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View Full Version : Just announced. 100 percent business expense write off. What does that mean?



Harold Mansfield
12-06-2010, 08:05 PM
Just came over the wire that the President and G.O.P ( sad that it's divided like that) just reached a tentative deal to extend the Bush tax cuts, unemployment benefits and 100 percent write off on business expenses.

What does that 100 percent business write off mean for me?

Edited:
I had it wrong. It's 100 percent write off of new investment. Still, does that apply to me?

huggytree
12-06-2010, 08:37 PM
id assume it means any new equipment you buy can be deducted 100 percent this year instead of deducting it little by little each year...if you had a high profit year you can now buy a piece of equipment to lower your tax burden....im assuming everything here, but ill bet thats what it is...I have a few thousand in new equipment, so it will help me a bit if its for 2010.....

extending unemployment to over 2 years is insane...GOP won in 2 things and gave up on 1.....2 for 1 isnt a bad deal i guess...hope the tax cuts are extended for more than 2 years

Harold Mansfield
12-06-2010, 08:45 PM
I'm a die hard Democrat and Liberal, but even I think a 13 month extension of unemployment is a bit much.
But I like the other stuff.
I guess that's Washington. Gotta give to get.

Evan
12-06-2010, 10:49 PM
I did not hear that fact of "100% of investment", but it does sound like an inference to capital/equipment, and the infamous 179 deduction and perhaps 168 bonus depreciation.

I'm not solidifying myself on what exactly is going to happen, as there are a lot of things contingent on this legislation, namely an extension of many "tax credits" that are supposed to expire. So if absolutely nothing was done, assuming the same $50,000 of income last year also being this year, some people would still see a tax increase because of fewer deductions. So until the dust clears, nothing Obama pledges with Republicans matters, as the liberal base of his party is who he needs to also try pleasing too.

eborg -- the whole point of this is to put things that are attractive in the bill for both sides, so when you vote against it, they can say you don't support... "X". It's politics as usual :)

jamesray50
12-07-2010, 06:52 AM
I don't think anything is written in stone yet. But I for one am hoping for the unemployment extension. It would be a big help to me since I have not found a job yet and my benefits are about to run out.

Harold Mansfield
12-07-2010, 08:54 AM
I don't think anything is written in stone yet. But I for one am hoping for the unemployment extension. It would be a big help to me since I have not found a job yet and my benefits are about to run out.

A few of my friends are hoping for the same thing. I don't think it will do them any good because they are 99'ers. From what I understand there is no extension in the works for them.

jamesray50
12-08-2010, 07:40 AM
The senate is talking a fillibuster now.

Harold Mansfield
12-08-2010, 07:45 AM
Of course they are. That's what they do.

Evan
12-08-2010, 06:56 PM
Jo Ellen -- sorry to hear about the job loss. It's been a very rocky economy. As noted, nothing is certain right now, and it seems like many Democrats don't like the plan. Regardless of my opinion, until the dust settles, I can't really say what, for sure, is going to be in place for next year.

Though I can say, factually, that the IRS will still be there, and that you WILL have a tax liability. Can't promise a low balance due, or refund... Sorry :)

vangogh
12-09-2010, 12:01 PM
Though I can say, factually, that the IRS will still be there, and that you WILL have a tax liability.

Noooooooooo. Say it isn't so, say it isn't so. :)

huggytree
12-10-2010, 09:29 PM
i think the repubs should vote against it because of the unemployment extention w/ no plan to pay for it.......just dig the hole a little deeper for the tax payer

where the unemployment bene's are right now it just crazy.....people are living off he govt...maybe the unemployed should start picking up trash on the interstates or something in exchange for the monthly check...instead they get to relax at home.

Harold Mansfield
12-10-2010, 09:36 PM
I actually read more on the unemployment extensions. It's not extending current benefits to more weeks of payments, it's just giving people more time to claim and collect under the current allotment. The way it was set up, when benefits run out, everyone gets cut off whether you were on tier 2 or tier 4.
If you have exhausted all benefits, you aren't getting more. You are done.

As far as the tax breaks go, there's no plan to pay for those either but everyone's cool with that because they get something.

jamesray50
12-11-2010, 02:27 AM
where the unemployment bene's are right now it just crazy.....people are living off he govt...maybe the unemployed should start picking up trash on the interstates or something in exchange for the monthly check...instead they get to relax at home.

I have been unemployed since July and I'm not just sitting around. I have looked for work and I don't even get interviews. And my unemployment check is not from the government. My employer paid for my unemployment. I worked for them for 14 years and they paid into the unemployment fund for my state. They have a low turnover and a high reserve balance. So you don't have to worry about any of your taxes paying for my unemployment benefits.

Harold Mansfield
12-11-2010, 08:42 AM
I have to back up Jamesray on that one. I've been out of work for an extended period of time and have friends that are now and there is nothing relaxing about it. It's frustrating, stressful, aggravating, humiliating, and you are scared everyday.
It's hardly a vacation not knowing how much longer you can keep the electricity on, or the heat in the winter when you have kids. $350 a week isn't exactly a kings ransom for a grown up to live on.

huggytree
12-11-2010, 11:56 AM
they arent tax breaks....they are extending a tax break that already exists....they are voting NOT TO RAISE TAXES....there is no extra debt added if they vote to extend them

its a play on words that the dems are using...just like if they vote to stop a program from increasing the next year...the dems say its a program cut because the program was expected to get a 3percent increase and now they are getting 0 percent.....its a trick the dems use....get wise to it and maybe you'll come over to my side

we will never cut our debt until we quit playing games and twisting things.....when it comes to numbers like this there is no grey area....if its a 0 percent increase its not a cut.. if tax rates are staying the same its not a cut......you gotta get out of that other dimension and into reality....the dems are horrible with managing money(repubs havent been much better)....right now we need to cut,cut,cut and leave taxes alone..

Spider
12-11-2010, 12:17 PM
Regarding unemployment - I would remind everyone that unemployment benefits are not welfare payments. They are an insurance - just like your car insurance, home insurance, life insurance, flood insurance and health insurance. You pay a premium for the insurance, and collect from the insurer when the terms of the insurance policy so dictate.

Everyone who collects unemployment checks paid insurnace premiums for the insurance and are now collecting under the terms of an insurance policy that they paid for. Someone who is unemployed and has never paid insurance premiums, will not collect uninsurance benefits - as I understand it.

I don't think you will find that unemployment benefits affect the government deficits or the national debt in any way.

Harold Mansfield
12-11-2010, 01:51 PM
they arent tax breaks....they are extending a tax break that already exists....they are voting NOT TO RAISE TAXES....there is no extra debt added if they vote to extend them

its a play on words that the dems are using...just like if they vote to stop a program from increasing the next year...the dems say its a program cut because the program was expected to get a 3percent increase and now they are getting 0 percent.....its a trick the dems use....get wise to it and maybe you'll come over to my side

we will never cut our debt until we quit playing games and twisting things.....when it comes to numbers like this there is no grey area....if its a 0 percent increase its not a cut.. if tax rates are staying the same its not a cut......you gotta get out of that other dimension and into reality....the dems are horrible with managing money(repubs havent been much better)....right now we need to cut,cut,cut and leave taxes alone..

There is an extra debt added by extending these cuts that were supposed to be temporary:

Treasury estimates the costs of making the tax cuts permanent for everyone is $3.7 trillion over 10 years.
Of that, $3 trillion accounts for the cost of extending them for the vast majority of Americans, as the president has proposed. The remaining $700 billion is the cost of extending them permanently for the high-income earners.
http://money.cnn.com/2010/09/15/news/economy/bush_tax_cuts_faqs/index.htm
There is no play on words in those numbers. It's pretty cut and dry.

Spider
12-11-2010, 03:37 PM
I must say I like this new accounting system. When my van payments ended about two years ago, even though I had now paid fully for something I purchased and on which I now had no continuing committment, under this new way of accounting, I have saved $10,000.

And, the vehicle I had before, which I traded in for the current van, I haven't had to pay any monthly payment on that one for ten years or more so I must have saved at least $50,000 on that. Then there is the car that I paid off 20 years ago, so I must have saved well over $100,000 on that one, too.

This new way of accounting makes me feel even richer today than I thought I was!

Harold Mansfield
12-11-2010, 04:05 PM
I think the accounting firm of Arthur Anderson practiced a similar style of bookkeeping for Enron:
Arthur Andersen - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Arthur_Andersen)

huggytree
12-11-2010, 06:22 PM
im becoming a fan of flat tax more and more every day...make it a tax on goods...you buy more you get taxed more....rich and poor pay the same percentage...quit expecting someone to pay your way because they are more successful.....this class warfare is destructive....thats all the dems seem to do..without envy and stick it to the rich where would they be....everything they do is geared towards creating more people who rely on govt and making the rich pay for it....when 50 percent dont pay taxes were already in the twilight zone.......i say its already too late and wont be reversed until we go bankrupt...look at the riots overseas over college costs....those riots will be here very soon....if the repubs start cutting spending ill bet 51percent will vote them out in a few years....when everyone is on the gravy train you cant cut them off....someday the gravy train will run out though and we will all be to blame....it will probably screw a generation or 2 until we get back on our feet....i feel bad for my children..at least i wont be to blame

Evan
12-12-2010, 12:08 AM
they arent tax breaks....they are extending a tax break that already exists....they are voting NOT TO RAISE TAXES....there is no extra debt added if they vote to extend them.

When the tax cuts were made, the government had a surplus. The point of the tax cuts was to give money back to the people and reduce the surplus. Well, a lot of things happened and the tax cuts ended up being quite detrimental to the economy. The big thing here is if the tax cuts worked so well, why are we still in this rut?

They are not voting on "not to raise taxes" as if they do absolutely nothing, they will be raised automatically. Why? Because REPUBLICANS (and some Democrats) said that they should expire at such a time in the future. So don't blame Democrats for their reluctance in extending them, blame Republicans for the sunset clause.

Evan
12-12-2010, 12:14 AM
I think the accounting firm of Arthur Anderson practiced a similar style of bookkeeping for Enron:
Arthur Andersen - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Arthur_Andersen)

There were a lot of issues with Arthur Anderson and Enron. The biggest thing was creating offshore companies, and manipulating them to generate appropriate numbers for the parent entity, but not with the offshore company. If the cards were "played" right, these things would not need to be disclosed in the financial statements, nor would they need to be consolidated and it resulted in seriously flawed financial statements that misled the public.

What they did wasn't necessarily "wrong" per se, as it followed the rules at the time. But the transactions should have been disclosed, and there was too much "substance over form" accounting going on.

Harold Mansfield
12-12-2010, 12:21 AM
When the tax cuts were made, the government had a surplus. The point of the tax cuts was to give money back to the people and reduce the surplus. Well, a lot of things happened and the tax cuts ended up being quite detrimental to the economy. The big thing here is if the tax cuts worked so well, why are we still in this rut?


I've been saying this myself for months. They didn't do anything to stop the economy form collapsing, it just put more money in the pocket of the people who helped down the drain. To me what they are asking for is more of a "Do over" because it didn't work as expected the last time. The economy still tanked and no amount of tax cuts can stop that from happening when unregulated manipulation is allowed to happen.

All I see happening is a repeat. Less regulation and oversight is what killed the economy, but certain parties have people all bent out of shape about wanting less regulation. The tax breaks were in effect and it didn't stop anything and the country lost millions of jobs.
There is always going to be an argument not to raise taxes. I don't care how well people are doing. I can't think of anytime when paying more taxes comes up when people will say, "OK, no problem".

Now 2 years later while we are still licking our wounds, here we go again with "less regulation and tax cuts".

It is the text book definition of insanity. Repeating the same process over and over again, expecting a different out come each time.

It's like we forget what just happened even though we are still living in it. It's actually an amazing observation of how easy it is to manipulate people.

Eddi Murphy did a skit in "Delirious" about Mr. T and his intelligence.

Mr.T: "Hey, I heard you did some jokes about me!"
Eddie: "No I didn't"
Mr. T: "OK, maybe you didn't. I'm gonna go beat up the fool that told me them lies."

That's politicians and voters to a tee. No pun intended.

Evan
12-12-2010, 12:49 AM
im becoming a fan of flat tax more and more every day...make it a tax on goods...you buy more you get taxed more....rich and poor pay the same percentage...quit expecting someone to pay your way because they are more successful.....this class warfare is destructive....thats all the dems seem to do..without envy and stick it to the rich where would they be....everything they do is geared towards creating more people who rely on govt and making the rich pay for it....when 50 percent dont pay taxes were already in the twilight zone.......i say its already too late and wont be reversed until we go bankrupt...look at the riots overseas over college costs....those riots will be here very soon....if the repubs start cutting spending ill bet 51percent will vote them out in a few years....when everyone is on the gravy train you cant cut them off....someday the gravy train will run out though and we will all be to blame....it will probably screw a generation or 2 until we get back on our feet....i feel bad for my children..at least i wont be to blame

A flat tax is quite different than a value-added tax OR a national sales tax. A flat tax refers to a flat income tax applied on all income, without any deductions at all. If that was to be implemented, I believe the rate you'd be paying would be close to 25%.

Even with a national sales tax, or the "fair tax", there would be a "prebate" so the tax would be regressive. So while everyone goes to the store and pays the same (say) 15% on groceries, services, etc., everyone receives a check for some of this tax up front. The poor receive a bit more, so they effectively end up paying less tax. The system, while fundamentally easy, becomes very easy to corrupt.

50% don't pay taxes already? Where are you getting this statistic from?

Riots overseas about college costs are probably because government isn't adequately subsidizing education.

You have quite a bleak view of the government, and I don't think most of the things you think that should be cut would have a significant impact at all...

Go to the New York Times: Budget Puzzle: You Fix the Budget - Interactive Feature - NYTimes.com (http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html)

Try to solve the "budget" crisis. Much harder than you think!

Spider
12-12-2010, 02:26 PM
I went to the NYTimes to try to solve the budget crisis and the only way I could get the numbers to balance was to cut plumber's pay to $5.00 an hour!

;-)

vangogh
12-12-2010, 11:31 PM
I balanced the budget. I had to cut plumber's pay to $4.50 though. :)

Kidding aside I was able to balance the budget, but it's easy to see why it's difficult. Even as I'm cutting something or taxing something else, most of the time I don't really want to. It's more that you know you have to cut or tax something. I tried not to pick and choose based on party ideology. I read through each item and made a decision on whether or not I thought each fair. By the time I reached the end I had not only balanced things, I was able to go back up and uncheck one item.

Evan
12-13-2010, 12:06 AM
Vangogh -- of course it is tougher with the reality of politics. But you know that!

What is fascinating is, for example, Republicans touting to be against earmarks, yet how small that really is in relation to the total budget (1%) and it doesn't really dent the deficit. That's why many people love earmarks, and let's face it -- who isn't happy when the pork is brought to your home state?

It seems easy to make a blanketed statement like -- we'll eliminate earmarks, reduce troops by 50%, cut foreign aid 50%, and do X, Y, and Z, and we'll be in balance -- but it's still usually quite far off. The point of my posting this was to put into perception just how "deep" we are, and making blanketed statements with how to fix our problems will do very little to nothing. A combination of cuts and increases in taxes (to ANY degree) is probably the safest thing... You can't fix this problem with 100% cuts in spending, or 100% increases in taxes and expect it to be a truly "safe" solution.

Spider
12-13-2010, 10:50 AM
I know what I would do if this was my personal budget and I had the power to print more money!

vangogh
12-13-2010, 12:08 PM
It seems easy to make a blanketed statement like -- we'll eliminate earmarks, reduce troops by 50%, cut foreign aid 50%, and do X, Y, and Z, and we'll be in balance -- but it's still usually quite far off

Evan I agree completely. So much of those statements are just political rhetoric. The earmarks thing has become a political fighting point, but the reality is their effect is relatively minor in the overall deficit. That's not to say we shouldn't eliminate them, but the reality is they'll only make so much of a difference. John Boehner was on 60 Minutes last night and one of his suggestions was to start by cutting the 5 percent of the budgets of congress. Ok, good idea, but again not wholly meaningful in terms of the deficit.

Evan
12-13-2010, 07:49 PM
The small things will add up and make a difference, albeit not a big one. There are some larger issues that need to be contended with. Of course defense is 40% of the federal budget, so that looks like a good "starting" point.

vangogh
12-14-2010, 02:48 AM
Yep. I cut our nuclear weapons as part of my balancing things. I also put in to bring some of the troops back from iraq and Afghanistan by whatever year listed, though not all of them. Those were the only cuts I made to the military. I picked one or two items from each of the different categories and tried not to lean too far in either political direction. Both sides of the political fence would get some things they liked and get some things they disliked. I tried not to cut anything from the lower class, but did make cuts or added taxes that affected both middle and upper class.

Mostly I read through each item and decided if I thought it reasonable. I was expecting to have to go back through, but when I reached the end I was done.

Steve B
12-14-2010, 04:48 AM
I vote for VG in 2012!

vangogh
12-14-2010, 12:05 PM
I do solemnly swear that I will faithfully execute the Office of…

Nah.