No tax left behind
While President Barack Obama is proposing to cut some taxes for companies that hire workers, his budget would raise a host of other taxes on businesses and wealthy individuals.
The budget proposal released Monday would extend Obama’s signature Making Work Pay tax credit — $400 for individuals, $800 for a couple filing jointly — through 2011. But it would alsoimpose nearly $1 trillion in higher taxes on couples making more than $250,000 and individuals making more than $200,000 by not renewing tax cuts enacted under former President George W. Bush. Obama would extend Bush-era tax cuts for families and individuals making less.
Obama revived numerous proposals for business tax increases that didn’t fare well in Congress last year, including a scaled-down plan to increase taxes on U.S. companies with major overseas operations, and plans to increase taxes on oil and gas companies.
In all, Obama would increase taxes on some businesses and wealthy individuals by a total of about $1.4 trillion over the next decade, while cutting taxes for middle-class workers and other businesses by about $330 billion. The bottom line: Tax receipts would increase by about $1.1 trillion over the next decade.
Roy Cordato weighs in on the tax hike on drilling:
One well-publicized element of President Obama’s proposed budget is the elimination of “subsidies” for fossil fuels. But, in large part, these are not subsidies at all. One proposal relates to the tax treatment of oil-company incomes. According to the New York Times, Obama proposes to eliminate the expensing of what are called intangible drilling costs. These represent about 70 percent of all drilling costs and are made up of labor, supplies, contractors, and fuel. Under current law, oil companies can write off the expenses against other income in the year that those expenses are incurred, rather than depreciating them over time. In reality, to allow expensing of these payments is not a subsidy. It avoids the imposition of a tax penalty on oil drilling and is an example of how all production costs should be treated by the tax code…
So Obama, in proposing to eliminate expensing of these drilling costs, is not abolishing a tax subsidy, but is imposing a tax penalty. And, given his often-articulated disdain for fossil fuels, he is probably quite aware of this fact.
Sen. Charles Grassley sums up:
“The proposed budget’s $300 billion in tax relief over the next 10 years for individuals, families, and businesses is mostly targeted and limited, often to people who don’t have to pay any taxes,” said Senator Charles Grassley of Iowa, the ranking Republican on the tax-writing Senate Finance Committee. “The tax increases in the budget dwarf the tax relief.”
Now that the feds and the state of Oregon have opened the floodgates on taxes for the “wealthy,” Forbes wonders if other state governments will follow suit:
Does Oregon’s vote mean more income tax hikes targeted at the “rich” are on the way? That’s certainly what state employee unions, which backed the Oregon increase, and liberal leaning groups are hoping. And Jamie Yesnowitz, a senior manager in Grant Thornton’s state and local tax group in Washington, D.C., thinks such hikes are very possible.
Sure, state politicians may be cowed and foreswearing tax hikes now, he says. But as state finances deteriorate further and budget deadlines loom, the better off will again be a tempting target. Consider: States are already projecting a combined budget gap of $102 billion for the upcoming fiscal year beginning July 1, and that gap is likely to grow $180 billion, the Center on Budget and Policy Priorities in Washington, D.C., projects.
Last year, six of the 10 states with the highest income tax rates–Oregon, California, Hawaii, New York, New Jersey and North Carolina–raised their levies on high earners, at least temporarily.
Yesnowitz speculates that in 2010, tax hikes for high-income folks could well spread from the West and East Coasts to the middle of the country. “Everything is on the table this year,” he says.
State tax hikes would hit the wealthy particularly hard if President Barack Obama gets his way. In its FY 2011 budget proposal, released Monday, the Obama administration proposed both allowing the Bush tax cuts for those earning more than $250,000 to expire and reducing the value of deductions (including for state and local taxes) for those earning $250,000 plus. So high-income families would pay a top rate of 39.6%, but would only be able to claim their state and local tax deductions against a 28% rate. In addition, the administration wants to reinstate for high-income folks a separate haircut to itemized deductions that was gradually phased out under the Bush tax cuts. (Plus, some upper-middle- class folks lose all the advantage of state and local income tax deductions to the alternative minimum tax.)
***
The era of big government has returned with a vengeance, in the form of the largest federal work force in modern history.
The Obama administration says the government will grow to 2.15 million employees this year, topping 2 million for the first time since President Clinton declared that “the era of big government is over” and joined forces with a Republican-led Congress in the 1990s to pare back the federal work force.
Most of the increases are on the civilian side, which will grow by 153,000 workers, to 1.43 million people, in fiscal 2010.
***
Backdoor taxes on the middle-class* [see update]:
While the administration is focusing its proposal on eliminating tax breaks for individuals who earn $250,000 a year or more, middle-class families will face a slew of these backdoor increases.
The targeted tax provisions were enacted under the Bush administration’s Economic Growth and Tax Relief Reconciliation Act of 2001. Among other things, the law lowered individual tax rates, slashed taxes on capital gains and dividends, and steadily scaled back the estate tax to zero in 2010.
If the provisions are allowed to expire on December 31, the top-tier personal income tax rate will rise to 39.6 percent from 35 percent. But lower-income families will pay more as well: the 25 percent tax bracket will revert back to 28 percent; the 28 percent bracket will increase to 31 percent; and the 33 percent bracket will increase to 36 percent. The special 10 percent bracket is eliminated.
Investors will pay more on their earnings next year as well, with the tax on dividends jumping to 39.6 percent from 15 percent and the capital-gains tax increasing to 20 percent from 15 percent. The estate tax is eliminated this year, but it will return in 2011 — though there has been talk about reinstating the death tax sooner.
Millions of middle-class households already may be facing higher taxes in 2010 because Congress has failed to extend tax breaks that expired on January 1, most notably a “patch” that limited the impact of the alternative minimum tax. The AMT, initially designed to prevent the very rich from avoiding income taxes, was never indexed for inflation. Now the tax is affecting millions of middle-income households, but lawmakers have been reluctant to repeal it because it has become a key source of revenue.
Without annual legislation to renew the patch this year, the AMT could affect an estimated 25 million taxpayers with incomes as low as $33,750 (or $45,000 for joint filers).
*Update*: Hmmm…and more on the Reuters retraction here. And here.
See what others have said
Note from Michelle: This section is for comments from michellemalkin.com's community of registered readers. Please don't assume that I agree with or endorse any particular comment just because I let it stand. A reminder: Anyone who fails to comply with my terms of use may lose his or her posting privilege.
Comments
You must be logged in to post a comment.
 |
Obama’s latest campaign angle: I’ve been saving America from wild Republican debts
May 24, 2012 04:33 PM by Doug Powers
36 Comments
Senate finally passes a budget approves bill striking word ‘lunatic’ from federal law
May 24, 2012 11:22 AM by Doug Powers
190 CommentsStammertime: Jay Carney asked if Chicago protests have soured Obama’s support for OWS
May 23, 2012 07:44 PM by Doug Powers
53 Comments
S.E. Cupp, Hustler, and the four stages of conservative female abuse
May 23, 2012 02:13 PM by Michelle Malkin
142 CommentsBiden: Tea Party stopped us from growing the economy
May 23, 2012 01:55 PM by Doug Powers
44 Comments
Pig Maher’s boy Bill Burton mocks my support of Hatch challenger Dan Liljenquist
May 23, 2012 11:37 AM by Michelle Malkin
32 CommentsFree speech blogburst: Show solidarity for targeted conservative bloggers; Update: It’s Everybody Blog About Brett Kimberlin Day
May 23, 2012 05:59 AM by Michelle Malkin
57 Comments
Jaczko the Jerk: Harry Reid’s sexist crony gets the boot
May 23, 2012 05:15 AM by Michelle Malkin
31 CommentsPalin officially endorses desperate, clingy Orrin Hatch; time to rally around Dan Liljenquist
May 22, 2012 11:32 PM by Michelle Malkin
83 Comments
Categories: Barack Obama,Politics
Nice Deb
» The Organized Left Now Stalking RomneyNewsBusters.org
» Very Annoyed Matthews Rips ‘Horse’s Ass Right-Wingers’ Who Cite ‘Thrill Up My Leg,’ Calls C-SPAN Host a ‘Jackass’Nice Deb
» Uncovered Ad Shows Obama Appeared At 1996 Event Hosted By Democratic Socialists of AmericaNice Deb
» Uncovered Ad Shows Obama Appeared At 1996 Event Hosted By Democratic Socialists of AmericaNewsBusters.org
» Reuters's Freeland: 'Anorexic' Americans Think Tax Bite Too Heavy When In Fact It's Dangerously Thin
And the cost of all of these taxes will be passed on to guess who?
See your mirror for the answer.
Who is John Galt?
This budget is another example of the complicated mess this administration is making of everything they try. They think that if they make it full of tiny details and obscure language, people will throw up their hands and say, “Oh, well, just take their word for it”. Like the health insurance bill. Same thing. Just overwhelm the public and they will give up the fight. This budget CANNOT STAND! Or, we will NEVER be free again. When is the word “impeachment” going to come out? It is time.
i loves me some flat tax…say everyone pay 15%… that means when Brad Pitt et al. make their 20 mil. for six weeks work they gots to pony up…
Obama must really want to lose congress this year. He’s making it easier and easier for conservative candidates that simply run on “less spending – lower taxes.”
Obama is proposing to give tax breaks to companies who hire workers. He doesn’t understand that the way to get companies to hire workers is to let more money stay in the private sector to begin with. Like any other economically illiterate liberal, he doesn’t understand that those rich people he constantly demonizes look for ways to make their money work for them, and investing in new businesses is one the best ways to get the returns they’re looking for.
OOOUUUCHH! Next Jan. my income taxe rate will be 39.6% and my deductions for charitable contributions, mortgage interest and state & local taxes will be affected. If I had captial gains, they would go from 15-20%.
We are small business owners, just where does Obama think growth comes from?
That says it all!
If a flat tax were instituted, all dedcutions removed, and the IRS dissolved, I’d be in favor of it. What could be more fair and balanced?
Right now though, all they are doing is whittling a whistle out of a Sequoia. It will be a long time before any happy tunes can be played on that instrument.
Watch out for your charitable deductions. People like the Obama’s and Biden’s, who rarely give of their own money to charity, won’t feel the pinch and have nothing to lose.
Intangible drilling costs?
How did that ever become an accounting line item for employee wages in the first place?
Someone got too fancy by half in allowing any company to put wages and salaries into a nebulous accounting line item like ‘intangible drilling costs’.
Yeah, what is being proposed budget wise can be called shaky, but the less fancy the accounting rules are, the better off we will all be.
What should happen is that we go back to Basic Accounting 101.
Salaries and wages are expensed in the year they are incurred. Capital goods are depreciated. Other non-capital goods are expensed in the year they are incurred.
No more fancy accounting line items like ‘intangible’ when basic terminology and standard business practices exist for an item.
I wonder if Warren Buffett and other rich looney leftwing liberals are starting to see the light?
Well, they made a deal with the devil, so now they need to pay up.
economically illiterate
liberal progressiveStatist (FIFY)Well I make less than $250,000 a year and Obuma promised me my taxes won’t go up. At least he kept his promise.
WOOPS, spoke to soon….
http://news.yahoo.com/s/nm/20100201/bs_nm/us_budget_backdoortaxes
Backdoor taxes to hit middle class
In other words, instead of increasing the size of our military (which would be useful), we will get 153,000 new leeches, useless except for Obama to say “See, I created jobs! Ain’t I the Greatest?”
Didn’t he just say “spending freeze”?
The Dems are still the party of slavery.
Taxation without reciprocity = slavery.
What kind of value are you getting for your dollars?
I call do-over.
Watch the inflation rate……. when these hit, up we go.
Been there, seen that.
Interest rate hikes will follow.
And the economy gets progressively worse.
And not have built-in cheats? Geithner would not approve.
Does the word IMPEACH come to mind?
Yes. As opposed to tangible drilling costs.
It’s not an accounting line item for employee wages. It’s an accounting line item for drilling expenses. Such line item expenses are often comprised of outside services, equipment rental, consultants, drilling fluids, etc. It may also include a portion of an internal employee’s salary.
There’s nothing nebulous about it.
Tangible drilling expenses include items such as pipe, pumps, etc. Do you consider that term to be nebulous?
Do you consider the term intangible assets to be a nebulous term? If so, then I’m sorry accounting isn’t more simple for you.
I had a professor in college explain the strategy “if you can’t dazzle them with brilliance, baffle them with bulls@$t”.
That seems to be President B.O.’s modus operandi.
Hey Sumner Redstone, Bill Gates, The Donald, how’s that hope and change working out for you?
Every day.
I guarantee that at some point, the wealthy elites are going to start saying: “You know what, I’d really like to see that long form birth certificate, if you don’t mind.”
I love the way progressives think every place is a better place than America.
If they can’t define this country as less than it should be there’s no reason to change it, to mesh with their authoritarian ideology.
You can’t possibly progress to their wonderful vision of a perfect nation that’s completely controlled, Orwellian and safe unless the perfect progressive government forces the less than worthy unwashed masses to conform.
You’re really really bad and you must be fixed, kind of like Fido was.
Haven’t heard that one for a while.
Excellent!
And that of at least one poster here at MM.
Picture a 2X4 with a row of nails sticking out of it. Along comes Barry with his hammer, and he begins to pound on the nails. Of course he will start pounding on the ones sticking the farthest up out of the wood first. I believe his goal is to pound all of the nails down to the same level, thereby making the nails “more fair”.
People really don’t understand how high-risk and low-return (per dollar of invested capital) the oil business truly is. It also faces long-term challenges that no other private industry challenges.
It is critical for companies who invest billions into very long term projects that may take 7-30 years or more to begin generating revenues to write off long-term (sunk costs) expenses against current non-matched revenues in their case. be able to smooth out there cash flows by
That isn’t a subsidy because those costs get written off eventually. It’s an accounting necessity to remove a major cash flow problem. Otherwise, who would invest in such an a horribly unattractive investment? No one invests billions on risky projects that may produce nothing for a minimum of seven years if ever and have to wait decades to write-off sunk-costs whose value have been depreciated by decades of inflation.
The middle class is the key source of revenue. I’ve a good mind not to take that raise.
Sounds too much like man’s work for our Barry.
Let me clean up my last post. Sorry about that. (I have a bad cold and was interrupted by a phone call.)
People really don’t understand how high-risk and low-return (per dollar of invested capital) the oil business truly is. It also faces long-term challenges that no other private industry challenges.
It is critical for companies who invest billions into very long term projects that may take 7-30 years or more to begin generating revenues to write off long-term (sunk costs) expenses against current non-matched revenues.
That isn’t a subsidy because those costs get written off eventually. It’s an accounting necessity to remove a major cash flow problem. Otherwise, who would invest in such an a horribly unattractive investment? No one invests billions on risky projects that may produce nothing for a minimum of seven years if ever and have to wait decades to write-off sunk-costs whose value have been depreciated by decades of inflation.
But, how do the words “President Joe Biden” sound?
BTW, I’m a recovering accountant. I’ve been out of the business for twenty years now (thank God) but I still remember matching principle of accounting which is what this issue concerns.
My moonbat sister was addicted to crack some years ago; she once described going to crack parties, which always ended with everybody suspiciously looking at one another, wondering who had any left and whether they were going to share.
In an budgetary sense, Hope-a-Dope is throwing the world’s biggest crack party, only with borrowed dollars instead of drugs. Inevitably, when the borrowed supply runs out, he and his minions are going to start looking around suspiciously for anyone who may be “holding out” — starting with “The Filthy Rich” — but eventually we’re all going to get a frisking.
Ooh! Ooh! (raises hand) Can I play?
Does it begin with the letter ‘z’
A simple way to make small big government — Across the board cut, 25%. That’s how it gets done in the real world.
We all be gubmint workers now. Thas right. You gotta build America come on!
I can think of two right off the top of my head…both start with “Z”!
By the time he figure out that he is President it will all be over. That’s why we call him Slow Joe.
Phil,
Well, certainly, Obama and his “Marxist Minions” don’t care about the risks and rewards of almost any business. They see billions of dollars of income and want to “spread it around.”
Obama and his cronies don’t care that they will eventually kill the golden goose because they know they won’t kill it while they are still in office…
Actually, that sounds better than President Barack Hussein Obama…mmm,mmm,mmm! Now, Pelosi as VP, that is untenable!
There is always room for humor, however the less complicated (‘fancy’) the rules are, the less likely there will be problems.
Regulus, that’s one of the best posts/analogies I have ever read.
And the “frisking” starts January 1, 2011 when the new taxes go into effect.
Okay, I’m ready to look for that birth certificate.
For all you accountants and would-be accountants out there, remember this.
When one looks at the people currently in line for “Presidential Succession” one is torn laughing and crying. You almost HAVE to pray for the health and safety of this Marxist clown.
The least objectionable is Gen. Shenseki but his most lasting milatary feat may have been changing the head gear of soldiers to the Black Beret. When you have to go to the 17th position on a list things are bad…
In an ironic note, Joe Biden’s position on the list is also his IQ!
This is the current list:
# Presidential Succession
1 – Vice President Joe Biden
2 – Speaker of the House Nancy Pelosi
3 – President pro tempore of the Senate Robert Byrd
4 – Secretary of State Hillary Clinton
5 – Secretary of the Treasury Timothy Geithner
6 – Secretary of Defense Robert Gates
7 – Attorney General Eric Holder
8 – Secretary of the Interior Ken Salazar
9 – Secretary of Agriculture Tom Vilsack
10 – Secretary of Commerce Gary Locke
11 – Secretary of Labor Hilda Solis
12 – Secretary of Health and Human Services Kathleen Sebelius
13 – Secretary of Housing and Urban Development Shaun Donovan
14 – Secretary of Transportation Ray LaHood
15 – Secretary of Energy Steven Chu
16 – Secretary of Education Arne Duncan
17 – Secretary of Veterans Affairs Eric Shinseki
18 – Secretary of Homeland Security Janet Napolitano
OMG! Obama! You Ba$tard!!!!
OH!!!! I CAN’T TAKE IT ANYMORE!!!
It’s the same old Demo-crapola; use the tax code for social engineering rather than just getting the government out of the way and letting businesses grow on their own.
Lookout Corkie, or zyg will use his remarkable debating skill of applied guided-questioning to have you explaining debits vs credits and assets vs liabilities…me thinks he just likes the attention.
Our freedoms are eroding and government power is moving towards despotism. The current Tea Parties are comparatively light in their attendance and anger though.
You may recognize the following from a previous documentation of too much government…
He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.
For protecting them, by a mock Trial, from punishment for any Murders (or vote fraud/intimidation) which they should commit on the Inhabitants of these States
For imposing Taxes on us without our Consent
For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments
That link is hillarious! You never fully recover from having been an accountant but you can still get back close to normal.
The IDC elimination will make a whole lot of marginally profitable wells unprofitable, reduce a lot of drilling, and put a lot of oilfield trash out of work.
It means less US oil and gas production, and higher heating and gasoline costs for consumers, and greater dependence on Venezuela, Iran and the Arabs.
I’m sure Chairman O will blame Exxon and Duke and all for more expensive gas and heating costs, and blame the electric utilities for raising rates.
The people who still believe in the Chosen 0ne will lap up thre anticapitalist crap like melting ice cream dripping down the cone.
Again, Occam’s razor, if one accepts the premise Obama is a Communist agent bent on the destruction of the United States as a representative (ie, indirect, small “r” republican) form of democracy with a generally capitalist system, the Fresh Prince of Bill Ayers, a traitor who should be tried for treason, then everything he does makes perfect sense.
I have it on good authority (a friend of mine from college is an accountant here for a large mining firm based in PA) that this will affect the coal industry and as a consequence, drive up electric costs for all of us in the coming two or three winters.
Zyzzyg, I didn’t think the /sarc tag was necessary. I have been in favor of both the flat tax and balanced budget amendments for quite some time.
Therein lies the nature of the lie. This isn’t closing loopholes or eliminating subsidies, it is crippling the mining, drilling and other long-term capital-intensive industries. I wonder why the Cap-and-Trade global warming cultists would want to do that?
Sorry, responded to the wrong comment. Should have been:
Your friend almost certainly knows more about this than I do.
I’m not an accountant but still wouldn’t waste my time on something as sophomoric as debits vs credits and assets vs liabilities.
Might not be so bad. He won’t bow so much as just bobble his head when meeting foreign dignitaries.
Seems clear to me…
The whole tax credit for jobs is just a way for Obama to try to get unemploymnet under control prior to the 2010 elections. Notice how the tax credit is for one year, what is to stop an employer from letting the person go at the end of that year, especially when the tax rates will be going up next Jan and companies will be once again looking to cut costs.
As an entrepreneur and the owner of a brand new business, I am stunned at how discouraging the current political climate is toward us. I own a software company and quite frankly, I have absolutely no incentive to hire anybody (I have to go offshore). I now have to deal with the Colorado legislature who is considering taxing my product because I use the internet to deliver it. I want government to get out of my way! I certainly don’t need its help. Incidently, in case you are curious, I hope nobody on this forum ever has to buy my software (divorce software). http://www.exnotes.com
As untenable an idea as Pelosi as VP is (shudder!), the people on the list of succession don’t ‘move up’. If somehow Obummer were unable to fulfill the office of President, Slow Joe would indeed move up to President, but Nancy wouldn’t automatically become VP. Joe would nominate someone for VP, subject to consent of the Senate– just as Nixon nominated Ford when Agnew resigned.
If you want to understand what it means to be dependent on the U.S. government, for your well-being look no farther than this article.
http://apnews.myway.com/article/20100202/D9DJV4800.html
Vice President Barbara Boxer
Better every day.
Ralph! (meant as a verb)
So, I guess 2010 is the year to:
1. Sell your business (to avoid the ridiculous capital gains taxes)
2. And die (so your heirs won’t have to pay a 55% inheritance tax next year)
Better than President Hillary Clinton.
BlameAmericaLast – if you have any Capital Gains left.
Joe Biden would bring the gravitas of “Barney Fife,” the intellect of “Gilligan,” and the broad appeal of “Roseanne Barr” to the office.
In many respects it would represent a vast improvement from the Mussolini-like clown we have now but it really couldn’t be described as “good” in any meaningful sense of the word…
I’m more than convinced that Obama is trying to kill capitalism and create a society of dependency — he’s well on his way already.
Now there’s big talk of reconciliation for the health care reform bill. Wonderful.
Nov 2010 couldn’t come soon enough. But then again the damage will already be done by then.
As my High School principal used to tell me:
“Bend over and grab your ankles.”
Corkie, Thank you for pointing out the obvious to zyzzyg re Intangible Drilling Costs.
I am a 55 year veteran in the oil patch. IDC is the irreplaceable incentive for companies and private investors to explore for and develop
oil and gas, the need for which is not going away anytime soon.
This administration is tax happy. The total focus is on squeezing the tax payers. Government at every level never considered having a “raining day fund” during the good times so that there would be money available during the recessions. Gov is limited by its linear thinking into believing that recessions can become a thing of the past. I cringe every time a politician claims that we can spend our way out of this recession. Bho assumes that no matter what he does, the public will continue to work hard to fund whatever he wants. Wrong!!! I, for one, won’t be working harder to have the gov take more of my money.
OK, my apologies. I thought you were being funny.
Then we have a level of agreement that the less complicated the tax system is, the better.
Hey, I’m hoping Obama eats the salmon mousse as much as the next guy but
1) Careless talk could mean a visit from men in suits
2) An assasination, especially one committed by a white guy, is riots in every inner city, innocent white bystanders killed, and a martyr effect like the one LBJ used to create the ‘Great Society’.
And probably a sympathy vote that keeps the House in Marxist hands next year.
What’s interesting is that Obama never mention the states that raised their income taxes in the past year like CA. I just paid an additional 10% in income taxes to the state…going towards the $11 billion illegals cost the state in various forms like welfare, housing, healthcare, education, etc.
It’s obscene the 4-figure income taxes my husband and I pay to this scum state each month. It’s sickening.
Whatever you do, don’t move to the Peoples’s Republic of Hawaii for tax relief. You’d be better off going to Texas or Nevada.
Forget impeachment proceeding, I want Obama and his ilk tried for being TRAITORS.
You missed the point. Re-read my original post, #10.
Why expense wages and salaries as intangible costs, when those items are in fact, tangible? They can be singled out and identified.
It is the manipulation of fancy accounting rules that is part and parcel of the problem.
In no way am I denying that there are intangible costs, much like there is a thing called ‘goodwill.’ It is the definition of which, and what is allowed to be called and accounted for under the term intangible costs.
Would you call office supplies and a truck durable goods, and depreciate them both the same way? Each is different and like wages and salaries should be subject to their own accounting principles.
It is the rules of accounting that have been, are, and will be manipulated to achieve certain outcomes. Allowing salaries and wages to be accounted for as intangible costs is part of the problem.
And, saying that is not the case means you have not read the excerpt provided by MM.
” . . . eliminate the expensing of what are called intangible drilling costs. These represent about 70 percent of all drilling costs and are made up of labor, supplies, contractors, and fuel.”
Having fancy accounting rules allows Presidents and Legislators to manipulate all that we do. Fancy accounting rules are a bad thing.
And O’Reilly scoffs at the idea that Obama has a Socialist agenda.
Wake up Bill.
It’s starting to look to me like I’m better off foreclosing on my mortgage and going on unemployment.
Under Obama’s reign, it’s no longer worth the effort to work hard, task risks and sacrifice in order to succeed.
Under Obama the bulk of the reward for that work will be confiscated by his government, only to be handed over to those who aren’t willing to maintain the work ethic and dedication that I have had all my life.
The transfer of “reward”…not wealth…because what he is transferring has been EARNED…..is staggering in size.
He’s taking away from those who do not support his view and giving it to those that do.
Tell it to the Left – they pretty much set the current system in place and like Glen Beck said, they don’t call a “progressive” tax system for nothing!
Wow, incredibly wrong.
Things that can be re-used, and have value, are tangible. An oil field pump jack. The tubing or packer run in the well. The separators and stock tanks.
Cementing casing in a well. An intagible cost, because that cement can’t be recovered in useful form. The day rate or footage charge on an oil rig. Running “logging” (geologic measurement tools).
Think of it like a prized piece of Wagyu steak. You may have to spend $100 to buy it, but once I eat it, that steak has no value, and if we agree I’ll pay you in three years for the steak I eat today, you have spent $100 and gotten nothing back for it. For three years.
If I spend $2 million dollars drilling a well, and it doesn’t break even after paying royalties and severance taxes for two or three years, I’m in a world of hurt if I can’t expense the IDC.
It means only the most immediately profitable wells get drilled.
Let me guess, acronyms like NPV and IRR mean nothing to you…
As a prelude to some sort of disciplinary measure, I presume.
Um, ok. But there’s really nothing fancy about intangible drilling costs.
Tangible is something that you can hold and fixed. Intangible is something that you can’t hold or something that is consumed (I assume you know what a consumable is).
Is it less fancy and therefore less of “a bad thing” for you now?
Tell me what’s tangible about labor? Can you hold labor? Is labor fixed?
Look, it’s not that I disagree with you conceptually. The tax codes in this county are absolute crap! They’re a mess, and it’s bad for two reasons.
1. It’s difficult to perform efficient tax planning and to prepare returns.
2. Those willing to accept more risk benefit financially. That doesn’t make them bad people. The tax code fails to make it clear what is bad and what isn’t. It’s expensive to error on the side of extreme caution.
But in this situation you’ve misidentified a problem. There’s nothing bad about the definition and tax treatment of intangible drilling costs.
Wait until Obama hears from Americans about higher gasoline prices if he eliminates the ability to expense the entire amount in the first year rather than depreciating it. Crude prices are already moving higher today. It will certainly reduce the amount of domestic drilling which will certainly reduce the amount of domestic supply. I’m sure Chavez and the other OPEC countries are quite happy with Obama regarding this issue.
Labor- if I pay someone $200 to paint my house, when he is done, he isn’t my property. I can’t sell him.
Hence, intangible.
If I can touch something, and it has value, it is tangible.
Again, like cementing the long string. 300 sacks of Pozmix is only part of the job, it is the 4 or 8 workers, the bulk truck, the water truck, the mixing truck, and once that job is pumped away, that cement is in the ground, and has no value apart from that oil well.
*The Fair Tax as currently proposed is the only viable option we have left; All else is just the same old, same old, and eventually there will be no can or road left; If we desire to change Washington, the Fair Tax is the best place to start!
Thanks to Dear Leader income tax will go down for 7 million americans and counting!
Let’s see…40% of nothing is…
… at some sort of seminar?
Old Military Axiom: BOHICA!
Another old Military Axiom better drescribes this–FUBAR!!!!!
Found Unresponsive Before and After Resuscitation?
Barry Obama Has Ignorant Cranial Applications??
I believe Fubar is the region of Kenya where Obama’s family comes from. The Snafu tribe, iirc.
Taxes are used by government to reward their friends and punish their enemies.
Higher taxes equal more rewards or more punishment depending on how subservient you are to those in power.
A fine is a tax for doing wrong. A tax is a fine for doing well.
That was funny.
Oh well, what went wrong? A fine tax you say?
That sounds fine but it was pretty taxing.
Freakin shame the NR article about the UK’s postwar socialist PM Atlee vs Obama isn’t online.
But Obama knows what he is doing, all the turtle on a post/rookie mistake stuff misses the fact that he is a Communist agent. Is he an independent, is he controlled by the Chinese or the once and future Soviet Union or agents of the old Soviet Union, or a tool of Bill Ayers and George Soros, that I don’t know.
But he is committed to destroying democracy, by either subverting representative (republican) constitutional democracy to pure mob rule democracy, or via fraud, and he is hell bent on destroying the United States as a leading economic power, perhaps on the belief that a strong economy allows a strong military and the US is the ultimate evil imperialist force in the world.
He truly deserves to be tried for treason, and executed, but I’d settle for one chamber of Congress in the 2010 cycle and a one term presidency. The country might be strong enough to survive one term of Obama. But I believe two terms could put us in a death spiral like the one the UK is now in, thanks to Atlee.