It's particularly nice for a liberal to find this mistake occurring when conservatives/libertarians are the ones designing the regulations. That's the case in Kansas, where governor Brownback has pushed tax reforms and cuts, intended to prove the old supply-side theory that less regulation and lower taxes will encourage growth and fill the government's coffers. Jared Bernstein has this quote from a Wall Street Journal article (behind pay wall):
The WSJ piece points out that the number of entities taking advantage of this new loophole [not taxing small business income "passed through" to an individual] turned out to be 70 percent above the state’s projections.
Steve Moore, a key trickler that pushed the plan in Kansas, didn’t see that coming:
“Sometimes it was legitimate, and sometimes it was a gaming of the tax system to pay the zero rate, so that loophole has to be closed,” he said. “Unless you have some rules about this, people really will shift income and they’ll find ways to legally avoid paying tax, and that was never the intention.”