Why is the tax code giving special treatment to corporate jets?

[WhoWee]

I think right now under current law commercial aircraft are 7 year property, but corporate jets are a 5 year property. I think, but am not certain, that the proposal in question is to put corporate jets and commercial aircraft on equal footing.

I've heard estimates of $3Billion in revenues over 10 years will be gained with this accounting adjustment - hardly a serious solution to a $14Trillion deficit.

 

[Char. Limit]

I've heard estimates of $3Billion in revenues over 10 years will be gained with this accounting adjustment - hardly a serious solution to a $14Trillion deficit.

Must everything be able to solve the 14 trillion dollar deficit? Because guess what, NOTHING CAN. I don't think we'll ever lose the deficit, no matter how hard we try.

 

[WhoWee]

Must everything be able to solve the 14 trillion dollar deficit? Because guess what, NOTHING CAN. I don't think we'll ever lose the deficit, no matter how hard we try.

When the President touts the "success" of his $Trillion dollar spending programs then attacks an accounting loophole that (when closed) doesn't pay the daily interest on the $14 Trillion national debt - it's not a serious proposal - I didn't post actual numbers label IMO please.

 

[Al68]

The same criteria you can use to choose between you taking $100 from me and you failing to send me $100.

Would you prefer a retailer reduce the price of an item by 100 dollars? Or would you prefer to pay the full price and have the salesperson hand you a check for 100 dollars?

LOL, those are equivalent, assuming that the latter was a condition of the transaction to begin with. But neither is equivalent to someone just "giving" me money.

Of course if one of the options was for a retailer to just give me $100, not as part of any transaction, that would be (voluntary) "welfare". Then you could ask me whether I'd rather get $100 off of a retailer's product or for someone to just give me $100 for no reason. And I'd say my criteria for such a "choice" is irrelevant, because neither option is conditional on the other.

 

[Jack21222]

LOL, those are equivalent, assuming that the latter was a condition of the transaction to begin with.

Paying taxes is a condition of living in this country. The government reducing your taxes by 100 dollars, or giving you 100 dollars while you pay the same tax, are equivalent for the same reasons you mention.

 

[WhoWee]

Paying taxes is a condition of living in this country.

Really?

 

[Char. Limit]

Really?

Uhh, yeah. Unless you think that the country can survive with no one paying any taxes, but I know that everyone on this forum is FAR too smart for that.

 

[WhoWee]

Uhh, yeah. Unless you think that the country can survive with no one paying any taxes, but I know that everyone on this forum is FAR too smart for that.

Then how can we expect only 50% to pay - with the top 10% paying the bulk?

 

[ParticleGrl]

Then how can we expect only 50% to pay - with the top 10% paying the bulk?

It is not true that only 50% pay taxes. Keep in mind- something like 40% do not pay FEDERAL INCOME TAX. However, excise taxes, state taxes, and payroll taxes are all regressive.

If you include all taxes (state, payroll, federal income), the lowest 20% pays about 16% of their income (this lines up with what I paid as a graduate student), the next 20% pays about 20.5%, the middle 20% pays about 25%, the fourth pays about 28.5%. The top 20% pays about 30.75%.

Most interesting, the top quintile is slightly regressive. The top 1% pays about 30.8%, while the rest of the top 5% pays 31.6%

See, for instance, http://www.ctj.org/pdf/taxday2010.pdf

 

[WhoWee]

It is not true that only 50% pay taxes. Keep in mind- something like 40% do not pay FEDERAL INCOME TAX.

Isn't this discussion about FEDERAL INCOME TAX? In keeping with your 40% - Jack's statement is not correct.

 

[ParticleGrl]

Isn't this discussion about FEDERAL INCOME TAX?

I was under the impression it was on the tax burden in general. Certainly, it seems silly to divorce payroll taxes from income taxes as part of someone's tax burden.

 

[russ_watters]

Paying taxes is a condition of living in this country. The government reducing your taxes by 100 dollars, or giving you 100 dollars while you pay the same tax, are equivalent for the same reasons you mention.

That isn't true for all taxes, particularly the federal income tax, which only half of Americans pay.

It is not true that only 50% pay taxes. Keep in mind- something like 40% do not pay FEDERAL INCOME TAX.

That doesn't really change the issue at all, does it? Any change in taxation will necessarily effect different people differently. Again, the logic of being given less equalling paying more only works if the giver and taker are the same person and they clearly are not.

And, of course, I'm sure you are aware that there is still a substantial fraction of the population that pays no or negative net taxes even when all taxes are included. For starters, anyone on Social Security (by your reasoning on the program), disability or unemployment compensation would obviously have a negative tax burden. Depending on if you count SS or not, the fraction is probably in the 20-30% range. [And it's closer to 50% than 40%: 47% for 2010 and likely even higher for this year, but we of course won't know until next year. And you've been in enough of these conversations to have seen the number many times.]

However, excise taxes, state taxes, and payroll taxes are all regressive.

The only one that a case could be made for being regessive is the payroll tax, but the payroll tax was sold by liberals as being for a government insurance and retirement program that the rich by and large are not eligible for, so "regressive" doesn't really fit - you can't have that both ways. All the others are flat or progressive (flat, but with deductions).

 

[Al68]

Isn't this discussion about FEDERAL INCOME TAX?

I was under the impression it was on the tax burden in general. Certainly, it seems silly to divorce payroll taxes from income taxes as part of someone's tax burden.

I'd say this thread is about federal income taxes, not payroll taxes. When is the last time a corporate jet tax deduction was taken on payroll taxes?

 

[Al68]

Paying taxes is a condition of living in this country. The government reducing your taxes by 100 dollars, or giving you 100 dollars while you pay the same tax, are equivalent for the same reasons you mention.

Yes, but neither is equivalent to welfare, assuming that the taxes paid exceed the $100 rebate.

My objection was to equating those two things with welfare, not to equating them with each other.

 

[Jimmy Snyder]

Yes, but neither is equivalent to welfare, assuming that the taxes paid exceed the $100 rebate.

My objection was to equating those two things with welfare, not to equating them with each other.

They want the $100, and they want people to argue over sematic distinctions rather than over the $100. Because if the govt decides they can't afford to pay out welfare anymore, it would matter what your $100 was called.

 

[ParticleGrl]

The only one that a case could be made for being regessive is the payroll tax, but the payroll tax was sold by liberals as being for a government insurance and retirement program that the rich by and large are not eligible for, so "regressive" doesn't really fit - you can't have that both ways. All the others are flat or progressive (flat, but with deductions).

How are the rich not eligible for medicare or social security? Right now, we do not means test these programs. Also, if we insist on looking at government spending in total (rather than separating out medicare and social security), we should look at the tax burden in total, which includes payroll taxes. After all, the social security excess is used to by treasuries, which shifts that money into the general fund.

Also, sales tax, gas excise tax, etc are regressive- the less money you have, the greater the percentage of your income goes to consumption, and hence to sales tax. See the link I provided above, and the actual numbers. Everyone pays taxes, and the upper class don't pay much more than the middle class in total. The top 1% actually pay slightly LESS than the rest of the top 5%.

I'd say this thread is about federal income taxes, not payroll taxes. When is the last time a corporate jet tax deduction was taken on payroll taxes?

It wouldn't be taken on individual federal income tax either, it would be on taxes for the company.

 

[russ_watters]

How are the rich not eligible for medicare or social security? Right now, we do not means test these programs.

Social Security: the taxes and benefits are capped at $106k, so people making above $212k are mostly ineligible for it. Social security is much larger than medicare, so above a certain income (not sure what), most of the combined "payroll taxes" will not be paid for or benefit those earners.

Also, if we insist on looking at government spending in total (rather than separating out medicare and social security), we should look at the tax burden in total, which includes payroll taxes.

Um...that's you wanting it that way. Conservatives disagree. For more on the implications of this stance that liberals tend not to address, see the thread I just started.

After all, the social security excess is used to by treasuries, which shifts that money into the general fund.

IMO, that's a misappropriation of funds and not IMO, will hasten the race to insolvency.

Also, sales tax, gas excise tax, etc are regressive- the less money you have, the greater the percentage of your income goes to consumption, and hence to sales tax. See the link I provided above, and the actual numbers.

I addressed the other taxes in my companion thread. Your link does not individually address sales taxes or excise taxes. I don't think it can be taken as a given that the poor pay more of their income toward taxable things, as many of your living costs, in particular the biggest single living cost (your housing) are not taxed. I haven't seen a good analysis (I've looked), but I suspect that a sales tax is pretty flat and perhaps even progressive up to a certain income level and then becomes regressive as spending flattens and savings increases. Like I said, I've never seen the data, but then your link doesn't provide it either.

 

[mheslep]

The top 1% actually pay slightly LESS than the rest of the top 5%...

A point that needs to be raised every time the President uses his "millionaires and billionaires" class warfare line: milking them for more won't do anything about the deficit.

 

[ParticleGrl]

Your link does not individually address sales taxes or excise taxes.

Look at the state tax charts in the link I provided- its the sales tax that makes them look so regressive.

I haven't seen a good analysis (I've looked), but I suspect that a sales tax is pretty flat and perhaps even progressive up to a certain income level and then becomes regressive as spending flattens and savings increases. Like I said, I've never seen the data, but then your link doesn't provide it either.

If you look in quintiles, its regressive across the board. See this http://www.itepnet.org/whopays3.pdf for a state by state breakdown.

Its important to note that when you look at total tax burden that the middle class pays about 25-28%, while the very wealthy pay about 30-31%. Our total tax system (total state+ total federal) is not very progressive.

 

[WhoWee]

Who are the owners of these aircraft - GE Capital might have a few?
http://www.gecas.com/en/

http://www.cefcorp.com/aircraft/

When the President kept mentioning the "owners" of corporate jets - I assume he realizes a lot of corporate jets are owned by leasing companies - and used by corporate executives?

If this is the President's round-about way of getting GE to pay taxes - on second look I'll have to support him on this one.
http://abcnews.go.com/Politics/general-electric-paid-federal-taxes-2010/story?id=13224558

 

[WhoWee]

While heavy on opinion - this highlights the confusion in policies of the President.

http://www.americanconservativedaily.com/2011/07/demagogue-in-chief-slams-corp-jets-after-spending-stimulus-money-on-them/

"Demagogue In Chief Slams Corp. Jets After Spending Stimulus Money on Them?"
"In February of 2009, the stimulus package that Obama pushed heavily as the only way to “save” the country included a provision that, as the Associated Press then reported, “sharply reduces the up front tax bill for companies who buy assets like business planes.”
So, once again, we have this president talking out of both sides of his mouth. Back in 2009 we needed a stimulus package that included big tax breaks to corporate jet owners, yet today those corporate jet owners are eeeevil for not paying enough taxes.
Again Obama reveals his capriciousness. No wonder the economy can’t revive with so much Obama-caused uncertainty abounding out there!"

 

[Jack21222]

A point that needs to be raised every time the President uses his "millionaires and billionaires" class warfare line: milking them for more won't do anything about the deficit.

And milking the poor will?

Oh right, cut spending... but cutting anyone part of the spending won't do anything about the deficit either. We need a combination of tax hikes (on those that a tax hike won't cause starvation) and gradual spending cuts.

 

[mheslep]

And milking the poor will?

Oh right, cut spending... but cutting anyone part of the spending won't do anything about the deficit either. We need a combination of tax hikes (on those that a tax hike won't cause starvation) and gradual spending cuts.

The tax hike proposal on the table from Obama - raising the rate ~5% on those over $200/250K will raise $100B (at most) against a $1600B deficit. 16-1 =/ 0, i.e. those taxes increases will do ~zip for the deficit, though I'll grant its political impact on the left is large. Raising taxes substantially on $1M incomes and up will do even less. New York and Maryland have both tried millionaire taxes with little revenue increase in NY and actual loss in Md as the high dollar folks simply walked.

Spending cuts across the board, including major reforms to entitlements are the only answer this problem.

 

[WhoWee]

The tax hike proposal on the table from Obama - raising the rate ~5% on those over $200/250K will raise $100B (at most) against a $1600B deficit. 16-1 =/ 0, i.e. those taxes increases will do ~zip for the deficit, though I'll grant its political impact on the left is large. Raising taxes substantially on $1M incomes and up will do even less. New York and Maryland have both tried millionaire taxes with little revenue increase in NY and actual loss in Md as the high dollar folks simply walked.

Spending cuts across the board, including major reforms to entitlements are the only answer this problem.

Think of it this way - we have a "Government Bubble".

 

[turbo]

Uhh, yeah. Unless you think that the country can survive with no one paying any taxes, but I know that everyone on this forum is FAR too smart for that.

Unfortunately, we have members who have not passed the pons asinorum, so we have the same pointless arguments over and over. It is pointless, but apparently fun to some.

 

[russ_watters]

The tax hike proposal on the table from Obama - raising the rate ~5% on those over $200/250K will raise $100B (at most) against a $1600B deficit. 16-1 =/ 0, i.e. those taxes increases will do ~zip for the deficit, though I'll grant its political impact on the left is large.

I think the Republicans should let him have it: the political impact on the middle and right will be even larger. It would be childs-play for the right to hammer Obama for focusing on politicking for this.

 

[Jack21222]

New York and Maryland have both tried millionaire taxes with little revenue increase in NY and actual loss in Md as the high dollar folks simply walked.

I'm going to ask for proof of this.

The number of millionaires DID decrease in Maryland after the tax was passed, but I've seen no evidence that it was due to them leaving the state, and not due to the economy tanking around the same time the law was passed.

 

[mheslep]

I'm going to ask for proof of this.

The number of millionaires DID decrease in Maryland after the tax was passed, but I've seen no evidence that it was due to them leaving the state, and not due to the economy tanking around the same time the law was passed.

Editorial for now:
http://online.wsj.com/article/SB124329282377252471.html
More later, unless you want a written affidavit from every Md tax filer >$1M that didn't file after the tax increase as to why they didn't file in Md.

 

[daveb]

Editorial for now:
http://online.wsj.com/article/SB124329282377252471.html
More later, unless you want a written affidavit from every Md tax filer >$1M that didn't file after the tax increase as to why they didn't file in Md.

I found this line rather telling:

All of this means that the burden of paying for bloated government in Annapolis will fall on the middle class. Thanks to the futility of soaking the rich, these working families will now pay Mr. O'Malley's "fair share."

I imagine some of the wealthy did move elsewhere - they have that capability since, well, they're wealthy. The middle class doesn't have that option. The poor even less so. If this is the case, are we entering into an era where, no matter what society or government does, the wealthy always have the power, the poor have none, and the middle class gets short shrift?

 

[Jack21222]

Editorial for now:
http://online.wsj.com/article/SB124329282377252471.html
More later, unless you want a written affidavit from every Md tax filer >$1M that didn't file after the tax increase as to why they didn't file in Md.

Read your own link:

No doubt the majority of that loss in millionaire filings results from the recession.

They still filed in Maryland, but due to the recession, they weren't millionaires anymore.

 

[WhoWee]

Unfortunately, we have members who have not passed the pons asinorum, so we have the same pointless arguments over and over. It is pointless, but apparently fun to some.

What test does this pass?

Apparently this was Whitehouse/OMB approved?
http://dailycaller.com/2011/07/12/why-is-the-government-mailing-you-2/

 

[mheslep]

Read your own link:


They still filed in Maryland, but due to the recession, they weren't millionaires anymore.

The point is some left. I doubt you thought I was stating that the income loss was because all millionaires left Md. Consider: how many millionaires have to pay the ~10% or whatever increase to existing Md income taxes to make up for those that are now paying none because they left the state altogether, taking some property taxes and likely some jobs with them?

Note that http://reason.com/blog/2010/11/01/keith-richards-we-left-england" is feasible as well should taxes climb high enough.

 

[mheslep]

This interfview today with Greek shipping owner John Coustas reveals many parallels between the Greek economic problems and the 'millionaires and billionaires' / "corporate jets" class warfare rising here, and its possible consequences:
http://online.wsj.com/article/SB100...440434028124912.html?KEYWORDS=greek+shipping"

If you've ever wondered why so many Greeks succeed in shipping, John Coustas has a plausible theory: "Greek shipping has nothing to do with the Greek state."

His firm, Danaos Corporation, is a case in point. Mr. Coustas took over the company, which owns container ships, from his father in 1987 and has since transformed it from a three-vessel outfit into the third-largest company of its kind in the world, with a fleet of 56 ships. Danaos is incorporated in the Marshall Islands, a popular and stable jurisdiction for the global industry, and handles many of its operations through its German, Ukrainian, Russian and Tanzanian offices.
...
the biggest risk to Greece, he says, is brain drain, that "all the good people, who really have something to offer, are either leaving or seriously considering it."
...
Mr. Coustas says entrepreneurial activity [in Greece] was denigrated for many years and profit was regarded as "wrong." "Anyone who wanted to make an investment here was considered a kind of bloodsucker."
...
In the early 1980s, Mr. Coustas was in Japan to sign a new shipbuilding contract for Danaos. He recalls being approached by a Japanese workers' representative who "wanted to thank us for giving them work." The worker told him, "'We will do everything possible to build a good ship for you.' Can you imagine that happening here? Here, if you tried to do the same thing and place an order in the Greek shipyards, you would get protests that either you paid too little, or are trying to pressure the workers, or whatever."

 

[Char. Limit]

The point is some left. I doubt you thought I was stating that the income loss was because all millionaires left Md. Consider: how many millionaires have to pay the ~10% or whatever increase to existing Md income taxes to make up for those that are now paying none because they left the state altogether, taking some property taxes and likely some jobs with them?

Note that http://reason.com/blog/2010/11/01/keith-richards-we-left-england" is feasible as well should taxes climb high enough.

I always laugh at the people who say they'll leave the country if we raise taxes/Obama gets elected/they don't win. It's funny because they're always the same people who say that we have the "single greatest country that God has ever given man on the face of the Earth". Well, if it's so great, then why are you so eager to leave?

Sorry, might be unrelated. But still funny.

 

[mheslep]

I always laugh at the people who say they'll leave the country if we raise taxes/Obama gets elected/they don't win. It's funny because they're always the same people who say that we have the "single greatest country that God has ever given man on the face of the Earth". Well, if it's so great, then why are you so eager to leave?

Because Obama gets elected? Most of those people so far seem to be left leaning
http://www.snopes.com/inboxer/outrage/leave.asp