Why closing tax loopholes is good:  Tax credits, deductions and loopholes distort resource allocation in a market situation because people respond to the differing tax rates and so put more resources into the areas which the loopholes apply to than they would otherwise. For example, current tax credits for investment mean that more resources go into investment than they would in the absence of that credit, as the returns on the placing of resources in this area are higher than others (as it is subject to a lower rate of tax). A government may even set certain tax credits and loopholes which favour certain industries or economic sectors, such as agriculture, on the basis that this is politically useful (in winning votes), when this again distorts resource allocation in the economy. These distortions may prove harmful as they cause certain sectors to be over-valued or over-invested in due to their favourable tax status, to the detriment and neglect of other more highly-taxed areas (for example, manufacturing) which may in fact be the more economically sound. A flat tax would abolish all 'credits' and 'loopholes' (and the politically-influenced government discretion which decides who gets credits and who does not) and therefore restore genuine market conditions without these harmful distortions. [1]  [1] Rothbard, Murray. “The Case Against the Flat Tax”, The Free Market Reader. Auburn. Mises Institute. 1988