Taxes and the GOP walkout of debt ceiling negotiations.

[choff]

In the short term, the rate hikes from a default will benefit people with money in the bank, no incentive to oppose the move from there. The only other silver lining I can see is improved export opportunities for US business, given the devaluation of the dollar. Long term the debt load drags everything down.

[ScottL]

Immelt is Obama's boy (or is that the other way around?) ask them.

Could be, but from my understanding Obama appointed him to the Jobs committee not to the tax committee. It seems more likely that GE is exploiting existing tax loopholes versus getting "this guys is with me" from Obama.

Anybody underhanded enough to support Obama is likely capable of breaking or bending any rule of law to promote their own interests. The Shutting down of Automobile dealerships all across the country has been pretty well demonstrated to be a Fascist like attempt to wipe out opposition businessmen in the industry and supplant them with loyal minions.

I don't follow with automobile dealerships. A downturn in the economy I would think would lead to a downturn in purchasing of high priced items (cars) and as such would put small to mid level dealerships out of business. I don't really see a fadcist attempt to put them out of business, but maybe I'm missing something here.

[Maui]

I think its already been shown that oil companies don't get subsidies in excess of what other industries receive.

You should drop a note to Boehner (or maybe you did and that's why he hasn't brought this up since April):

"We're in a time when the federal government is short on revenues," he said. "We need to control spending, but we need to have revenues to keep the government going. And [oil companies] ought to be paying their fair share."

Even George W called for them to be ended. But time and time again, the GOP blocks attempts to end them.

Calling things like depreciation of assets and losses subsidies are pretty twee of you, don't you think?

This one of those issues where I feel you and your cohorts are terribly hippo-critical. Sure, there are expenses that all businesses get to write off. And, sure, many industries get special breaks and subsidies. But aren't you against them? Your against the subsidies the farm industry gets, right? These are targeted breaks, not breaks available to all industries.

For example, according to the CBO, once you factor in all the tax breaks and subsidies, the effective tax rate on income from petroleum and natual gas structures is just 9.2%. This is compared to farm tractors at 22.7% and computers that end up getting taxed 4 times heavier at 36.9%.

How can you go on about supporting a flatter tax structure, yet stand behind something that flies in its face?

I will admit, that compared to debt we face, that eliminating these subsidies won't make much of a dent. But at a time when we are asking Grandma to give up $ she paid into the system her entire life is it really that ridiculous to stop spending money on handouts to an industry that clearly doesn't need any help? You railed against helping the banking industry when they were suffering, so is your criteria for handing out taxpayer dollars that its okay only if they go to immensely profitable companies? (ie, companies that are clearly not investing their earnings in new jobs?)

[Jccarlton]

I think its already been shown that oil companies don't get subsidies in excess of what other industries receive.

You should drop a note to Boehner (or maybe you did and that's why he hasn't brought this up since April):

"We're in a time when the federal government is short on revenues," he said. "We need to control spending, but we need to have revenues to keep the government going. And [oil companies] ought to be paying their fair share."

Even George W called for them to be ended. But time and time again, the GOP blocks attempts to end them.

Calling things like depreciation of assets and losses subsidies are pretty twee of you, don't you think?

This one of those issues where I feel you and your cohorts are terribly hippo-critical. Sure, there are expenses that all businesses get to write off. And, sure, many industries get special breaks and subsidies. But aren't you against them? Your against the subsidies the farm industry gets, right? These are targeted breaks, not breaks available to all industries.

For example, according to the CBO, once you factor in all the tax breaks and subsidies, the effective tax rate on income from petroleum and natual gas structures is just 9.2%. This is compared to farm tractors at 22.7% and computers that end up getting taxed 4 times heavier at 36.9%.

How can you go on about supporting a flatter tax structure, yet stand behind something that flies in its face?

I will admit, that compared to debt we face, that eliminating these subsidies won't make much of a dent. But at a time when we are asking Grandma to give up $ she paid into the system her entire life is it really that ridiculous to stop spending money on handouts to an industry that clearly doesn't need any help? You railed against helping the banking industry when they were suffering, so is your criteria for handing out taxpayer dollars that its okay only if they go to immensely profitable companies? (ie, companies that are clearly not investing their earnings in new jobs?)

Good try, But this is a report on the capital gains tax. It doesn't have anything to do with oil company taxes. As for grandma, she had plenty of warning that social security was a ponzi scheme and like all such schemes the money is running out, especially when grandma collects 5 or six times what she paid in, in real dollars.

[Maui]

Good try, But this is a report on the capital gains tax. It doesn't have anything to do with oil company taxes.

Huh? This is exactly my point. Its a report on how tax breaks (subsides) affect overall taxes paid. As the report points out:

The variation among asset types generally arises from tax-depreciation rules that deviate from economic depreciation unevenly.

EDIT: Yes, I understand this isn't the oil industry's overall tax rate if that's what you meant. But is still demonstrates breaks the oil industry is receiving that other industries aren't benefiting from.

[Maui]

As for grandma, she had plenty of warning that social security was a ponzi scheme and like all such schemes the money is running out, especially when grandma collects 5 or six times what she paid in, in real dollars.

Where are you getting your figures from? Do they account for inflation?

In the mean time, please study up on what a Ponzi scheme actually is: Ponzi Schemes vs. Social Security

[TDPerk]

kitesman, you didn't catch any fish.

Where please?

I believe it was earlier in this thread, it certainly was in one of these threads. If you didn't see it, sorry. If you didn't believe it, I can't help that.

Oil in the ground is in no way a capital "EXPENDITURE" It may apply to the cost of the "rights" but not the value of the oil in the ground. And if the value of the oil in the ground weren't WAY bigger than the cost of the "rights", they wouldn't buy the rights.

It's capital they have which is destroyed from their balance sheet in the course of them doing their normal business. That's why it's depreciated, why any capital can be depreciated. There's no grounds to say, only oil companies shouldn't be able to depreciate. And the value of the oil in the ground is larger than the extraction fee, much larger. It has to be, or they wouldn't be bought and the oil wouldn't be had from the ground. That's not a bug, that's a feature.

The farmer thinks he'll get way more value out of his tractor than he pays for it too. He still gets to depreciate the tractor 100%.

But nowhere near the value of the oil they get to depreciate.

But the value of the oil in the ground is what they are buying, and it is what they are depreciating.

Yup, and like oil company subsidies, I'm against farm subsidies too.

You're evidently against the concept of depreciation, which is what companies have of value which gets used up as they do business, can be taken off their income before taxes they way it comes off their balance sheets.

"Depreciating the value of the reserves is a subsidy."

Not depreciating them as they are extracted it isn't.

[TDPerk]

You should drop a note to Boehner (or maybe you did and that's why he hasn't brought this up since April):

Actually, I think he's been a little busy...

Even George W called for them to be ended. But time and time again, the GOP blocks attempts to end them.

So if GW did it, you think it's a good idea? Maybe you haven't noticed, but W wasn't the most economically sound President. Obama is at least four times worse. W did two things that if they hadn't been defeated by Democrats would have stood the country in good stead; he tried to privatize Social Security, and he tried to tighten lending rules in the real estate market. We're not better off the Dems ( and RINOs) stopped him.

This one of those issues where I feel you and your cohorts are terribly hippo-critical. Sure, there are expenses that all businesses get to write off. And, sure, many industries get special breaks and subsidies. But aren't you against them? Your against the subsidies the farm industry gets, right? These are targeted breaks, not breaks available to all industries.

You haven't even shown that, for example, the depreciation Kitesman is going on about is a special break. And if you're telling me you want Wickard v. Filburn overturned and the Raw Deal reversed, great. If that's not what you're saying, quit taking your cues from Obama and stop talking out of both sides of your mouth. Yes, I am against targeted breaks and subsidies--that's not what this is. The oil business is being targeted because it is seen as being Republican, it is the foundation of the modern economy the greens hate, and if oil gets more expensive, we all end up relying more on government like the Dems wants--because beggars are easier to please.

"For example, according to the CBO, once you factor in all the tax breaks and subsidies, the effective tax rate on income from petroleum and natual gas structures is just 9.2%. This is compared to farm tractors at 22.7% and computers that end up getting taxed 4 times heavier at 36.9%.

How can you go on about supporting a flatter tax structure, yet stand behind something that flies in its face?"

Because no business ever really pays taxes, only individuals do. Period. Full stop. That's all there is. The uneven tax rates you claim businesses are paying are really government deciding which sets of customers will pay more. In the case of raising the taxes oil companies pay, the government does so in a drastically regressive manner. This reduces the ability of individuals to respond to economic changes by taking work further away from where they live at a time when government intervention in the housing market has already trapped many people in houses they can't afford to leave.

I will admit, that compared to debt we face, that eliminating these subsidies won't make much of a dent.

The government needs to get out of the business of picking winners and losers inside and amongst areas of business. That means not being seen as picking an industry to penalize--which is not distinguishable from what you want.

But at a time when we are asking Grandma to give up $ she paid into the system her entire life is it really that ridiculous to stop spending money on handouts to an industry that clearly doesn't need any help?

No one's asking grandma to do that. But the money to pay what the boomers who are now grandmas were promised will not be there. As things stand, at most she'll get is about 75 cents on the dollar of what she was promised. Whether that's worth much depends on how much of Obama/Geithner/Bernanke's quantitative easing is seen as inflation.

"You railed against helping the banking industry when they were suffering, so is your criteria for handing out taxpayer dollars that its okay only if they go to immensely profitable companies? (ie, companies that are clearly not investing their earnings in new jobs?)"

The banks which screwed up should have been allowed to fail, the politicians who encouraged it should have been unelected. This has nothing to do with penalizing companies which are not creating jobs when they are permitted to do so--no one is topping oil industry expansion like Obama--and oil companies have low percentage profits compared to many.

Also.

When wealth creation is penalized, why shouldn't profits be sat on?

When wealth creation is not penalized, do you think profits lie fallow? If they go in a bank they get borrowed--an investment. If people can't think of a good investment for the profit, why shouldn't they stay in a bank?

Do you think it's government's job to make sure through it's taxation policies that no industry type is more profitable than the others? If that's not what you meant, what do you think you just wrote?

[Maui]

My prediction: The Grand Bargain will win out after all.

It's looking increasingly like Boehner's in a no-win situation with his bill. Reid's is in serious doubt as well. Boehner has got to be frustrated that the Tea Party is scuttling his fall back option here so, that, combined with the fact that the Grand Bargain may in fact be the only bill that could pass both houses could be enough to push Boehner back to the table with Obama.

At this point, I have to think that Obama would be willing to sweeten his last offer to Boehner in order to gain the political points of claiming a major role in averting this crisis. (ie, pull back the extra $400B in tax that was apparently a counter to something else Boehner wanted). If Boehner is willing to go along (and by all accounts, they had been close), he wouldn't need many GOP to go along with him, as I think most Dems would be on board.

This will piss the Tea Partiers off, but honestly I think this may actually be the outcome they are hoping for. The get the political points they were seeking for not backing down, but they get them in a risk-free way. I'm sure the Tea Partiers are smart enough to realize that if they actually got their way, sharp and immediate cuts would, in the short term, kill jobs, jeopardize the recovery, and cut programs could rankle feathers with some moderate voters they need to get re-elected.

[KitemanSA]

Oil in the ground is in no way a capital "EXPENDITURE" It may apply to the cost of the "rights" but not the value of the oil in the ground. And if the value of the oil in the ground weren't WAY bigger than the cost of the "rights", they wouldn't buy the rights.

It's capital they have which is destroyed from their balance sheet in the course of them doing their normal business.

That is the point, it is NOT capital. Capital is what is paid for something, not the product that comes from that something. Capital is the money PAID to derive value, not the thing derived. The capital is depreciated, not the product... EXCEPT for the oil companies. That is the unequal treatment that constitutes the subsidy.

[Maui]

McCain unloads on the Tea Partiers.

[TDPerk]

Any non-labor resource you can have exclusive use of is capital, it is what can go on a balance sheet of net worth. Money certainly can be capital, but it is certainly not exclusively capital. The farmer's tractor is his capital--his land is not, but his land is assumed not to be changed.

An oil company's oil deposit is certainly changed by the oil company using it, and they must use it to produce their product, in fact they use it up. Hence it's value which comes off their balance sheet, as they empty it can be depreciated to that extent.

[TDPerk]

(ie, pull back the extra $400B in tax that was apparently a counter to something else Boehner wanted)

What else did Boehner want, and did he really want it all along?

[Maui]

(ie, pull back the extra $400B in tax that was apparently a counter to something else Boehner wanted)

What else did Boehner want, and did he really want it all along?

Who knows? This was the explanation from the press secretary. So it really comes down to he said/she said and having no reason to trust either. Go fish.

Still, I do think it makes sense that neither Obama nor Boehner publicized the details of each offer and counter-offer. If 2 men can't come to an agreement on their own, there's no way it would be possible with millions more shouting voices weighing in.

[choff]

It's my understanding that at least one ratings agency is going to downgrade the US credit rating even before August 2, based entirely on the bickering. Correct me if I'm wrong but the US national debt stands at $15 trillion. If as a result of any downgrade interest rates were to climb by even 1% that adds $150 Billion to the debt. If that resulting 1% hike is also applied on mortgages and loans to business, lets assume that only caused a downgrade of $150 Billion in revenue projections.
That means you can take any budget plan from either party and automatically tack on an extra $300 Billion loss. That means each and every budget proposal that has been put forth to date is like Hitler in his 45 bunker sending out orders to armies that no longer exist.
Even if either party were to get everything their way from the other, total capitulation, if it means dragging on past the deadline its a total fail. A balanced budget amendment is an even bigger fraud than the worst of Ponzi scams. For the Dems getting $200 Billion more in taxes is rendered meaningless.
Lets say things drag on for 2 weeks past the deadline before events force a deal, and as a result interest rates went up a little over 3%. Thats a half trillion dollar increase in debt, and god only knows how badly revenues are killed.
My advice would be to take whatever crappy plan out there can be rushed through the fastest and pass it right now, because the enemy is not the other party, the enemy is interest rates. The two parties need to come together and make mad passionate love in front of the ratings agencies right now.