A question about state taxes

[Conan71]

Can't see that any state handles money any better than any other.  It's just mishandling in different ways.  And our way appears to concentrate on efforts to kill roads and schools.

Tax credits, etc don't really do much to attract anything - note Whirlpool and Kimberly-Clark.  They came for the slave wages and that is why they stay.  The "tax benefits" wore out long, long ago, but the low pay is the gift that keeps on giving.  Nationally, statewide, and locally - it's all about the cheap labor.  (Hence, 25 million illegals.)

Incorrect.  If they purchase a piece of machinery for the manufacturing process or raw materials which go into finished goods, they pay zip in sales taxes on those items.  I believe they also can take advantage of "quality jobs" tax credits.

[RecycleMichael]

According to this website...

http://www.hoovers.com/company/Chesapeake_Energy_Corporation/rtfcsi-1-1njea5.html

Chesapeake Energy has 30 billion dollars in assets and revenue for 2009 of 7.7 billion dollars yet paid a negative 3.5 million in taxes last year.

Why are we giving millions and millions in tax breaks to Chesapeake?

[Conan71]

According to this website...

http://www.hoovers.com/company/Chesapeake_Energy_Corporation/rtfcsi-1-1njea5.html

Chesapeake Energy has 30 billion dollars in assets and revenue for 2009 of 7.7 billion dollars yet paid a negative 3.5 million in taxes last year.

Why are we giving millions and millions in tax breaks to Chesapeake?

Because by the books you list, they lost about $9.2 bln.

They may have posted revenue of $7.7 bln, but posted an operating income of -$8.9 bln.  Income after taxes was still
-$5.80 bln.

Agreed, this is probably all accounting sleight-of-hand and makes a great argument for simplified tax codes.  I'm of the mindset that raising tax rates has no serious affect on the wealthiest as long as loopholes and accounting gimmicks exist to help them avoid paying higher rates. 

[nathanm]

Incorrect.  If they purchase a piece of machinery for the manufacturing process or raw materials which go into finished goods, they pay zip in sales taxes on those items.  I believe they also can take advantage of "quality jobs" tax credits.

Interesting. I thought in most states the things they buy for resale are exempt from sales tax, but anything they consume in their own business gets taxed. So the copier paper and machinery would be subject to sales tax, but the materials they turn into dishwashers or whatever wouldn't be.

Maybe I misunderstand. I only "sell" tax-exempt services, so I've never had to be certain.

[Conan71]

Interesting. I thought in most states the things they buy for resale are exempt from sales tax, but anything they consume in their own business gets taxed. So the copier paper and machinery would be subject to sales tax, but the materials they turn into dishwashers or whatever wouldn't be.

Maybe I misunderstand. I only "sell" tax-exempt services, so I've never had to be certain.

Services and labor are exempt from sales tax.  If you have your car repaired in Oklahoma, you pay sales tax only on the parts used for the repair.  If you ever get charged taxes on the labor, the shop is gratuitously gigging you on that sales tax.

Actually, if they are on a manufacturer's exemption permit, machinery they purchase to manufacture goods is exempt from sales tax.  If Wayerhouser bought a corrugating machine to make box board, that piece of equipment is exempt as would be the raw materials used to make the box board.  Office supplies, cleaning supplies, or plant maintenance items and tools would not be exempt.

[Ed W]

Buy one of these, they roll over everything with the 29" wheels

That's a fixed gear 29er!  Gosh, that would be fun.  I can only imagine what it would do to what's left of my knee joints.  Too many years on track bikes and road conversions, you know.  Still, like a hot-tempered Italian mistress, it would be fun for a little while.  After that the pain arrives.

[Ed W]

Incorrect.  If they purchase a piece of machinery for the manufacturing process or raw materials which go into finished goods, they pay zip in sales taxes on those items.  I believe they also can take advantage of "quality jobs" tax credits.

Ireland and some other European countries have Value Added Tax.  It's added at each step in the manufacturing process.  For example, when a sheep shearer sells wool to a yarn maker, he pays the tax.  When the yarn maker sells his product to a sweater manufacturer, he pays tax again.  This is all added in, so when the sweater reaches the consumer, the price may reflect as much as 40% in hidden taxes.  That 40% would have been my discount for purchasing a sweater in country and having it shipped to the US without taking ownership of it in Ireland. 

VAT is a very bad idea.

[Conan71]

Ireland and some other European countries have Value Added Tax.  It's added at each step in the manufacturing process.  For example, when a sheep shearer sells wool to a yarn maker, he pays the tax.  When the yarn maker sells his product to a sweater manufacturer, he pays tax again.  This is all added in, so when the sweater reaches the consumer, the price may reflect as much as 40% in hidden taxes.  That 40% would have been my discount for purchasing a sweater in country and having it shipped to the US without taking ownership of it in Ireland. 

VAT is a very bad idea.

Every taxation method has it's drawbacks (...and gasp...benefits).  For VAT being a bad idea, it's in use throughout virtually the entire EU and a large portion of the developed world.  It's most definitely a more transparent tax system.  Consumers in the U.S. pay sales taxes ranging upward of 10% plus they pay a butt-load of imbedded costs as a result of corporate taxes which have been factored in to pricing, payroll taxes spent on the employees who make the goods, tax compliance costs companies spend on dealing with convoluted tax codes as well as road taxes, fuel taxes, and taxes on energy used to produce and transport items along the supply chain.

The argument for consumption taxes is it takes away accounting gimmicks which have traditionally favored large corporations and also lowers compliance costs as it removes any benefit in employing elaborate accounting schemes designed with the sole purpose of tax avoidance.  Everyone pays their fair share in the supply chain.  Consumers ultimately pay the tax costs on goods they purchase no matter the system used though.  Only with our system of profits-based corporate taxes, if the corporation can claim enough depreciation and amortization or other expenses in the COGS, they simply keep funds they priced in to the good sold as what they estimate they would pay in taxes.

Honestly, there's enough to dislike about either system, so I'm not claiming one method is better than another for the purpose of our discussion.  My main concern is our tax code is far too complicated and requires far too many people to enforce and collect the taxes and creates costly compliance burdens on owners and operators of small businesses.

[nathanm]

Yeah, the piper gets paid either way. The question is does the federal government even have the power to collect a sales tax? I suppose given the Supreme Court's expansionist interpretation of the commerce clause starting in the 1930s, it's possible.

[Conan71]

Yeah, the piper gets paid either way. The question is does the federal government even have the power to collect a sales tax? I suppose given the Supreme Court's expansionist interpretation of the commerce clause starting in the 1930s, it's possible.

I believe Congress has the power to overhaul the entire tax code. 

I've never read the book, I've simply read excerpts of the proposal for the "Fair Tax".  It even includes "pre-bates" for those earning under certain levels so it entirely removes the argument of being regressive.  The math used to justify it makes it look like a very equitable way to increase tax reciepts.

[nathanm]

I believe Congress has the power to overhaul the entire tax code. 

I've never read the book, I've simply read excerpts of the proposal for the "Fair Tax".  It even includes "pre-bates" for those earning under certain levels so it entirely removes the argument of being regressive.  The math used to justify it makes it look like a very equitable way to increase tax reciepts.

Targeted correctly (iow, not on food, rent, and a few other things) a pre-bated sales tax wouldn't be the end of the world. The sad thing is that we'll probably end up having both an income tax and a sales tax.

My main complaint is that folks who don't have their smile together, whether by their own doing or unfortunate happenstance, won't be getting any pre-bate. The most marginalized in our society don't file tax returns anyway, because they don't make enough money or know enough to care about the income tax they paid but didn't owe or don't have jobs at all. Thus, distribution of it could be a big issue for the people who need it most.

Figure out a way to solve that problem and I could get on board with it, presuming that there's no other major issues I haven't thought of.

[Conan71]

Targeted correctly (iow, not on food, rent, and a few other things) a pre-bated sales tax wouldn't be the end of the world. The sad thing is that we'll probably end up having both an income tax and a sales tax.

My main complaint is that folks who don't have their smile together, whether by their own doing or unfortunate happenstance, won't be getting any pre-bate. The most marginalized in our society don't file tax returns anyway, because they don't make enough money or know enough to care about the income tax they paid but didn't owe or don't have jobs at all. Thus, distribution of it could be a big issue for the people who need it most.

Figure out a way to solve that problem and I could get on board with it, presuming that there's no other major issues I haven't thought of.

Tell someone they will get a check from the government and they will figure out how to sign up.  If they can't figure it out, I'm pretty sure there are community-based organizations who will help sign people up.  This is where it might get sticky, is unscrupulous people who would sign people up for a share of it.

[nathanm]

Tell someone they will get a check from the government and they will figure out how to sign up.  If they can't figure it out, I'm pretty sure there are community-based organizations who will help sign people up.  This is where it might get sticky, is unscrupulous people who would sign people up for a share of it.

You'd think, but there are a lot of people who refuse to go get food stamps when they're starving either because they've got more pride than sense or because they've got a mental illness or because they lack the requisite documentation. There are a lot of folks (I've known a few over the years) who won't file tax returns even though they are owed money. I have a hard time writing them off, even if their problem is one of rank stupidity rather than ignorance.

[Hoss]

Here's where I see the base problem is as it lies with the way the left and the right decipher 'social services'.. i.e, those things that help people who are truly in need.

The left think that those people that deserve it should get it.  That's fine, they should if they deserve to.

The right seem to think that those who don't deserve it are out to job the system, even if they DO deserve it.  Until it comes time for said right leaning person to actually have to think about using that service.  Then, they're all for it.

When you are flat broke and in need of feeding your three kids because your job was outsourced to India, I don't think you care which side of the aisle your representative on Senator sits on.  You need help.  You need work.

And before you RWRE crooners start talking about pulling yourself up by your bootstrap, think about this:  if you lost your job and really only had a high school diploma, how easy would it be for YOU to do that before you've depleted your savings (if you have any, given that a lot of Americans live paycheck to paycheck)?

I got into that situation for about three months.  I didn't go the government, and I was able to pull myself up by the bootstraps.  But I had just me to look after.  No children, no wife, no mortgage.  I can't even fathom what some of these other families are doing.  What if they lost their vehicle because they could no longer maintain payments on even a used car?  Do you seriously think that Tulsa's transit is good enough to get the job done for job seekers?  I know it isn't because I used it exclusively for about 12 months.

[Conan71]

Still not sure what RWRE means but you are invoking Heironymous now. You're scaring me.

I don't personally know any conservatives or Libertarians who begrudge someone seeking help from the gov't who truly needs it. I don't automatically assume someone on welfare, SSI, or U/E is gaming the system.

I had an ex sister in law who was scamming Sooner Care, but it made sure she got her crazy meds, so it was a benefit to all society as I saw it.