So I presume you don't think businesses should be able to deduct expenses either.
In the case of taxes, how is it reasonable to tax someone on money they never even see? If you have no choice but to hand over 6% of your income to the state, shouldn't the state pay the federal income tax on that part if anyone does?
By your logic even if you never get the money you owe taxes on it. That really is ridiculous.
I actually do not think businesses should be able to deduct interest (I think anything that encourages debt is stupid), but that is neither here nor there. There are TONS of things you cannot deduct to that make way more sense. For example, if I invest $1,000,000 in company X and it falls in value to $500,000, I can only deduct $3,000 of that against income this year! I can't deduct interest on my car. I can't deduct my sales taxes paid (if I deduct state). I can't deduct credit card interest. I can't deduct personal loan interest. I can't deduct repairs on my house. I can't deduct investment projects in my house. We need to get government out of steering us to do what it wants.
By your logic even if you never get the money you owe taxes on it.
Uh, no, that's not what I said. But even if you were "right", why isn't it the other way around, anyway? Why isn't it the state that lets you deduct from federal? Pretend this deduction didn't exist today and then rationally argue for it over just cutting the statutory rate.