Another BHO Tax Myth

Skull Pilot

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Nov 17, 2007
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Obama's '$4 Billion for Exxon' Myth - WSJ.com

In the last debate, Sen. Obama said, "We both want to cut taxes, the difference is who we want to cut taxes for. . . . The centerpiece of [McCain's] economic proposal is to provide $200 billion in additional tax breaks to some of the wealthiest corporations in America. Exxon Mobil, and other oil companies, for example, would get an additional $4 billion in tax breaks."

That $200 billion figure is false. Yet FactCheck.org and most reporters never bothered to ask Mr. Obama where he came up with it. FactCheck.org did discover that Mr. Obama's claim about "$4 billion in tax breaks for energy companies" came from a two-page memo from the Center for American Progress Action Fund -- a political lobby headed by John Podesta, former chief of staff to Bill Clinton, with tax issues handled by two lawyers, Robert Gordon and James Kvaal, former policy directors for the John Kerry and John Edwards campaigns. Those lawyers confused average tax rates (after credits and deductions) with the 35% statutory rate on the next dollar of earnings, so that cutting the latter rate from 35% to 25% would supposedly cut big oil's $13.4 billion tax bill by 28.5%, or $3.8 billion. That is not economics; it is not even competent bookkeeping.

The Committee for a Responsible Federal Budget, by contrast, correctly notes that, "Senator McCain has called for the repeal and reform of a number of tax preferences for oil companies," which would raise the oil companies' taxes by $5 billion in 2013.

When fact checkers do look into campaign claims on taxes, they invariably cite estimates from the Urban Institute and Brookings Institution's Tax Policy Center (TPC). The TPC estimates that the McCain corporate tax cuts would lose $734.7 billion of revenue over 10 years (2009-2018). Mr. McCain would also allow immediate expensing through 2013 for equipment normally written-off over three to five years, but no deduction for interest expense if the investment was made with borrowed money. Once equipment has been written-off in 2009 or 2010 it can't be written-off in later years, so the estimated revenue loss over 10 years is only $45 billion, or $4.5 billion per year. Altogether, that adds up to $78 billion a year in corporate tax cuts, not $200 billion.

Yet the $78 billion TPC estimate is also nonsense because it's entirely static. The estimate assumes raising or lowering corporate tax rates has no effect on corporate decisions about where to locate production, income or costs, and no effect on the economy's performance. If that made sense, the corporate tax rate could be doubled to 70% and the only effect (according to TPC estimates) would be to double corporate tax receipts. Such a static analysis is obviously worthless, yet it is nonetheless crucial to the TPC's estimates of the revenue supposedly lost from the McCain plan and its alleged distributional effects.

Mr. McCain proposes to cut the corporate tax rate to 30% in 2010-11, 28% in 2012-13, 26% in 2014, and 25% thereafter. The timing could be better. Why not cut the corporate tax rate to 28%-30% right away? Could anyone doubt that would help struggling businesses to minimize cutbacks and layoffs? Could anyone doubt it would invigorate the stock market?

Phasing in tax-rate reductions -- as in 1981 and 2001 -- has become a bad habit among Republicans. The trouble is that knowing tax rates will be lower in the future provides incentives to delay earning and reporting income until after they fall. In the American Economic Review, December 2006, University of Michigan economists Christopher House and Matthew Shapiro found "the phased-in tax cuts called for in the 2001 tax bill worked to depress employment as firms and workers waited for the lower tax rates to materialize."

In the U.S today, the combined federal and state tax on corporate profits averages 40%, which is increasingly out of line with the rest of the world. The average corporate tax rate dropped to 25.9% in 2008 from 37.7% in 1996 among 97 countries surveyed by KPMG, and to 23.2% from 38% in the European Union. Corporate tax revenues typically increased as a share of GDP after tax rates were reduced. Countries with corporate tax rates from 12.5% to 25%, such as Ireland, Switzerland, Austria and Denmark, routinely collect more corporate tax revenue as a share of GDP than the anemic 2.1% figure the Congressional Budget Office projects for the U.S.

In a new Tax & Budget Bulletin at Cato.org, Jack Mintz of the University of Calgary estimates that a federal-state corporate tax rate higher than 28% loses money for the government. Kimberly Clausing of Reed College estimated revenues would be maximized with a 33% federal and state tax. Kevin Hassett and Alex Brill of the American Enterprise Institute found "the revenue maximizing point has dropped over time, and is about 26%." In all of these studies, cutting the federal tax to 28%-30% sooner rather than later is very likely to raise revenue.

Regardless who wins the election, an accelerated version of Mr. McCain's original plan -- to cut the corporate tax rate to 28%-30% and expense investments in business equipment -- is by far the most potent "stimulus plan" anyone has yet proposed. And far from costing $200 billion a year, as Mr. Obama claims, it wouldn't cost a dime.


It seems to me the more you read about BHO the more mistakes you find.

And why haven't the fact checkers done this? And how many people have to tell you that cutting corporate taxes will result in more growth and more tax revenues before you take you lips off of Obama's skinny ass?

Could it be that BHO doesn't allow press who disagree with him access to the miracle?

Three Reporters From McCain-Endorsing Newspapers Removed From Obama's Plane - FOXNews.com Elections

Washington Times - Washington Times kicked off Obama plane

This feels like the journalistic equivalent of redistributing the wealth. We spent hundreds of thousands of dollars covering Senator Obama's campaign, traveling on his plane, and taking our turn in the reporters' pool, only to have our seat given away to someone else in the last days of the campaign," said Washington Times Executive Editor John Solomon.

It seems BHO only wants "change" for those who kiss his ass....I mean agree with him
 
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Why is it that when BHO is caught in an outright lie or at lease an blatant misunderstanding of taxes and their effect on the economy, all the Obama ass kissers who defend his tax plan disappear like cockroaches when the lights are turned on?
 
The Washington Times is owned by the Rev. Moon who believes he is the Second Coming of Christ.
 
It is people like you that are responsible for the mess we are in. Anyone who voted for Bush twice should be ashamed of themselves.

If you are talking about the economic mess I would have to disagree with you on that.

The economic mess has mainly to do with government interference in the housing market begun by Carter and expanded by Clinton.

Suggest you view this tape. Four million others have.

[youtube]<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/TxgSubmiGt8&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/TxgSubmiGt8&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>[/youtube]

Then watch this:

[youtube]<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/_MGT_cSi7Rs&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/_MGT_cSi7Rs&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>[/youtube]
 
If you are talking about the economic mess I would have to disagree with you on that.

The economic mess has mainly to do with government interference in the housing market begun by Carter and expanded by Clinton.

Suggest you view this tape. Four million others have.

[youtube]<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/TxgSubmiGt8&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/TxgSubmiGt8&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>[/youtube]

Then watch this:

[youtube]<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/_MGT_cSi7Rs&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/_MGT_cSi7Rs&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>[/youtube]

Bullshit.

Phil Gramm deregulation of Wall Street, and Bush's borrow and spend madness led us into this mess.
 
Bullshit.

Phil Gramm deregulation of Wall Street, and Bush's borrow and spend madness led us into this mess.

Fair enough. Expain to me in your own words:

1. How Phil Gramm's deregulation of Wall Street caused the problem.

2. How Bush was able to continue his borrow and spend policies, as you put them, under a Democratically controlled Congress for the past two years.
 
Fair enough. Expain to me in your own words:

1. How Phil Gramm's deregulation of Wall Street caused the problem.

2. How Bush was able to continue his borrow and spend policies, as you put them, under a Democratically controlled Congress for the past two years.

:popcorn::popcorn:
 
Fair enough. Expain to me in your own words:

1. How Phil Gramm's deregulation of Wall Street caused the problem.

2. How Bush was able to continue his borrow and spend policies, as you put them, under a Democratically controlled Congress for the past two years.

Democrats did not control Congress the last two years.

Lieberman is a DINO.

Derivatives allowed companies to lend more money than they actually had. The same thing happened in the crash of 1929. Warren Buffett predicted it months before it happened. You can read about it at this link....

Buffett On Derivatives: 'A Fool's Game' - Seeking Alpha
 
Democrats did not control Congress the last two years.

I'm sure Pelosi and Reid will be saddened to hear this news.

Derivatives allowed companies to lend more money than they actually had. The same thing happened in the crash of 1929. Warren Buffett predicted it months before it happened. You can read about it at this link....

No where in your link do I see Gramm's name or bill mentioned by Buffet.

Also:

Clinton signed into law the bill you refer to.
Buffet himself has purchased more than 20 billion in derivatives.
Derivatives existed before the bill you refer to.

Now listen, I'm not saying there isn't blame to go around but the current economic issues have to do with defaults on sub prime mortgages and over valued housing. I think that is pretty universally accepted. The cause of this, in my opinion, was the Community Reinvestment Act.
 
Phil Gramm's opposition to regulating derivatives allowed companies to bury them and not tell shareholders and regulators. Shareholders and regulators did not understand the risks inherent within the firms. Gramm believed that firms could regulate themselves. They did not. In fact, they took on far more debt because more debt meant more revenues which meant more pay for themselves.

The collapse we've experienced is a result of too much debt. Gramm's opposition to transparency contributed directly to the collapse.
 
Democrats did not control Congress the last two years.

Lieberman is a DINO.


Buffett On Derivatives: 'A Fool's Game' - Seeking Alpha

Chris, use wikipedia if you have to... don't make the left-leaning individuals on here look bad.

The Democrats took control of Congress after the last election in 2006.

Gramm's bill in 1999 allowing deregulation of commercial and investment banks allowed commercial banks to sell their mortgages as securities to the investment banks which were then sold overseas in various different forms. When people defaulted on their mortgages, it had a ripple effect on not only the commercial bank, but the investment bank and wherever they sold the security to overseas as well. AIG insured the banks up to a certain percentage of the mortgages. When the banks were falling, AIG fell, Bear Sterns, Lehman Brothers, Merryl Lynch, also fell.

Gramm was the senior economic advisor to John McCain until July 2008 when Gramm said that the recession was in our head and that we were a nation of whiners.
 
Phil Gramm's opposition to regulating derivatives allowed companies to bury them and not tell shareholders and regulators. Shareholders and regulators did not understand the risks inherent within the firms. Gramm believed that firms could regulate themselves. They did not. In fact, they took on far more debt because more debt meant more revenues which meant more pay for themselves.

The collapse we've experienced is a result of too much debt. Gramm's opposition to transparency contributed directly to the collapse.

I agree it contributed. But the underlying problem was and continues to be loan defaults that have devalued the mortgage backed securities.

Gramm's bill had nothing to do with that.

People were given loans they could not afford. This traces back to the Community Reinvestment Act.

Government injected itself into the housing market and we are now paying the price for that.
 

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