understand it, cattle-feeding shelters have been around for a long time, which probably says all that needs to be said about why tax reform is a good idea.

Contrary to everything that you may have read, real-estate tax shelters are also still being touted, but only--and here is the really revolutionary thing--if they have a chance to make money. This is a switch on the old rule, which allowed someone who chucked $30,000 into a certain kind of real-estate shelter to claim a $2-million tax loss, thereby obtaining the wherewithal to buy a dairy herd whose surplus milk could be sold to the government for a nice profit. The spoilsports in Washington have decreed that there will be no more of that.

A major purpose of tax reform is, of course, to try to steer investment money away from ventures set up to lose money and toward productive ends. But even with greatly reduced tax rates it appears that some people remain determined to dump their money into exotic if not bizarre enterprises, looking for losses to offset other gains. Fears have already been expressed that the cattle-feeding shelter market is about to become saturated--after all, the beasts can eat only so much--forcing latecomers into a frantic search for the even more far-out. Somewhere in the 1,400 or so pages of the new tax code, we suspect, the really far-out will be found. Somewhere, somehow, someone will come up with the gimmick that will go on making tax avoidance worthwhile.