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

[BobG]

No it isn't. The difference is between me NOT giving the govt money and the govt giving me money. Either way I end up with one more dollar more in my pocket, the govt with one dollar less. As I said, the beneficiaries prefer the tax reduction over the handout because it fools people.

Again, the larger issue is that the govt is selecting the airline industry over the rail industry. Why?

The difference is between:

1) giving the government a $1 and having the government give that dollar to someone else.
2) giving the government a $1 and having the government give that dollar back to you.
3) not giving the government a $1 and having the government give you a $1.
4) not giving the government a $1 and not having the government give you a $1.

One would be taxation. A second would be taxation with a tax rebate. A third would be a handout. A fourth would be no taxation.

Adding in a competitor:

1,2,3,and 4) both you and your competitor ... (no change from the first scenarios, except more parties)

5) you give the government a $1 and your competitor doesn't - the govt gives your dollar to someone else
6) your competitor gives the govt a $1 and you don't - the govt gives his $1 to someone else
7) you give the govt a $1 and the govt gives the $1 to your competitor
8) your competitor ...
9) neither of you give the govt a $1 and the govt gives your competitor a $1
10) neither of you give and the govt gives you a $1
11) you both give and the govt returns your $1, but not your competitor's
12) you both give and the govt returns your competitor's $1, but not yours

In all of these, the government has picked a favored competitor and has interfered in the market, whether you want to call it welfare, rebates, tax breaks, etc. even if the interference makes sense. The term is just semantics.

Or, you could toss in the current practice:

The government doesn't take a $1 from either of you. Instead it borrows a dollar from someone else to fund a study about who should get the dollar, if the dollar actually existed.

 

[WhoWee]

This is an overview of aircraft finance. Pages 16 thru 28 offer specifics includes the handling of depreciation.
http://www.scribd.com/doc/48120216/DB-Aircraft-Lease

 

[Jack21222]

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?

 

[russ_watters]

The govt giving me $1 more or me giving the govt $1 less is a distinction without a difference. Especially since it is argued that one is bad and the other is good.

The difference comes in the realization that by and large they aren't the same person: the government takes from one and gives to another! So it makes a big difference which person you are!

Im starting to wonder if this isn't just propaganda designed to trick people into accepting more redistribution!

 

[ParticleGrl]

Under current law, aircraft are 5-year property. If you buy an airplane, you can expense 20% of its cost for each of the first five years of operation. (I won't get into MACRS here) I don't know if the President is suggesting that aircraft become 7-year property (the default) or what.

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.

 

[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.