Obama and the Left's Misuse of the Term 'Tax Loopholes'

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

Obama and the Democrats Are Distorting the Term "Loopholes"

According to Obama and the Democrats, business activities like big oil production, corporate jet ownership, and the operation of a hedge fund are taking advantage of tax "loopholes" so that they can avoid paying taxes. This is a complete distortion of the term "loopholes".

Loopholes are an ambiguity in the tax laws that allow someone to skirt paying taxes. For example, if there weren't specific conditions associated with claiming dependent children as a tax exemption, both parents, filing taxes separately, could each reduce their taxes by both claiming the same children as dependents. But, that loophole doesn't exist and only one parent can actually claim any given child as a dependent deduction.

But, the things that Obama-and-company are claiming to be so-called loopholes are not ambiguous. They are legitimate deductions and tax advantages that were intentionally written into the tax laws, over time, by both the Republicans and the Democrats of Congress. Take, for example, the accelerated depreciation for the purchase of corporate jets. Obama and many Democrats call this a loophole. But, it's not. The fact is that it is an intentional tax advantage that was signed into law, by this president, as part of the Stimulus Package with the full intent that it would spur on corporate jet ownership and thus aid the International Machinists and Aerospace Workers Union by "saving or creating" their jobs during this recession. There was nothing ambiguous about it. It was clearly spelled out in that law. But, Obama, once again, has decided to use that particular tax advantage as a form of class warfare. My guess is that both "focus group sessions" and phone polling have determined that using of the word, tax loopholes, yields a more favorable response, politically; especially for those in Obama's own political base. For sure, the word loopholes has a negative connotation and implies, to some extent, that dirty pool is afoot.

To me, using the word "loopholes" is a totally dishonest tactic against what is, in most cases, a completely honest application of the tax laws. Once again, this president is playing fast and loose with the facts to gain political advantage. So much for the supposed "most transparent administration in the history of the United States"!

Obama: Your Marxism Is Showing

Karl Marx, the communist and the social economist, often talked of the struggle among the classes. He obsessed about the class of people known as the bourgeoisie. The bourgeoisie of society were those who placed too much into the value of owning property. Today, if Marx was still alive, he might just call them corporate jet owners. At least that's what Obama referred them as in his speech at his press conference of just last week. In fact, he obsessively mentioned corporate jet owners 6 times in that speech. He also singled out the so-called billionaires and millionaires. Just another bunch of "bourgeoisie" property owners that Obama is obsessed with.

Pitting one class against another is straight out of the Marxist playbook. That's exactly how the Marxist, Hugo Chavez, got elected in Venezuela and, then, managed to literally become president (or dictator) for life. Like Obama, the Marxist Chavez is also about redistribution of wealth. Since being president in Venezuela he has taken land from the rich and given it to the poor and he has nationalized formerly private businesses. All one has to do to understand how Marxism is in Obama's heart is to go back to the 2008 campaign and recall what Obama told "Joe the Plumber": "We need to spread the wealth around.." However, spreading the wealth around takes a serious toll on any economy; usually in the form of inflation. For example, since Chavez has been in office, Venezuelans have suffered from 20+ percent annual inflation and empty grocery shelves. A fate we could see here if Obama isn't stopped in 2012.

If anyone doesn't think this President isn't a socialist/Marxist, they have got their head screwed on wrong or they are just blindly ignoring the truth in what the reporter/writer, Bernie Goldberg, calls a "Slobbering Love Affair". The economy is still in trouble because we have an anti-business President in office. His fixation is to spend and spend while hiding behind Keynesian Economics as the means of promoting wealth redistribution programs like Obamacare that will ultimately sap the economy and that will only further high unemployment. Just look at his handover of GM to the labor unions as a perfect example of Obama's application of Marxist principals. And, as for inflation? We've already seen a doubling of gasoline prices under his rule and many food products are seeing annual double-digit price hikes. Isn't Marxism lovely?

Obama's "Jet" Wars

Yesterday, during one of his getting-to-be-rarer press conferences, our anti-business President launched another rant/attack on corporate jets. This time he singled out the write-offs that the purchasers of corporate jets get as an incentive to buy one of these very expensive items that tend to last for decades if properly maintained. Yet, here's a guy that has no problem saddling-up Air Force One whenever he can; a plane costs $182,000/hour to operate and that is 60 times more expensive to fly than any corporate jet. In a recent "campaign trip" to Puerto Rico, Obama spent 6 hours in the air so he could spend a mere 4 hours on the ground at a cost of over a million dollars for Air Force One and all on the tax payers dime (God! I wish it only was a dime!). Last year, he ponied Air Force One around this country and the world for a total of 172 times and at a cost of around $200 million.

To me, this president has an unnatural obsession with "jets" in general; whether corporate or otherwise. I think he holds a long-harbored jealousy and hatred of the rich and those jets are representative of that wealth (a common neurosis among socialists). Or, maybe, he just sees all jet travel as hurting the environment. In fact, in my last blog entry (below) I questioned whether or not the extreme TSA pat-downs are just a means of greening America by hurting the high-carbon footprint of air travel in this country.

Yesterday wasn't Obama's only "jet" slap-down. Within a month after taking office, in a town hall meeting in Elkhart, Indiana, he launched a similar attack to yesterday's attack on corporate jets and added an attack on corporations that "fly-in" to Las Vegas for conventions; a comment that resulted in both conference cancellations and avoidance and which, I'm quite sure, helped Las Vegas become one of this nation's highest unemployment centers. Then, there were the attacks on the auto CEO's when they "jetted in" for a Congressional hearing on the auto company bailouts. Oh, and lastly, lets not forget how the Obama-anointed National Labor Relations Board is going after Boeing for building a non-union manufacturing facility in South Carolina in order to remain competitive with the euro-subsidized and euro-built Airbus that employs zero American workers.

The fact is that the removal of the "jet" tax breaks would only amount to about $300 million a year in debt reduction against a $14+ trillion deficit. Obama, alone, spent two-thirds of that amount in 2010 flying Air Force One around. However, more importantly, the removal of these "breaks" could result in a substantial loss of jobs in the jet-building industry. Many companies, without these incentives, will probably hold on to their existing jets longer or they won't add aircraft because it would be just too expensive; thus, resulting in an industry slowdown and the forcing of layoffs in an already horrid job's market. It just seems like the Democrats never learn. By targeting the rich, it is always the workers who get hit the hardest. In 1991, the Democrat-controlled Congress passed a Luxury Tax on yachts, furs, and luxury cars. The result was that more than 16,000 boat industry workers -- many highly-paid craftsmen -- lost their jobs. Hundreds of decades-old custom boat builders went out of business. Additionally, other workers in the luxury car and fur industries got laid off. Only 3 years after passage, the tax was "quietly" repealed by Bill Clinton. This President is a moron to ignore that history. But, that's what you get when you have a socialist ideologue as a President.