Starting with his presidential run in 2008, and for the last 7 years, President Obama has been talking about closing tax loopholes for businesses. However, his use of the word "loopholes" is incorrect. What he should be referring to is "tax incentives" that corporations get for certain business activities. Using the word loopholes makes tax breaks and incentives sound nefarious or even criminal. The reality is that most of the "loopholes" that the President is talking about are legal tax breaks that the IRS or Congress ruled on as incentives for jobs, or to provide our corporations with international competitiveness.
The biggest tax incentives (or, in his vernacular, loopholes) that the President wants to eliminate are those for buying and operating corporate jets. Along with high CEO salaries, they gall him more than anything else because they are a symbol of wealth. I'm sure he feels that corporate jets shouldn't exist because it's unfair that the average person can't have one too.
Today, if a corporation buys a jet, the cost enjoys accelerated depreciation for tax purposes, of just 5 years under the law. That's 2 years shorter than the depreciation on commercial jet liners. Thus, in just 5 years a company can offset nearly all of the cost of buying a jet -- less inflation -- by lowering its taxes. There is nothing abnormal about this. Corporations have always been allowed to depreciate "high ticket" capital expense items such as replacement roofs, buildings, phone systems, cars, trucks, manufacturing equipment, etc. At the same time, the operation of a jet and all associated costs are deductible as business expenses in the same way office supplies are deductible under the law, again to lower the tax burden. Now, to be fair, the use of a corporate jet did have a "tax loophole" in that the corporation could also deduct the cost of using the jet for non-business entertainment uses, but that was identified in 2007 and was finally closed in 2012 by the IRS.
The primary reason that the corporate jet tax breaks exist is to keep over 1.2 million jobs intact. That's how many workers are directly or indirectly employed in making them and their parts; flying them as pilots and co-pilots; maintaining and servicing them; and, working in the airports they use throughout the country.
Similar tax incentives that Obama believes are loopholes are those that allow oil drillers to depreciate drilling equipment, trucks, and cars. The expense of drilling the well is also deductible. However, in this case, it is not about fairness but global warming. Anything he can do to slow down oil exploration and raise the price of oil is his main objective but, like corporate jets, slowing down oil exploration and production will only cost Americans their jobs. Something we can ill afford in an already slow economy.
Make no mistake about it. Obama has created his own "loopholes". He has created tax deductions for buying electric cars and solar and wind power systems that only benefit the rich who can afford to buy them.
I think that -- instead of attacking loopholes that create jobs -- President Obama should think about all the policies that he has implemented that retard job growth.
References:
2015 State of the Union Address: Obama attacks 'loopholes' for wealthy, business: http://www.washingtonexaminer.com/obama-attacks-loopholes-for-wealthy-business/article/2559008
New Dogfight Between Obama and Private Jet Industry: http://www.cnbc.com/id/100439712
Obama budget would slash oil tax breaks while boosting renewables: http://fuelfix.com/blog/2015/02/02/obama-budget-would-slash-oil-tax-breaks-while-boosting-renewables/
IRS Lays Out New Rules on Corporate Jet Use: https://www.google.com/search?q=IRS+Lays+Out+New+Rules+on+Corporate+Jet+Use+&ie=utf-8&oe=utf-8
Under Obama: Recovery Has Created Far More Low-Wage Jobs Than Better-Paid Ones: http://www.nytimes.com/2014/04/28/business/economy/recovery-has-created-far-more-low-wage-jobs-than-better-paid-ones.html
Subscribe to:
Post Comments (Atom)
Posts
No comments:
Post a Comment