Tax loophole of the week.

As one who is for a more progressive tax system than what we currently have -- throw in sales tax and gas tax and property tax with America's (relatively progressive) income tax, and the poor pay about the same percentage as the rich -- I am against most of the tax breaks and loopholes that are available only to those who own stocks and mutual funds, which for obvious reasons are almost exclusively the domain of the wealthy.

But, um, as long as those breaks and loopholes are there, it's moral to use them, right? There are certain mutual funds, such as the USAA Tax Exempt Virginia Bond Fund, that invest solely in bonds sold by single-state municipalities; the Virginia Bond Fund, for example, holds bonds sold during the building of the Richmond convention center, bonds for civic improvements in Alexandria, bonds for civic improvements in Hanover County (just north of us), and such. A pretty cool (and safe, as long as Hanover County doesn't go bankrupt) investment, yes? But you don't know the third of it: As a Virginia resident, any money Kim and I would make from this mutual fund is doubly tax-deductible: We would pay neither state nor federal taxes on our earnings, per federal law. (The federal law was created vis-à-vis the purchase of these bonds rather than mutual funds, but it holds for mutual funds as well.) A very nice loophole for Kim and I, and it ought to be closed up.