Debt Debate in Congress

[Townsend]

I'd be interested and terrified at the same time to see the results if they announced a complete spending freeze for one quarter.

Entitlements, roads, military, pensions, congressional pay, so on and so on...

The reactions would be remarkable to say the least.

[carltonplace]

SPENDING CUTS. . .NO MORE SPENDING. . .STOP SPENDING. . .

At this point I would rather they not even have a debate about taxes, it's a distraction and a stupid one at that.  They need to STOP SPENDING. . .CUT SPENDING. . .SPEND NO MORE. . .SPEND FAR LESS. . .ELIMINATE SPENDING.

The problem is that the bulk of what we are spending is for Medicare, Medicade, Social Security and the Military. Drastic cuts are needed to all of these big ticket items to stop spending and stop borrowing...or we have to agree to change these programs (raise the elligibility age), end them or fund and pay for them without borrowing.

[RecycleMichael]

Is ending tax breaks for select industries raising taxes? By definition, yes.

But are these not the same breaks often considered pork for powerful politicians?

I want to have someone defend the $126 million giving to horse racing owners in Kentucky last year. GOP leader Mitch McConnell brings it back to his state and I am sure it is important to the people of Kentucky, but why should I in Oklahoma pay to subsidize it?

I found it easy to believe that no one could defend these tax breaks... Please one of you fiscal conservatives who talk about lowering the debt...please tell me why ending these tax breaks should be off the table to stop paying rich horse owners in Kentucky. Anybody.

[Gaspar]

I found it easy to believe that no one could defend these tax breaks... Please one of you fiscal conservatives who talk about lowering the debt...please tell me why ending these tax breaks should be off the table to stop paying rich horse owners in Kentucky. Anybody.

First, I think it may be necessary to understand what it is.  The $126 Million (tiny drop in the debt bucket) is not a gift of any kind, but rather an adjustment built in to the Stimulus along with dozens of other adjustments in depreciation.

In business you have you have the ability to depreciate capital purchases at different rates depending what that item is.  Vehicles, printers, desks, and other property have various depreciation rates.

Sen. Jeff Merkley proposed and got passed an amendment to the tax code because race horse owners found that their investments (their horses) were depreciating at a far greater rate than the standard rate for horses.  This made it hard for new horse owners to enter the sport.  It also made the industry less attractive to new investors/owners.  Basically it allowed racehorses, that used to depreciate at a 7 year property rate, the same as other horses, to depreciate at a 3 year property rate that better reflects the actual average depreciation of the property.

Another favorite is the "tax breaks for big oil."  These are also related to depreciation rates for drilling equipment, vehicles, tools, and other property investments made by oil companies.  They are no different than the depreciation that your business takes for the tools that you use every day.

As the tools age they depreciate in value and therefore cannot be valued at the same rate.  If indeed there is an inconsistency in the value of an item as compared to it's established depreciation rate, then yes it is fare to alter that depreciation rate.  If however you are doing it simply to pick on an industry, or because you think the sheeple will buy it because they don't know any better, then it is not justified to eliminate the deduction.

You cannot tell an industry that they are not allowed to depreciate capital items on their balance sheets, unless those items do not depreciate in value. 

This talk of tax cuts for big oil, or $129 million dollar gifts is simply Lib speak designed to excite the masses who simply don't know no better.

So to answer the question, I believe that any tax deduction based on depreciation that is a false depreciation should be eliminated.  If however the depreciation rate is accurate, the state has no right to eliminate it for one industry, unless it subsequently eliminates the same deduction for all businesses.

[Teatownclown]

Obuma want's to go down in history as the Democrat that destroyed it. I wish Lyndon Johnson were alive today. He'd kick Obuma's political arse into oblivion for not only trying to end of the New Deal and Great Society but for even contemplating the idea of destroying social security and medicare. Right now the greatest irony is that the anti-New deal republicans want to take MORE from the middle class and they know Odumba will give it to them.

Invoke article 4 of the 14th amendment. No more trying to compromise with the GOP/Teabaggers. You can't cut your way to prosperity. Most these congress people have never run a business and have no clue of investing to grow. Stop the wars. Preserve and protect social security, medicare and education. Revert taxes back to when Clinton was POTUS. Make me quit calling him POTUS Odumba.

To hurt the economy to gain power is criminal.

[TulsaMoon]

First, I think it may be necessary to understand what it is. 

It's horse racing....

Though I see and understand what you are saying Gaspar I can't disagree more. We want tax breaks, we want less spending, then these " drops in a bucket " need to be cut out. Add the drops up and we start to see improvement.

You see this as a drop in the bucket as others see the little old lady " scamming " ( not my words ) SSID as a drop in the bucket. Stop the leak on both sides sounds like a plan to me.

[Gaspar]

It's horse racing....

Though I see and understand what you are saying Gaspar I can't disagree more. We want tax breaks, we want less spending, then these " drops in a bucket " need to be cut out. Add the drops up and we start to see improvement.

You see this as a drop in the bucket as others see the little old lady " scamming " ( not my words ) SSID as a drop in the bucket. Stop the leak on both sides sounds like a plan to me.

I agree, but it must be fair.  If you wish to end a businesses ability to depreciate certain types of property, you should end that for all businesses right?

If you are a doctor and your friend is a dentist, you both have medical equipment to buy.  Right?  According to the federal government you can depreciate those assets over 7 years. 

If all of a sudden the federal government comes in and says "no depreciation for you because your a doctor (and we hate doctors)."  You then have all of this equipment that carries no depreciation.  You paid as much as your dentist friend, and the equipment devalues at the same rate, but because the government happens to hate doctors you get screwed.

Now if you want to make it fair and increase revenue, all you have to do is remove the same depreciation on property for all businesses.  Doctors, lawyers, dentists, racetracks, massage parlors. . .everyone!  This increases revenue for your super-duper programs, and does it in such a way that no one can argue that you are being unfair or playing favorites.

Racetrack aside (that's just a funny example to stir up the idiots), the "tax breaks for big oil" are the real revenue generators that democrats have their eyes on.  To understand what they are looking at, you have to understand what's under the spin.  The oil exploration and production companies have the exact same depreciation table that you, and I, and the Avon lady down the street have.  They can take the same deductions and depreciate equipment over time at the same rate.  What the president has hinted at is eliminating this for the oil companies.  When you think of what that means it makes more sense.

If we decide to go down this route, then perhaps the government should develop a list of the companies they like and the companies they do not like and simply penalize accordingly?  Allow some industry to prosper and cripple others.  Develop an economy not based on market demand, but rather on administrative preference.

This is the road to tyranny, and the first step on that road is to get the public stimulated with the idea of wealth envy and make them believe that the success of an individual is based on the failure of another.  That is what makes it seem fair to take more from one business or person to fund the "general welfare" of the people.

Ergo. . .It's horse racing. . . .

The welfare of the people in particular has always been the alibi of tyrants, and it provides the further advantage of giving the servants of tyranny a good conscience. – Albert Camus

[guido911]

Five greatest sentences that I agree with.

You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

What one person receives without working for, another person must work for without receiving.

The government cannot give to anybody anything that the government does not first take from somebody else.

When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is the beginning of the end of any nation.

You cannot multiply wealth by dividing it.

.

[guido911]

Seriously? These two clowns? And as for invoking anything in the constitution, when did you become such a scholar?

[RecycleMichael]

Sen. Jeff Merkley proposed and got passed an amendment to the tax code because race horse owners found that their investments (their horses) were depreciating at a far greater rate than the standard rate for horses.  This made it hard for new horse owners to enter the sport.  It also made the industry less attractive to new investors/owners.  Basically it allowed racehorses, that used to depreciate at a 7 year property rate, the same as other horses, to depreciate at a 3 year property rate that better reflects the actual average depreciation of the property.

You cannot tell an industry that they are not allowed to depreciate capital items on their balance sheets, unless those items do not depreciate in value.  So to answer the question, I believe that any tax deduction based on depreciation that is a false depreciation should be eliminated.  If however the depreciation rate is accurate, the state has no right to eliminate it for one industry, unless it subsequently eliminates the same deduction for all businesses.

Good. Then you will have to agree that a three year depreciation doesn't make sense.

All horses born in the northern hemisphere have the same birthday (Jan 1st). They cannot legally race as a one year old and only about half of racehorses will race at all their second year and never more than four races or so. As a three-year-old, the horse will race between five and twenty times. The very, very best will retire by age four to go to stud. The remainder will race in quality races,up to about year six. Even then, they still have some value.

The richest races in the world are for four-year-olds and up. The Dubai Breeders Cup has eight races worth over $26 million in prize money (compared to $2 million for the Kentucky Derby race for three year olds). The biggest race there is n ow worth over $8 million.

Breeding a horse can go on for many years. Stud fees range from $2,500 to $500,000 per live foal. Many studs can be produce a couple hundred foals per year (not unlike an NBA player). The horse Easy Jet produced 2,500 foals in his stud years.

The three year depreciation argument is all bogus. It was all made up to give rich people in Kentucky $126 million dollars a year. It may smell like horsemeat, but it is still pork. 

[RecycleMichael]

"Never invest in anything that requires repairs or eats."

Benjamin Franklin

[Gaspar]

Good. Then you will have to agree that a three year depreciation doesn't make sense.

All horses born in the northern hemisphere have the same birthday (Jan 1st). They cannot legally race as a one year old and only about half of racehorses will race at all their second year and never more than four races or so. As a three-year-old, the horse will race between five and twenty times. The very, very best will retire by age four to go to stud. The remainder will race in quality races,up to about year six. Even then, they still have some value.

The richest races in the world are for four-year-olds and up. The Dubai Breeders Cup has eight races worth over $26 million in prize money (compared to $2 million for the Kentucky Derby race for three year olds). The biggest race there is n ow worth over $8 million.

Breeding a horse can go on for many years. Stud fees range from $2,500 to $500,000 per live foal. Many studs can be produce a couple hundred foals per year (not unlike an NBA player). The horse Easy Jet produced 2,500 foals in his stud years.

The three year depreciation argument is all bogus. It was all made up to give rich people in Kentucky $126 million dollars a year. It may smell like horsemeat, but it is still pork. 

It would depend on the purchase price and average estimated value at 3, 5, and 7 years.

If the average race horse costs $100,000, you would need to know what the average price would be at the end of those periods.  For example, at the 2007 Fall Yearling sale at Keeneland, 3,799 young horses sold for a total of $385,018,600, for an average of $101,347 per horse. 

Only a very small percentage of these horses will make the income necessary to offset the cost of their training and upkeep.  Of that small percentage a fraction will become champions, and supplement the cost of the others.  When sold after 4 years they may be valued at a 1% or less of their original value.

I do not know the average values after 3, 5, and 7 years, so I could not agree or disagree with you.  All I've tried to do is present an understanding of what the "tax cut" really was.

[RecycleMichael]

Yes. You don't know the horse racing business.

The horse racing business, especially thoroughbreds, is a very interesting business. The horses are actually for sale in most of their races. On Sunday at Fair Meadows (the Tulsa track) nine of the 12 races were "claiming" races. These type of races mean that anyone can put their money down before the race and "claim" any horse they want.

This allows the owner many tax advantages, especially if the horse is claimed by a few friends from each other a few times during the racing season. The real money in horse racing is of course, knowing when to bet on (or bet against) your own horse. Often a horse in a small money can make his owner more money by not winning when the owner happens to bet on other horses. There is no oversight on this...it is not like the SEC is watching like other forms of gambling (think stock market).

This tax break was for the wealthiest and almost completely centered on one state. Kentucky.

[guido911]

I found it easy to believe that no one could defend these tax breaks... Please one of you fiscal conservatives who talk about lowering the debt...please tell me why ending these tax breaks should be off the table to stop paying rich horse owners in Kentucky. Anybody.

I'm not going to defend them and I think they should be looked at. Everything should be on the table and everyone should participate.

On a side note, I came across this tidbit:

In a 75-minute meeting Sunday night, President Obama once again demanded that more than $1 trillion in tax increases be part of any deficit reduction package attached to a vote on the debt ceiling. In the session, Obama rejected a Republican proposal to seek $2.5 trillion in spending cuts and reforms, and insisted on higher taxes on businesses and wealthy individuals.
Barack Obama,

It's a curious position, given the anemic economic growth and rising unemployment. And it's even more curious considering that Obama himself has warned about the deleterious effects of raising taxes in a struggling economy.

In August 2009, on a visit to Elkhart, Indiana to tout his stimulus plan, Obama sat down for an interview with NBC's Chuck Todd, and was conveyed a simple request from Elkhart resident Scott Ferguson: "Explain how raising taxes on anyone during a deep recession is going to help with the economy."

http://www.weeklystandard.com/blogs/obama-vs-obama_576524.html
Obama flipped on his 2006 debt ceiling vote and now on raising taxes.

[nathanm]

Obama has said all along that taxes on those making over $250,000 a year should go back to pre-Bush levels.