Not so much a loophole, but back in the 50s all kinds of income were treated the same which meant you could write off your income against your investment losses.
I think it's naive to assume that rich Americans back then weren't working the system. If it was so great, why do we tax different kinds of income differently now?
I have always believed that the majority of the complexity in the tax code is derived from lobbying by special interests to lower taxes on their specific sort of income.
Lately though it seems like tax filing companies have been the ones primarily responsible for sustaining the complexity of the tax code - though whenever someone's particular benefit comes up that group tends to get pretty vocal (i.e. exemptions for SALT taxes and home owner/child credits)
