bbauska wrote:I am for repealing ALL subsidies of ALL companies, and ALL subsidies of ALL citizens.

I guess that would make it simple...

when someone on the "right" is calling a tax break a subsidy, you know we're @#$!.

A subsidy is monetary support. Whether that be cash money, tax-break, under the table benefits, loan, or whatever financial assistance. The big thing is that the tax rate should be equal across ALL businesses, and there should not be ANY governmental support. I would think that Guapo, Theo and Neal could agree with that. If there is not supports for businesses then there is not any business beholding to the government. If you have the businesses beholding to the government, that opens up the system to graft, lobbying, and other less than pleasant activities.

bbauska

The big thing is that the tax rate should be equal across ALL businesses, and there should not be ANY governmental support. I would think that Guapo, Theo and Neal could agree with that. If there is not supports for businesses then there is not any business beholding to the government. If you have the businesses beholding to the government, that opens up the system to graft, lobbying, and other less than pleasant activities.

How many industries have you lost to the Asian tigers who's govenrments specifically invested in starting up production in their region? Computers, displays and etc. Non-involvement by your government in a world where other governments actively involve themselves in making their industries more competitive has lead to a exodus of industry . Do you really think "doing nothing" and letting the markets decide has been good for your domestic industries?
In a perfect world I'd agreee with your sentiment. But in a competitive world, unless someone acts in their own interests no one else will.
Taxation policy, grants and subsidies should all have sunset clauses. The problem with a subsidy that has no end date is that the industry gets used to the subsidy and never plans for life without it.

From time to time, it makes sense to provide subsidies or tax breaks for particular domestic industries, but Brad has identified a key danger in accepting this - that it can mean that the squeaky wheel gets the grease, and that once brought in, those subsidies are harder and harder to get rid of. Ricky's example is interesting. The US government did assist the nascent computing industry massively via DARPA. This is why we now have an internet as it is, and why it's based in the USA.

And for oil, regardless of the history, it's really about time to question whether the subsidy from tax breaks that only covers a small number of firms, and that includes foreign activity and taxation (meaning in effect that the USA is subsidising foreign nations). The oil price is at pretty high level, and oil company profits (barring a blip for BP) are also high. Smaller oil companies are already at a disadvantage from being excluded. The influence of oil money on policy-making is not benign.

And what is odd is this - the USA has had 30 years of such a subsidy. And for about as long (since the days of Carter at least, if not Nixon), leaders from both parties have been saying that more should be done to promote US energy independence, reducing reliance on foreign imported oil. The figures on the balance of oil use do not suggest that any workable policy has emerged, and so if the subsidy was supposed to help, it's not easy to see where it did. Maybe it stopped things getting even worse, but I'd like to see the evidence for that.

At a time when everyone is going to have to accept cuts in spending or perhaps tax increases, or some other effect of deficit reduction, why should a massively profitable industry (and it's largest representatives) be exempt?

danivon wrote:why should a massively profitable industry (and it's largest representatives) be exempt?

Just out of curiousity Danivon, what qualifies as massively profitable?

bbauska wrote:A subsidy is monetary support. Whether that be cash money, tax-break, under the table benefits, loan, or whatever financial assistance. The big thing is that the tax rate should be equal across ALL businesses, and there should not be ANY governmental support. I would think that Guapo, Theo and Neal could agree with that. If there is not supports for businesses then there is not any business beholding to the government. If you have the businesses beholding to the government, that opens up the system to graft, lobbying, and other less than pleasant activities.

Sorry, Brad, but I can't agree. A tax 'break' is a tax break. It was their money to begin with. The government isn't giving you something when you get a tax cut/break. It's like saying that if someone robs you at gunpoint, then gives you your hat back, that he gave you a hat. No, he just didn't steal it.

I'm 100% against subsidies. A tax break is not a subsidy, and the only way you can believe that is if you believe that all money belongs to the gunverment to begin with, and that we just 'use' it.

Guapo wrote:

bbauska wrote:A subsidy is monetary support. Whether that be cash money, tax-break, under the table benefits, loan, or whatever financial assistance. The big thing is that the tax rate should be equal across ALL businesses, and there should not be ANY governmental support. I would think that Guapo, Theo and Neal could agree with that. If there is not supports for businesses then there is not any business beholding to the government. If you have the businesses beholding to the government, that opens up the system to graft, lobbying, and other less than pleasant activities.

Sorry, Brad, but I can't agree. A tax 'break' is a tax break. It was their money to begin with. The government isn't giving you something when you get a tax cut/break. It's like saying that if someone robs you at gunpoint, then gives you your hat back, that he gave you a hat. No, he just didn't steal it.

I'm 100% against subsidies. A tax break is not a subsidy, and the only way you can believe that is if you believe that all money belongs to the gunverment to begin with, and that we just 'use' it.

Well if you think taxes are armed robbery in the first place then there's some logic to it. However if you argue that taxes are debts to society (agreed upon beforehand through political process) then it becomes basically the same. You either get a deduction of your taxburden via subsidies or tax breaks.
Maybe one is more disruptive to the competitive enviorment than the other, but outside the taxes=robbery equvialency i don't see how you can conclude that there is a vast difference on principle between subsidies and tax breaks.

Guapo wrote:Sorry, Brad, but I can't agree. A tax 'break' is a tax break. It was their money to begin with. The government isn't giving you something when you get a tax cut/break. It's like saying that if someone robs you at gunpoint, then gives you your hat back, that he gave you a hat. No, he just didn't steal it.

I'm 100% against subsidies. A tax break is not a subsidy, and the only way you can believe that is if you believe that all money belongs to the gunverment to begin with, and that we just 'use' it.

We're being imprecise with our language. Most of the time these "tax breaks" are tax credits, not tax deductions. Credits are when the gov't gives you money, just like a subsidy, but it does it at tax time. Deductions are when you exempt some amount from your taxable income. You're talking about tax deductions, not tax credits. There is no material difference between a tax credit for something and a subsidy for the same thing, other than the mechanism in how it's paid out.

More reasons for a simple tax system. Set a rate, and have the business pay that rate based upon income (NO DEDUCTIONS). The same could be done with personal income tax. The more simple, the more difficult to "game" the system. Also people would see more what they are paying.

I am sure that would be an eye opener!

geojanes wrote:

Guapo wrote:Sorry, Brad, but I can't agree. A tax 'break' is a tax break. It was their money to begin with. The government isn't giving you something when you get a tax cut/break. It's like saying that if someone robs you at gunpoint, then gives you your hat back, that he gave you a hat. No, he just didn't steal it.

I'm 100% against subsidies. A tax break is not a subsidy, and the only way you can believe that is if you believe that all money belongs to the gunverment to begin with, and that we just 'use' it.

We're being imprecise with our language. Most of the time these "tax breaks" are tax credits, not tax deductions. Credits are when the gov't gives you money, just like a subsidy, but it does it at tax time. Deductions are when you exempt some amount from your taxable income. You're talking about tax deductions, not tax credits. There is no material difference between a tax credit for something and a subsidy for the same thing, other than the mechanism in how it's paid out.

Just to add a little more precision, most credits are non-refundable. So, a tax credit only comes into play if you have a tax liability (or past tax liability since carrybacks of credits are generally permitted) . If you have no taxable income and no income tax, then the credit does you no good (whereas a subsiday still would). In this particular case the companies in question have a lot of taxable income.

Brad, Steve, Geo, you guys are starting to look an awful lot a like, which is confusing me. Brad, Geo, can you return to your normal avatarial appearance now that Steve is back.

Aye, sir. Reporting for duty.

Faxmonkey wrote:
Well if you think taxes are armed robbery in the first place then there's some logic to it. However if you argue that taxes are debts to society (agreed upon beforehand through political process) then it becomes basically the same. You either get a deduction of your taxburden via subsidies or tax breaks.
Maybe one is more disruptive to the competitive enviorment than the other, but outside the taxes=robbery equvialency i don't see how you can conclude that there is a vast difference on principle between subsidies and tax breaks.

That's exactly why I made the original comment I did. If the American "right" is defining taxes as a debt to society (hence the government's prerogative on tax cuts/breaks/stipends, whatever) Capitalism is dead.

geojanes wrote:We're being imprecise with our language. Most of the time these "tax breaks" are tax credits, not tax deductions. Credits are when the gov't gives you money, just like a subsidy, but it does it at tax time. Deductions are when you exempt some amount from your taxable income. You're talking about tax deductions, not tax credits. There is no material difference between a tax credit for something and a subsidy for the same thing, other than the mechanism in how it's paid out.

I used the imprecise term because, while I understand the difference, I don't care. Again, it's an issue of philosophy. The government has no money to begin with. Unless a credit puts someone/something in the positive (receive more credits than pay taxes), I don't care how it's done.

But since you think the method is important, wouldn't you also agree that government employees DON'T pay taxes and any "deduction" is really accounting fraud?

*Edit note: I misattributed the quote to Ray Jay.

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