Where is the US economy headed?

@georgeob1,

Instead co-operating to solve the debt ceiling crisis the Republicans chose to use it as a weapon and make Obama look weak. A default would have led a downward spiral towards maybe even a depression as the world economy is closely tied to the US economy. The brinksmanship is unbecoming of people who swore t0 serve the nation.

1 Reply

@georgeob1,

Are you a republican? If you are is there any possibility that you are confirmation bias?

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@talk72000,

@Talk

Obama makes himself look weak when he doesn't have a plan to offer the American people. The Republicans had a plan in fact they had several plans they were all shot down. So really ask yourself who was trying to solve an issue, the people who had plans or the people who didn't have plans.

Plus I didn't know co-operation came with name calling and phrases such as "Let the adults talk". Really Harry Reid? Adults know what a debt-to-income ratio is and how to fix it. Adults cut back on things, not charge forward and spend more money, when that happens you end up in bankrupcy court.

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@joefromchicago,

But the administration admitted that there were very few "shovel ready" projects

http://www.cbsnews.com/8301-503544_162-20019468-503544.html

Quote:

With unemployment hovering near 10 percent nearly two years after President Obama signed his economic stimulus package, Mr. Obama is acknowledging that, despite his campaign promises, "there's no such thing as shovel-ready projects."

The president gave that remark in an hour-long interview with the New York Times.

So if there were few, if any, "shovel ready" projects, exactly WHERE did that money go?

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@mysteryman,

mysteryman wrote:

So if there were few, if any, "shovel ready" projects, exactly WHERE did that money go?

Two places.

Firstly, the states were in the grip of financial distress resulting from rapidly falling sales and income tax revenues; increasing demands for social welfare services, and, in some cases, already high levels of debt and unfunded pension programs. The grants to states for road and environmental projects that comprised about 40% of the stiumulus bill went to the various highway and environmental departments of the states, but was consumed in paying salaries and benefits for state employees, permitting the states to use the money for other programs. In effect this merely delayed the day of reconing for inflated state bureaucracies for another year.

Secondly, under current environmental law the permitting process for even a simple road imprvement or expansion can take well over a year and cost a great deal of money, very little of it really beneficial to anyone but the bureaucrats in EPA and local governments who shuffle the associated paperwork.

1 Reply

@Thomas,

So.. you are now agreeing that businesses can write off things that I can't?

1 Reply

@Thomas,

Thomas wrote:

roger wrote:
Self employed individuals are businesses.

. . . but they usually aren't corporations. And Parados's original point was about corporations.

I was comparing corporations to individuals, not to businesses or self employed persons.
Corporations get tax deductions that individuals don't. Corporations ALWAYS get those tax deductions. Individuals only get them if they file as a business.

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@parados,

The tax is on income, not revenue. This appears to be a point you have some peculiar difficulty in understanding.

Corporate income is what is left out of revenue after all those costs to which you refer are paid. Perhaps you would like to see a gross receipts tax on business in which their revenue is taxed. That's a good way to suppress economic activity too.

1 Reply

@georgeob1,

Quote:

Secondly, under current environmental law the permitting process for even a simple road imprvement or expansion can take well over a year and cost a great deal of money, very little of it really beneficial to anyone but the bureaucrats in EPA and local governments who shuffle the associated paperwork.

Which is a dignified form of digging holes and filling them up again which might be said to be a harmless process for a nation too rich for its own good.

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@parados,

parados wrote:

Corporations get tax deductions that individuals don't. Corporations ALWAYS get those tax deductions. Individuals only get them if they file as a business.

I think you're mixing up two comparisons that should be distinct: Corporations with individuals on the one hand, and businesses with households on the other.

Corporations exist to run businesses, not households. So if you want to compare corporations to individuals, the only apples-to-apples way of doing it is to compare corporations running businesses (by definition) to individuals running businesses (by choice). When you do that, you will find that corporations and individuals can basically deduct the same expenses that corporations can.

If, instead, you want to compare businesses with households is true that households can't deduct the same expenses. But that makes sense, because households and businesses are different entities serving different purposes.

That said, a typical American household will be able to deduct most of its investment spending.

In the investment portfolio of most households, their own home is by far the largest item. The mortgages on those homes come out of pre-tax income.
The second-largest investment is probably the household's 401k. That comes out of pre-tax income.
The third-largest investment is probably the kids' college education. You can't deduct college tuitions from your income tax, but you get a 20% tax credit, which for the average household works out the same way. And so on.

The average American household can avoid paying taxes on the lion's share of its investment spending---just as the average American business can. Spending on consumption, of course, isn't tax free. But that's another matter.

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@georgeob1,

I understand the difference between taxable income and gross income. Taxable income is all moneys coming in minus allowable expenses.

If corporations lost the tax deductions for certain expenses they are allowed then their "income" would change.

If corporations are "people" then why shouldn't they be subject to the same tax rates as individuals?

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@Thomas,

I think you are missing the "corporations are people" aspect of the issue.
If corporations are not people then fine, they can have a separate tax structure.

If they are people then why should they get cushy deals from the government that other people don't get?

1 Reply

@parados,

Wrong Pardos. You have "people", thats you and me, than you have "PEOPLE", thats business. See the difference? Its a medieval concept. The difference between surfs and royalty.

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@parados,

parados wrote:

I understand the difference between taxable income and gross income.

I don't think you do, because revenue is not income.

Say you start up a store. You buy $1,000's worth of goods a day, sell them for $1,100, and keep $100 a day in profits. Your income in this case is $100 a day, not $1100. If the US and state governments imposed a 40% income tax on the $1100, that would be a complete misunderstanding of what "income" means. It would also remove any incentive for you to start up the shop in the first place.

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@parados,

parados wrote:

If they are people then why should they get cushy deals from the government that other people don't get?

I think I just explained. Corporations are people who run a business. There are other people who run a business---sole proprietors for example---and they get the same tax treatment as corporations do. By contrast, people who run households rather than businesses can't deduct business expenses, because they aren't running a business. I don't see why that's so hard to understand.

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Obama's big black cloud of debt that's hanging over the US today will haunt our economy for decades.

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This pretty much sums up this topic:

Quote:

Have you lost confidence in the ability of world leaders to tackle economic problems?

Yes.....86%.......52996
No....14%........8653

Total votes: 61649

http://www.cnn.com/

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@mysteryman,

mysteryman wrote:

But the administration admitted that there were very few "shovel ready" projects

Maybe so. But then that wasn't my point.

mysteryman wrote:

So if there were few, if any, "shovel ready" projects, exactly WHERE did that money go?

I have no clue. But if there's any hint of Democratic hypocrisy involved, I'm confident you'll point it out in due time.

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@Thomas,

@Thomas

Quote:

In the investment portfolio of most households, their own home is by far the largest item. The mortgages on those homes come out of pre-tax income.

How does a mortgage on a home come out of pre-tax income? I look at my check and I have my medical insurance and 401k which are pre-tax. Then the taxes/SS/unemployment is taken out. I have post tax deductions as well. Then I get my end of the check. With the money I receive I then pay my mortgage.

I get to claim a deduction at the end of the year on the interest I paid on the mortgage but I don't know what the total of the write of is worth.

Not sure how many of you know this, but you can also deduct a portion of your medical expenses if you have spent more then $4500 total in the year.

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@Baldimo,

I think he meant that it's deductible to those who itemize their deductions. He's only semi-right there. The mortgage isn't deductible, only the portion of it that is interest is deductible and is only available to those who have enough deductions to itemize.

One of the "expenditures" that I hear being tossed around for elimination are the property tax deductions. Depending on where one lives property taxes are a huge bite out of the homeowner's budget. My property taxes are more than my total mortgage.

1 Reply

Where is the US economy headed?

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