Keep taxes low: Allowing Bush cuts to expire will slam families, strangle investment - Page 4 - Mercedes-Benz Forum

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post #31 of 61 (permalink) Old 06-13-2008, 09:42 AM
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Originally Posted by mcbear View Post
Um...

First, YES, it did take 224 years to run up the first bit, tickling $2Trillion around 1985. $1Trillion was in 1981 [Reagan was an overachiever].

And right now [as of today] the National debt is $9.4Trillion [see link below]. I is projected to hit $10Trillion about the time Bushie leaves office [he likes zeros].

The uplift in Clinton National Debt was due, in no small part to the first four years of reduction of the budget deficits that were holdovers from Bush1. Also, INTEREST on the $4T was starting to pile up. Note on the chart, however that the growth of DEBT crawls to a stop [and if you remember, Bush campaigned on how he was going to use the new surpluses for programs].

One other serious consideration to look at. The current deficit spending that contributes to Bushie's accelerating National Debt. That deficit is based on spending ABOVE the now $3Trillion regular annual National Budget. In other words, the threshold for deficit spending is higher [and still breached].

The point of that last part is that you mentioned the $544Billion of Iraq spending. Well, it has been included, for the very most part in the Pentagon's NORMAL operating budget for the past six years and really shouldn't be included in the National debt calculus [though it is a ancillary contributor].

Sorry for the crappy sized chart.

National Debt Clock: U.S. National Debt Clock
You can't say it took 224 years to run up the national debt when there was NO NATIONAL DEBT until about 60 years ago. Do you see what I'm saying? It only took 60 years, which actually lends credibility to a lot of arguments about national debt and who's responsible. As Federal Taxes increased, this encouraged more federal spending, which increased debt. Now, with tax receipts at historic proportions, our wonderful (out)lawmakers and legislooters spend like drunken sailors, each side of the fence claiming the desire to reign in spending but, do not.

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post #32 of 61 (permalink) Old 06-13-2008, 09:50 AM
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Originally Posted by bottomline1 View Post
Enlighten me as to what was meant by, "all loses are transferred to taxpayers"
Loses are deductible for a business so the regular Joe has to come up to fill the void in the tax fund.
If I crash my car I will pay for the repair.
If my boss crashes his car, company lease, the taxpayers are paying indirectly for the repair.
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post #33 of 61 (permalink) Old 06-13-2008, 09:47 PM
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Loses are deductible for a business so the regular Joe has to come up to fill the void in the tax fund.
If I crash my car I will pay for the repair.
If my boss crashes his car, company lease, the taxpayers are paying indirectly for the repair.
Not really. Why involve a crash here? Wouldn't you, with that logic, also conclude that the taxpayers are making the lease payment? After all it's money from the same pot. Or that taxpayers are buying the gas to run the car. Gov't only taxes profits and, pre-Obama, the tax rate is not 100%.

Remember that, so far, the government doesn't own the business and the conventional wisdom is that government stands to gain revenue only when the business makes a net profit or sells itself at a capital gain.

If your boss crashes too many cars, he's out of business and the gov't has no profit or gain to tax. If he is a proprietor, partner or officer, the cost of that crash is real and it's his, not the taxpayers.

The basic principles of business finance and taxation are not that difficult You're making it more so because of your rhetorical insertion of the taxpayer.

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post #34 of 61 (permalink) Old 06-13-2008, 11:39 PM
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Nothing like some guy who supports the government who has spent us into penury to give us all financial advice. Here's some advice: admit the
tax cuts" are nothing but theft, as long as they result in deficits of the most incredible proportions in human history. Get honest about that, and then maybe someone will give a shit about your financial opinions.

Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.

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post #35 of 61 (permalink) Old 06-14-2008, 08:35 AM
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Nothing like some guy who supports the government who has spent us into penury to give us all financial advice. Here's some advice: admit the
tax cuts" are nothing but theft, as long as they result in deficits of the most incredible proportions in human history. Get honest about that, and then maybe someone will give a shit about your financial opinions.
Things are so bad there must be no reason for you to go on living. So feel free to crawl in your grave early and spare yourself the pain (and spare the rest of us your reflections on it.)

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post #36 of 61 (permalink) Old 06-14-2008, 11:49 AM
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Originally Posted by AndreiRN
No way.
Business has a free lunch in US.
Every expense is transferred to consumer.
100% of "cost of doing" business is deductible and ALL loses are transferred to taxpayers.
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Originally Posted by bottomline1 View Post
Well, wise one, you woke up from your stupor to stomp on the little people.

Enlighten me as to what was meant by, "all loses are transferred to taxpayers"
First, we will look at the ENTIRE quote, not just a snippet.

Expenses for a business, small or large are passed to the consumer by way of their business and price model. They factor all costs associated with doing business, add in a margin for profits and away they go [in the bit theoretical world].

Using a small business as an example, where they also pass cost of doing business to taxpayers is when they deduct things like mileage, office equipment, lease payments for business vehicles, rental space, utilities, and all the other costs associated with running that business. Now, should they now show a profit for several years, the IRS does not have a problem and those "losses are transferred to the taxpayers" as the business has been able to function as a business, write off the expenses and allow the system to absorb that loss. The taxpayers simply have to pick up that revenue from another source. I am not sure I would have used the word ALL but the concept is valid.

Did you ever wonder why so many restaurants only stick around for four and a half years? Part of that is because they can work the system to where they only have to show profit for two years in 60 months. Then they come back under another partnership. tada. It is a great way to game the system.

For reference, I have had the same two business entities for over 23 years. I don't play games with the IRS. I prefer profit to gaming the system.

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post #37 of 61 (permalink) Old 06-14-2008, 08:37 PM
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Originally Posted by mcbear View Post
First, we will look at the ENTIRE quote, not just a snippet.

Expenses for a business, small or large are passed to the customer by way of their business and price model. They factor all costs associated with doing business, add in a margin for profits and away they go [in the bit theoretical world].

Using a small business as an example, where they also pass cost of doing business to customers is when they deduct things like mileage, office equipment, lease payments for business vehicles, rental space, utilities, and all the other costs associated with running that business. Now, should they now show a profit for several years, the IRS does not have a problem and those "losses are transferred to the taxpayers" as the business has been able to function as a business, write off the expenses and allow the system to absorb that loss. The taxpayers simply have to pick up that revenue from another source. I am not sure I would have used the word ALL but the concept is valid.

Did you ever wonder why so many restaurants only stick around for four and a half years? Part of that is because they can work the system to where they only have to show profit for two years in 60 months. Then they come back under another partnership. tada. It is a great way to game the system.

For reference, I have had the same two business entities for over 23 years. I don't play games with the IRS. I prefer profit to gaming the system.
I fixed a couple of words for you.

You are using the words "loss" and "expense" nearly interchangeably. Expense is just that--either cost of sales of inventory or overhead expense, while loss is a net number (gross profit less overhead/admin expenses). The only legitimate ways to lose on the bottomline is through non-monetary expenses, like depreciation or poor management. Padding overhead expenses with personal items (aka owner benefits) can create a book loss, but if you do that more than three out of five years (you correctly point that out) you will not have a business, but a hobby. And, unless the remainder of the business is quite profitable, you will be feeding it nickels all the time to cover your personal expenses in the business entity.

With respect to depreciation, within some limits, you can write off that loss against other income, e.g. a spouse's W-2 wages, but you will recapture that depreciation when you sell the business assets. Usually at ordinary income tax rates, too.

Because every business entity stands on its own before the Code, neither you or Andrei have made a case for "all losses are transferred to taxpayers." Unless you are simply saying if I cheat on my business books I'm going to reduce what I owe the IRS.There are enough opportunites and gimmies in the Code, cheating is really, really stupid.

As for the "system absorbing the loss""taxpayers having to get that revenue from another source"--the IRS has no quota of revenue due from any single business entity that they count on receiving each year--pre-Obama, that is.

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post #38 of 61 (permalink) Old 06-14-2008, 08:46 PM Thread Starter
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Originally Posted by bottomline1 View Post
I fixed a couple of words for you.

You are using the words "loss" and "expense" nearly interchangeably. Expense is just that--either cost of sales of inventory or overhead expense, while loss is a net number (gross profit less overhead/admin expenses). The only legitimate ways to lose on the bottomline is through non-monetary expenses, like depreciation or poor management. Padding overhead expenses with personal items (aka owner benefits) can create a book loss, but if you do that more than three out of five years (you correctly point that out) you will not have a business, but a hobby. And, unless the remainder of the business is quite profitable, you will be feeding it nickels all the time to cover your personal expenses in the business entity.

With respect to depreciation, within some limits, you can write off that loss against other income, e.g. a spouse's W-2 wages, but you will recapture that depreciation when you sell the business assets. Usually at ordinary income tax rates, too.

Because every business entity stands on its own before the Code, neither you or Andrei have made a case for "all losses are transferred to taxpayers." Unless you are simply saying if I cheat on my business books I'm going to reduce what I owe the IRS.There are enough opportunites and gimmies in the Code, cheating is really, really stupid.

As for the "system absorbing the loss""taxpayers having to get that revenue from another source"--the IRS has no quota of revenue due from any single business entity that they count on receiving each year--pre-Obama, that is.
Excuse him. He has very little real business experience. And he only reads the left-wing blogs about business so he comes to the topic from a very limited reality basis...

Don't believe everything you think
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post #39 of 61 (permalink) Old 06-14-2008, 11:41 PM
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Originally Posted by bottomline1 View Post
I fixed a couple of words for you.

You are using the words "loss" and "expense" nearly interchangeably. Expense is just that--either cost of sales of inventory or overhead expense, while loss is a net number (gross profit less overhead/admin expenses). The only legitimate ways to lose on the bottomline is through non-monetary expenses, like depreciation or poor management. Padding overhead expenses with personal items (aka owner benefits) can create a book loss, but if you do that more than three out of five years (you correctly point that out) you will not have a business, but a hobby. And, unless the remainder of the business is quite profitable, you will be feeding it nickels all the time to cover your personal expenses in the business entity.

With respect to depreciation, within some limits, you can write off that loss against other income, e.g. a spouse's W-2 wages, but you will recapture that depreciation when you sell the business assets. Usually at ordinary income tax rates, too.

Because every business entity stands on its own before the Code, neither you or Andrei have made a case for "all losses are transferred to taxpayers." Unless you are simply saying if I cheat on my business books I'm going to reduce what I owe the IRS.There are enough opportunites and gimmies in the Code, cheating is really, really stupid.

As for the "system absorbing the loss""taxpayers having to get that revenue from another source"--the IRS has no quota of revenue due from any single business entity that they count on receiving each year--pre-Obama, that is.
Thanks for trying to change my words to fit YOUR argument but mine were picked correctly for a reason. And NO, I was not using loss and expense interchangeably. It is why we have paragraphs and sentences.

I do agree with you that cheating is really stupid. But I think what Andrei and I were pointing out is that businesses are allowed to pass through all of their expenses to the consumer by way of both their price structure and, should they have loses, the lessening of revenue paid out to IRS. You, correctly are saying that there is not a specific LINE that says "enter your loses here". Business simply has every opportunity to depreciate assets, deduct expenses such as travel and M&E, mileage, office equipment, wages, all 1099 contract expenses and the like whether they make a profit or not. If not, their 3/5 biz just changes ownership and a new one pops up.

At the same time they/we get to price out services based on a number that takes into consideration as many of those same expenses as we think the market will bear. And then we add the others as ancillary charges.

My invoices, as an example show my hourly rate, air fare, hotel, per diem [varies per city], taxi/subway, rental car. Any other fees are added on as required per contract.

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post #40 of 61 (permalink) Old 06-15-2008, 10:52 AM
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Excuse him. He has very little real business experience. And he only reads the left-wing blogs about business so he comes to the topic from a very limited reality basis...
You may be correct. His writing style is so bold and affirmative that he leaves the impression that he knows what he is saying. But when you drill down to the kernel of a thought, ofttimes there is nothing there or it's wrong in fact. That why I call him "bare"--he needs to be called on the fact that he's not wearing new clothes after all.

In this latest discussion, he asserts that "the system" absorbs a business' loss through a loss of tax revenue. That would be true in bankruptcy if one considers vendors, employees and stockholders as the system. But to treat an accounting of a business loss as a convenient fiction is serious delusion. That negative number is a very real representation of a decrease in equity and if you do it enough, regardless of the tax consequences, you are no longer in business. And the taxpayer's are not absorbing anything. That seems so basic to me.

Regards and have a great day, Jay.

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