Misunderestimated?

[JasperL]

Just a little FYI, it wasn't always that way. Some of us more 'mature' folks remember...



On Oct. 22, 1986, President Ronald Reagan signed into law the Tax Reform Act of 1986. Reagan called the 829-page, 33-pound bill “the most sweeping overhaul of the tax code in our nation’s history.”

The new code gradually phased out all deductions for interest paid on car loans, charge-account purchases, vacations and anything else that fell under what the law termed “consumer loans.”

Yes, no whipper snapper here. I was getting a masters degree in tax when TRA 86 was passed. The deduction for mortgage interest is still a housing subsidy in 2014...:lol:

 

[ludin]

The two options are economically identical - that was my point. And they ARE economically identical. You're letting form trump substance, and all the $1,000 an hour lobbyists whose sole job is to insert tax subsidies for their pet industry thank you for distinguishing between the two.

no they are not identical. there is a huge difference in me keeping my money and me having my money used to pay someone else.
that is why welfare, food stamps and depending even SS can be called a subsidy.

why? becuase you pay into it and the money goes to someone else. that is what a subsidy does. it is a transfer of money from one person to another.

you keeping more of what you make is not a transfer from one person to another.

there is a legal and logical difference between the two of them.

 

[ludin]

Yes, no whipper snapper here. I was getting a masters degree in tax when TRA 86 was passed. The deduction for mortgage interest is still a housing subsidy in 2014...:lol:

actually no it isn't. as it doesn't transfer money from one person to another. it only allows you to decrease the amount that you owe on your taxes.

 

[tres borrachos]

actually no it isn't. as it doesn't transfer money from one person to another. it only allows you to decrease the amount that you owe on your taxes.

Liberals love to use the word "subsidy" yet they have no idea what its definition is.

 

[JasperL]

no they are not identical. there is a huge difference in me keeping my money and me having my money used to pay someone else.
that is why welfare, food stamps and depending even SS can be called a subsidy.

But ONLY electric car owners get to "keep their money." You get no tax credit for your gas guzzling Ford F-150. Some hippie does get a $1200 credit for their Nissan Leaf. That lowers the cost of operating a Leaf versus your F-150. It's a subsidy to the electric cars/owners.

The ONLY thing in dispute is which party gets that subsidy (grant or credit doesn't matter). Could be the electric car companies can charge more for electric cars because consumers comparing the operating costs of a Leaf versus F-150 will take into account the annual $1200 subsidy and be willing to pay more for an electric than otherwise, driving up the selling price of electrics. Or, if there is robust competition among electric car companies, it will simply drive up demand for electric cars and have no effect on price but on units sold.

That's not the point - the point is whether the subsidy takes the form of direct deposit or tax credit doesn't change the nature of the SUBSIDY. They are identical in their effect.

 

[JasperL]

Liberals love to use the word "subsidy" yet they have no idea what its definition is.

So, you agree with ludin that a tax credit of $X, and a direct disbursement of the same amount to the same people are fundamentally different? And only one of those is a subsidy?

If so, then it's conservatives who are misguided.

 

[tres borrachos]

So, you agree with ludin that a tax credit of $X, and a direct disbursement of the same amount to the same people are fundamentally different? And only one of those is a subsidy?

If so, then it's conservatives who are misguided.

According to Merriam Webster, this is the definition of subsidy:

sub·si·dy noun \ˈsəb-sə-dē, -zə-\ : money that is paid usually by a government to keep the price of a product or service low or to help a business or organization to continue to function
plural sub·si·dies
CloseStyle: MLA APA ChicagoFull Definition of SUBSIDY
: a grant or gift of money: as a : a sum of money formerly granted by the British Parliament to the crown and raised by special taxation b : money granted by one state to another c : a grant by a government to a private person or company to assist an enterprise deemed advantageous to the public

Ludin is correct. You are not.

 

[ludin]

Liberals love to use the word "subsidy" yet they have no idea what its definition is.

yes because most liberals and govenerment doesn't see your money as yours. it is actually claimed as untaxed assets on their work sheets.

 

[ludin]

But ONLY electric car owners get to "keep their money." You get no tax credit for your gas guzzling Ford F-150. Some hippie does get a $1200 credit for their Nissan Leaf. That lowers the cost of operating a Leaf versus your F-150. It's a subsidy to the electric cars/owners.

The ONLY thing in dispute is which party gets that subsidy (grant or credit doesn't matter). Could be the electric car companies can charge more for electric cars because consumers comparing the operating costs of a Leaf versus F-150 will take into account the annual $1200 subsidy and be willing to pay more for an electric than otherwise, driving up the selling price of electrics. Or, if there is robust competition among electric car companies, it will simply drive up demand for electric cars and have no effect on price but on units sold.

That's not the point - the point is whether the subsidy takes the form of direct deposit or tax credit doesn't change the nature of the SUBSIDY. They are identical in their effect.

yes there are only some tax credits that you get if you participate in them. that doesn't mean they are a subsidy.
a tax credit is a direct deduction from what you owe. so if you bought a leaf and got a 1200 tax credit and were going to get back 400 dollars then you would get back 1600.
if you bout a leaf and got the 1200 tax credit and owed 400 dollar then you would get 800 back.

a subsidy is as was posted above.

money that is paid usually by a government to keep the price of a product or service low or to help a business or organization to continue to function
plural sub·si·dies
CloseStyle: MLA APA ChicagoFull Definition of SUBSIDY
: a grant or gift of money: as a : a sum of money formerly granted by the British Parliament to the crown and raised by special taxation b : money granted by one state to another c : a grant by a government to a private person or company to assist an enterprise deemed advantageous to the public.

 

[JasperL]

According to Merriam Webster, this is the definition of subsidy:

sub·si·dy noun \ˈsəb-sə-dē, -zə-\ : money that is paid usually by a government to keep the price of a product or service low or to help a business or organization to continue to function
plural sub·si·dies
CloseStyle: MLA APA ChicagoFull Definition of SUBSIDY
: a grant or gift of money: as a : a sum of money formerly granted by the British Parliament to the crown and raised by special taxation b : money granted by one state to another c : a grant by a government to a private person or company to assist an enterprise deemed advantageous to the public

Ludin is correct. You are not.

But they have an IDENTICAL effect. And shouldn't we, in the pursuit of clarity when describing government actions, use the same term to describe actions with an identical effect? Using different terms to describe actions with an identical effect dis-informs the public, not informs them.

Besides, we can offer definitions all day. Here's one from Investopedia:

Subsidy Definition | Investopedia

Definition of 'Subsidy'

A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy is usually given to remove some type of burden and is often considered to be in the interest of the public

I guess Obama should just start offering tax credits for everything he wants to 'encourage' and you guys will all pretend these aren't in fact subsidies, and aren't spending. Heck, if he offers a tax credit for the full purchase price of an electric vehicle, that's NOT a subsidy of electric vehicles, he's just allowing buyers of electric vehicles to keep more of their own hard earned money!! Furthermore, that is a virtuous tax cut, and NOT NOT NOT spending! They are different!

You all are taking a position that cannot be defended logically or economically. A tax credit for the full purchase price of an electric vehicle is obviously, in any way that matters, a direct subsidy of electric cars. What other term can we use to describe that act if not 'subsidy' and how would using this alternative term improve our understanding of the effect of that credit?

 

[JasperL]

According to Merriam Webster, this is the definition of subsidy:

sub·si·dy noun \ˈsəb-sə-dē, -zə-\ : money that is paid usually by a government to keep the price of a product or service low or to help a business or organization to continue to function
plural sub·si·dies
CloseStyle: MLA APA ChicagoFull Definition of SUBSIDY
: a grant or gift of money: as a : a sum of money formerly granted by the British Parliament to the crown and raised by special taxation b : money granted by one state to another c : a grant by a government to a private person or company to assist an enterprise deemed advantageous to the public

Ludin is correct. You are not.

Here's another definition from Wiki: Subsidy - Wikipedia, the free encyclopedia

A subsidy is a form of financial or in kind support extended to an economic sector (or institution, business, or individual) generally with the aim of promoting economic and social policy.[1] Although commonly extended from Government, the term subsidy can relate to any type of support - for example from NGOs or implicit subsidies. Subsidies come in various forms including: direct (cash grants, interest-free loans) and indirect (tax breaks, insurance, low-interest loans, depreciation write-offs, rent rebates)

 

[shrubnose]

This country must have unlimited coffers.

I don't know about that, but it does have the IRS and the ability to print money.

 

[sangha]

That's a beautiful ruse that the elites have conjured up to defend tax subsidies! Seriously, modern day followers of Goebbels would be proud.

If you're a business, there are two ways government can subsidize you. One is to write you a check directly - we all see this as a subsidy. The other is to write into the code a special deduction or credit for your industry, or even your company (that's been done!). It's as direct and effective as writing a check, but it doesn't appear as "spending" and only gear heads who have more time than most to study the arcane 1,000 tax omnibus bill will even notice it, and there is no way for even them to see the real impact to a particular company, and we'll only see the impact on industry years later, if that. But it's as real as a direct check, just artfully hidden from view.

If I recall correctly, the biggest subsidy on the books is the deduction for mortgage interest. In general, housing isnt' deductible - it's a personal expense like electricity, TV, lawn mowing, etc. But Congress decided to allow a deduction for a very specific kind of housing - owner occupied housing, secured by a special kind of debt. We can deduct that interest personally, but cannot deduct other kinds of interest. It's a direct and incredibly large subsidy to the housing industry, with benefits that increase as the amount of debt and the income of the borrower increase. This subsidy is useless to someone paying no income tax or who does not pay enough in interest to itemize.

And the reason it's a subsidy is some people can deduct part of their housing costs, and others cannot. If you rent, housing isn't deductible. We've paid off our mortgage - and get no housing subsidy. So it's only a special type of person who can deduct housing - we are subsidizing housing for that group, but not for others.

What we should do is calculate the amount, and send checks, the largest to the most indebted home owners who report the highest incomes. We might still keep that subsidy in place, but the public wouldn't be fooled that a tax deduction for mortgage interest is somehow different. It's not - the effect is identical to sending a check, and if the effect is identical (and it is) they only differ in form.

A lot of people want to pretend that there's a significant difference between taking tax money from people and then giving some of it back (a subsidy) and not taking the money to begin with (a tax break)

It doesn't take a lot thought to realize the effect is the same, but some people have to pretend it's a whole different thing in order to be poutraged

 

[sangha]

According to Merriam Webster, this is the definition of subsidy:

sub·si·dy noun \ˈsəb-sə-dē, -zə-\ : money that is paid usually by a government to keep the price of a product or service low or to help a business or organization to continue to function
plural sub·si·dies
CloseStyle: MLA APA ChicagoFull Definition of SUBSIDY
: a grant or gift of money: as a : a sum of money formerly granted by the British Parliament to the crown and raised by special taxation b : money granted by one state to another c : a grant by a government to a private person or company to assist an enterprise deemed advantageous to the public

Ludin is correct. You are not.

Subsidy Definition | Investopedia

A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction.

http://en.wikipedia.org/wiki/Subsidy

A subsidy is a form of financial or in kind support extended to an economic sector (or institution, business, or individual) generally with the aim of promoting economic and social policy.[1] Although commonly extended from Government, the term subsidy can relate to any type of support - for example from NGOs or implicit subsidies. Subsidies come in various forms including: direct (cash grants, interest-free loans) and indirect (tax breaks, insurance, low-interest loans, depreciation write-offs, rent rebates).[2]

http://www.businessdictionary.com/definition/subsidy.html

Economic benefit (such as a tax allowance or duty rebate) or financial aid (such as a cash grant or soft loan) provided by a government to (1) support a desirable activity (such as exports), (2) keep prices of staples low, (3) maintain the income of the producers of critical or strategic products, (4) maintain employment levels, or (5) induce investment to reduce unemployment. The basic characteristic of all subsidies is to reduce the market price of an item below its cost of production. Also called subvention.

Read more: http://www.businessdictionary.com/definition/subsidy.html#ixzz31WgXFk8R

 

[sangha]

All the right wingers are insisting that tax credits are not subsidies, while insisting that the tax credits people get for buying on the exchanges are subsidies

for right wingers, the definition of "subsidy" is the same as their definition of "unconstitutional. All it means is "I don't like it"

 

[tres borrachos]

Here's another definition from Wiki: Subsidy - Wikipedia, the free encyclopedia

Sorry Jasper, I never accept Wiki as a source. Anyone with a Wiki account can modify it.

Merriam Webster is good enough for me.

You and I won't agree on this. Getting something from the government is never the same thing as keeping more of the money you earn to me.

 

[sangha]

Sorry Jasper, I never accept Wiki as a source. Anyone with a Wiki account can modify it.

Merriam Webster is good enough for me.

You and I won't agree on this. Getting something from the government is never the same thing as keeping more of the money you earn to me.

And yet, you call the tax credits on the exchange "subsidies" even though the MW definition doesn't describe those tax credits

We don't get the subsidies. We pay them. Fun, isn't it?

 

[JasperL]

A lot of people want to pretend that there's a significant difference between taking tax money from people and then giving some of it back (a subsidy) and not taking the money to begin with (a tax break)

It doesn't take a lot thought to realize the effect is the same, but some people have to pretend it's a whole different thing in order to be poutraged

The only reason I care is the big boys who benefit from these things engineer their subsidies as indirect because they're hidden from the public view. And politicians LOVE tax credits and deductions for pet causes and industries because they don't show up as the dreaded increases in spending. The effect is the same, but people successfully propagandized don't see it this way, so it's a beautiful way to enrich your big donors under the public radar - just write a tax break into the IRC.

One favorite of mine was during the financial crisis. IRS rules prohibit buyers of companies from using NOLs of the company they purchase. Paulson (and I'm not mentioning him to make a partisan point) simply wrote a rule as Sec. of Treas. that allowed one purchaser of one failed bank to use $billions in losses of that failed bank. It was a direct subsidy to the purchaser, worth the marginal rate times those billions in direct aid - as good as a check. But this Federal subsidy of that 'market' purchase was almost entirely hidden - only geeks found it and mentioned it but if Paulson had written a check, for perhaps $800 million, there would have been outrage - but this way.....NOTHING. No loan, nothing to pay back, no grant, showed up on no reports, but as good as free money to the buyer!

It's the way lobbying works in D.C. for the most part.

 

[sangha]

The only reason I care is the big boys who benefit from these things engineer their subsidies as indirect because they're hidden from the public view. And politicians LOVE tax credits and deductions for pet causes and industries because they don't show up as the dreaded increases in spending. The effect is the same, but people successfully propagandized don't see it this way, so it's a beautiful way to enrich your big donors under the public radar - just write a tax break into the IRC.

One favorite of mine was during the financial crisis. IRS rules prohibit buyers of companies from using NOLs of the company they purchase. Paulson (and I'm not mentioning him to make a partisan point) simply wrote a rule as Sec. of Treas. that allowed one purchaser of one failed bank to use $billions in losses of that failed bank. It was a direct subsidy to the purchaser, worth the marginal rate times those billions in direct aid - as good as a check. But this Federal subsidy of that 'market' purchase was almost entirely hidden - only geeks found it and mentioned it but if Paulson had written a check, for perhaps $800 million, there would have been outrage - but this way.....NOTHING. No loan, nothing to pay back, no grant, showed up on no reports, but as good as free money to the buyer!

It's the way lobbying works in D.C. for the most part.

And while they all protest when someone calls a tax credit a "subsidy" and run to their dictionaries, the very same people are calling the exchanges tax credits "subsidies" and whining about how unfair it is.

 

[JasperL]

Sorry Jasper, I never accept Wiki as a source. Anyone with a Wiki account can modify it.

Merriam Webster is good enough for me.

You and I won't agree on this. Getting something from the government is never the same thing as keeping more of the money you earn to me.

Wiki wasn't central to my point - I just posted that discussion to illustrate that if you want to rely on the dictionary definition of the word to ignore the real world effects, there are OTHER definitions broad enough to include how subsidies actually work in the REAL WORLD.

Besides, the main point was simple, stated many times - the effects of a tax deduction/credit are identical to direct spending. Do you dispute this? Surely you can't because it's math. In my simple example, both the electric car owner and government are totally indifferent between getting that $1200 annually via tax credit from IRS or direct deposit from DOE.

So why should we call acts with IDENTICAL effects by different names? Does that increase our understanding of what is happening?

 

[tres borrachos]

Wiki wasn't central to my point - I just posted that discussion to illustrate that if you want to rely on the dictionary definition of the word to ignore the real world effects, there are OTHER definitions broad enough to include how subsidies actually work in the REAL WORLD.

Besides, the main point was simple, stated many times - the effects of a tax deduction/credit are identical to direct spending. Do you dispute this? Surely you can't because it's math. In my simple example, both the electric car owner and government are totally indifferent between getting that $1200 annually via tax credit from IRS or direct deposit from DOE.

So why should we call acts with IDENTICAL effects by different names? Does that increase our understanding of what is happening?

A subsidy is something that the government gives that comes from other peoples' money.

A tax credit is less of the money that I make going to the government so they can give more subsidies to others.

We'll never see eye to eye on this.

 

[sangha]

A subsidy is something that the government gives that comes from other peoples' money.

Unless it's a tax credit someone gets on the exchange.

Then, it's a subsidy

 

[JasperL]

A subsidy is something that the government gives that comes from other peoples' money.

A tax credit is less of the money that I make going to the government so they can give more subsidies to others.

We'll never see eye to eye on this.

Hilarious that you won't (because you cannot) address the central point - they are IDENTICAL in result.

The reason big boys and corrupt politicians love tax credits and special interest deductions is, however, for the reason you're illustrating here. They're hidden and seen as somehow different than direct grants.

Heck, around here the big thing is TIFs - tax increment financing. A well connected builder in our booming downtown applies for a TIF grant. Essentially, the developer with connections gets to keep (at least part of) the sales tax from the retail operations on the ground floor of the building and the city freezes property taxes for the upstairs residential areas at the pre-development level. Of course, all the existing buildings and businesses don't get this subsidy - only those renovating existing buildings AND connected to the politicos who grant these things. The City could, and should, just write these developers a check for, say, $500,000 or $1 million. But that's too obvious and the rubes would object. What the City does instead is just reduce tax collections, compared to all their competitors (unconnected suckers) who couldn't get a TIF, for five years or so - same effect as a check.

And put "TIF" into a news story and readers' eyes glaze over and it's seen as economic incentives!! Etc.

In a recent case the city was about to issue a TIF deal to an out of town beauty school that wanted to locate downtown. Well, a friend's family owns a beauty school that's been in business downtown for 40 years or more. They screamed bloody murder - not because they were getting a competitor, but because the CITY was proposing to SUBSIDIZE this competitor with a TIF and give them a tax advantage (SUBSIDY) over a long standing, successful local business. My friend and his family and eventually hired guns had every right to scream bloody murder and eventually got most of that SUBSIDY killed, as was appropriate.

 

[ludin]

Hilarious that you won't (because you cannot) address the central point - they are IDENTICAL in result.

Repeating the same thing over and over again doesn't make it anymore fact than the first time you said it.

 

[AlbqOwl]

That's semantics. If I pass a law that allows for a tax credit for an oil depletion allowance, it's no different than passing a law giving the industry a from the Treasury in the form of a subsidy. The result is the same, the company gets money that they otherwise wouldn't.

But these threads show the conservative's true colors. It's just fine giving money to oil companies but not the poor or desperate.

As I previously posted, a lot of the oil subsidies DO go to people considered 'poor or desperate', help keep food costs down with some tax breaks allowed for fuel for farm machinery, and about a fifth of it is to put oil into the strategic oil reserve. The tax breaks oil companies get are intended to promote hiring and keep industry in the USA. And those tax breaks do have that positive effect. Take it away from oil companies and you won't hurt the oil companies, and any savings for government are likely to be erased in lost jobs, increased unemployment insurance payments, and lost tax revenues from more business being done outside the USA.

The oil companies will just simply elect to do more of their exploration and production elsewhere. The government won't get much if any more revenue and could very easily get less. More people will be out of work and there will be less opportunity for all. Those of us who use petroleum products will likely see an increase in our costs. But those liberals who so resent big oil will feel righteous. And that's all that matters, yes?

Just like they feel righteous that Obamacare is providing insurance for a few people who didn't have it before. So the fact that ten times that many are being hurt is immaterial.