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

[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

 

[Char. Limit]

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

I think you missed the point of the joke. That's okay, it'll probably hit you soon. Also, that WAS a typo... it meant to say "re-elected"

 

[WhoWee]

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.

It's no more silly than President Obama talking about an accounting adjustment of $300Million(roughly?) when faced with a maxed-out $14Trillion credit limit - sort of like buying a can of beer instead of a bottle when your $10,000 credit card is about to be maxed-out - doesn't help much.

 

[Jack21222]

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.

Look, you made the claim that some people left Maryland because of the tax situation. Moreover, you implied that there was a net loss in tax revenue, because so many left the state that it wiped out more than the extra taxes those who stayed payed.

You have provided no evidence of this. Can you at least find ONE millionaire who states that the primary reason they left Maryland was because of the tax hike? Not that that would prove your case, but so far, you haven't shown anything.

I'm not making any claims, I think it's quite possible that enough millionaires left Maryland to cancel out the tax hike, but it's up to you to support your argument.

 

[mege]

Look, you made the claim that some people left Maryland because of the tax situation. Moreover, you implied that there was a net loss in tax revenue, because so many left the state that it wiped out more than the extra taxes those who stayed payed.

You have provided no evidence of this. Can you at least find ONE millionaire who states that the primary reason they left Maryland was because of the tax hike? Not that that would prove your case, but so far, you haven't shown anything.

I'm not making any claims, I think it's quite possible that enough millionaires left Maryland to cancel out the tax hike, but it's up to you to support your argument.

There is an alternative to 'millionare's dissapearing' - they didn't make money.

I've posted a few articles on this in other threads, and for some reason I can't find it by quickly googling - but there was evidence that CA's big budget shortfalls were because the top 1% contributing 80% of the income tax revenues in the early 2000s in CA stopped making money in the late 2000s. The rich, while rich, can also afford to lose money for a year or two and not blink too hard. Since we tax on income, if they stop making money - that means less for the state. Since the start of this discussion, I wonder if that's more of the case in MD than actual millionare's leaving.

 

[WhoWee]

There is an alternative to 'millionare's dissapearing' - they didn't make money.

I've posted a few articles on this in other threads, and for some reason I can't find it by quickly googling - but there was evidence that CA's big budget shortfalls were because the top 1% contributing 80% of the income tax revenues in the early 2000s in CA stopped making money in the late 2000s. The rich, while rich, can also afford to lose money for a year or two and not blink too hard. Since we tax on income, if they stop making money - that means less for the state. Since the start of this discussion, I wonder if that's more of the case in MD than actual millionare's leaving.

The real question should be "what is the impact on jobs creation and growth in Maryland - is capital flowing in or out"?

Aside from Government contractors and the DC suburbs - what are the business trends in Maryland?

 

[mheslep]

Look, you made the claim that some people left Maryland because of the tax situation...

From my original response:

The Maryland state revenue office says it's "way too early" to tell how many millionaires moved out of the state when the tax rates rose. But no one disputes that some rich filers did leave...

Christopher Summers, president of the Maryland Public Policy Institute, notes: "Marylanders with high incomes typically own second homes in tax friendlier states like Florida, Delaware, South Carolina and Virginia. So it's easy for them to change their residency."

Moreover, you implied that there was a net loss in tax revenue, because so many left the state that it wiped out more than the extra taxes those who stayed payed.

You have provided no evidence of this.

Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year -- even at higher rates.

This still doesn't provide a forensic accounting proof, but my original statement is a very reasonable conclusion given the the macro facts we do know, including the well established correlation between high earners and the shunning of high tax venues. If I feel inclined I'll attempt to dig up more information on the Md. case.

Edit:
http://online.wsj.com/article/SB100...114241782001262.html?mod=djemEditorialPage_h":

... the state comptroller's office [of Md] now has the final tax return data for 2008, the first year that the higher tax rates applied. The number of millionaire tax returns fell sharply to 5,529 from 7,898 in 2007, a 30% tumble. The taxes paid by rich filers fell by 22%, and instead of their payments increasing by $106 million, they fell by some $257 million.

Yes, a big part of that decline results from the recession that eroded incomes, especially from capital gains. But there is also little doubt that some rich people moved out or filed their taxes in other states with lower burdens. One-in-eight millionaires who filed a Maryland tax return in 2007 filed no return in 2008. Some died, but the others presumably changed their state of residence...

One-in-eight paying zero tax to Maryland. And as I posted before, the $257 million decline from state income taxes doesn't account for the lost property taxes, lost jobs provided by the millionaires, or the income that the millionaires may have shifted into less productive tax shelters shrinking their taxable income.

 

[mheslep]

More anecdotes regarding high earners fleeing high taxes:

http://www.telegraph.co.uk/finance/budget/5219642/Sir-Michael-Caine-warns-further-tax-rises-will-force-him-to-move-abroad.html"

"I will not pay the Government more than I get. No way, ever. So they've reached their limit with me. That's the lot."...
"That's what will happen to a lot of people," he said. "You know how much they [the government] made out of that high taxation all those years ago?
"Nothing and they sent a mass of incredible brains to America. Yes they did. The most stupid act you've ever seen in your life.
"We've got three and a half million layabouts laying about on benefits and I'm 76 getting up at six o'clock in the morning to go to work to keep them.
"Let's get everybody back to work so we can save a couple of billion and cut tax, not to keep sticking it on

The new 50% income tax could stifle enterprise and drive risk takers overseas

Thanks to Alistair Darling’s 50% tax rate, announced in the budget, the co-founder of Hargreaves Lansdown, Britain’s biggest firm of financial advisers, is expected to cough up an extra £500,000 a year in income tax. “I won’t pay. I’ll leave,” said the 63-year-old entrepreneur, echoing the words of hundreds of businessmen.

“Why wouldn’t I? If I stay I’ll pay half a million more a year in tax. If I leave the country I can save £3m a year. It’s almost like the government is offering me a bribe worth £3m a year to go and live abroad.”

"[URL Me Google That For You: businesses leave california
[/URL]103,000,000 results (0.20 seconds)"[URL Top Ten Reasons Why California Companies Are Calling the Moving Companies
[/URL]#9 – Severe Tax Treatment: The Tax Foundation in their 2011 State Business Tax Climate Index lists California at No. 49 for tax fairness. CFO Magazine ranked California the worst state for tax treatment.

 

[mheslep]

Somebody should get the Whitehouse a DVD pack of old West Wing episodes:

https://www.youtube.com/watch?v=716qbOv3a4M

 

[WhoWee]

Somebody should get the Whitehouse a DVD pack of old West Wing episodes:

https://www.youtube.com/watch?v=716qbOv3a4M

nice