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(The Motley Fool)   The new tax laws in the USA limit citizens from deducting all of their property and state income taxes. But Alaska Air can "reduce [their] cash tax bill to nearly zero" if they buy new Boeing planes   ( fool.com) divider line
    More: Asinine, Alaska Air, Capital, Boeing 737, Capital expenditure, Operating expense, Generally Accepted Accounting Principles, Airbus, Airbus A320 family  
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791 clicks; posted to Business » on 03 Jan 2018 at 5:47 AM (2 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



31 Comments     (+0 »)
 
View Voting Results: Smartest and Funniest
 
2018-01-03 03:29:24 AM  
Good thing they closed all those tax loopholes. Wait, sorry, I mean: Created more loopholes.
 
2018-01-03 06:39:43 AM  
How is that Trumps or the GOPs fault if you did not incorporate yourself?
 
2018-01-03 07:00:25 AM  
Of all the things in the tax code to be angry about, this is a pretty solid meh.

The long term difference is that we're just losing out on the cost of inflation for taxes they will pay later by not depreciating over time.  If they're buying capital equipment from profitable American companies, this pulling investment forward might even end up increasing revenue in the medium term.
 
2018-01-03 07:00:50 AM  
Anyone that actually believed that corporations in the US were paying 35% is an idiot.  There's a reason we had to add the Alternative Minimum Tax at 20%.  Because businesses weren't even paying that much.  Now the tax rate IS 20% and they have removed the AMT, so there will be plenty of companies paying 0%, or actually getting money back for a negative tax rate.  You, the regular schmoe, will still be paying.  Probably more in the long run, to make up all the lost corporate taxes.
 
2018-01-03 07:03:06 AM  

fusillade762: Good thing they closed all those tax loopholes. Wait, sorry, I mean: Created more loopholes.


A loophole is by definition unintentional.  This was explicitly written in to work this way.

If you want to be mad at it, call it corporate welfare, though this particular thing is pretty innocuous.
 
2018-01-03 07:12:34 AM  
This isn't a free market.
 
2018-01-03 07:13:42 AM  

debug: Anyone that actually believed that corporations in the US were paying 35% is an idiot.  There's a reason we had to add the Alternative Minimum Tax at 20%.  Because businesses weren't even paying that much.  Now the tax rate IS 20% and they have removed the AMT, so there will be plenty of companies paying 0%, or actually getting money back for a negative tax rate.  You, the regular schmoe, will still be paying.  Probably more in the long run, to make up all the lost corporate taxes.


We need a sad but true button.
 
2018-01-03 07:52:29 AM  
I wonder if the employees of Boeing and those in the supply chain are as pissed off about this development as Fark is.
 
2018-01-03 07:59:11 AM  

Dancin_In_Anson: I wonder if the employees of Boeing and those in the supply chain are as pissed off about this development as Fark is.


Who knew that Farkers so loved traditional depreciation schedules?
 
2018-01-03 08:11:49 AM  
Let's see if Hatch gets a seat on the Boeing board.
 
2018-01-03 08:24:02 AM  

sex_and_drugs_for_ian: Dancin_In_Anson: I wonder if the employees of Boeing and those in the supply chain are as pissed off about this development as Fark is.

Who knew that Farkers so loved traditional depreciation schedules?


Hey, there are whole industries committed to figuring out how to move depreciation from companies that don't need it to companies that do.  Won't someone think of the accountants?
 
2018-01-03 08:46:13 AM  

debug: Anyone that actually believed that corporations in the US were paying 35% is an idiot.  There's a reason we had to add the Alternative Minimum Tax at 20%.  Because businesses weren't even paying that much.  Now the tax rate IS 20% and they have removed the AMT, so there will be plenty of companies paying 0%, or actually getting money back for a negative tax rate.  You, the regular schmoe, will still be paying.  Probably more in the long run, to make up all the lost corporate taxes.


The personal AMT was 26% after an exemption and 28% over about $180k. And it's not removed, it's just significantly raised with automatic ties to inflation, so it should affect far fewer taxpayers. Which I think is also a non-offensive change. AMT was a stupid pita and years of inaction made it hassle lots of people. Adding a secondary tax system is not a good fix for a tax system that's too complicated and exploitable.

But I agree with your main point that no one has ever been paying the "retail" tax rate, especially businesses.
 
2018-01-03 08:50:17 AM  
Deducting business expenses?  Get out, no way.
 
2018-01-03 08:53:08 AM  

BizarreMan: debug: Anyone that actually believed that corporations in the US were paying 35% is an idiot.  There's a reason we had to add the Alternative Minimum Tax at 20%.  Because businesses weren't even paying that much.  Now the tax rate IS 20% and they have removed the AMT, so there will be plenty of companies paying 0%, or actually getting money back for a negative tax rate.  You, the regular schmoe, will still be paying.  Probably more in the long run, to make up all the lost corporate taxes.

We need a sad but true button.


I've made it point to ask Drew that every day this year.  Hopefully he reads the comments.

Drew, can we please have a Sad button?
 
2018-01-03 08:55:34 AM  
OccamsWhiskers:
But I agree with your main point that no one has ever been paying the "retail" tax rate, especially businesses.

Smallish businesses were paying close to that.  Not the mom-and-pop bakery that might hire some teenagers during busy times but the $5-10 million machine shops, housing contractors, small restaurant chains, folks like that.  In particular mid-sized retailers got killed on taxes (or rather, the five that still make any money got killed).  Both parties agreed on the need to bring some relief to those guys but of course were unable to do so on a bipartisan basis because nothing happens on a bipartisan basis in Washington anymore.
 
2018-01-03 09:20:56 AM  

debug: Anyone that actually believed that corporations in the US were paying 35% is an idiot.  There's a reason we had to add the Alternative Minimum Tax at 20%.  Because businesses weren't even paying that much.  Now the tax rate IS 20% and they have removed the AMT, so there will be plenty of companies paying 0%, or actually getting money back for a negative tax rate.  You, the regular schmoe, will still be paying.  Probably more in the long run, to make up all the lost corporate taxes.


Small biz pays that rate, they're not sophisticated enough to take advantage of the loopholes like large business. My father in law does hvac work, he pays the full amount. The sidework I do cost the full 35% too. The vast majority of employers (small biz) pay the full amount. Trumps corporate tax reduction he campaigned on was the only thing that had my interest. In the end I couldn't vote for him but I felt reducing the Corp tax rate was a good idea.
 
2018-01-03 09:25:02 AM  

debug: Anyone that actually believed that corporations in the US were paying 35% is an idiot.  There's a reason we had to add the Alternative Minimum Tax at 20%.  Because businesses weren't even paying that much.  Now the tax rate IS 20% and they have removed the AMT, so there will be plenty of companies paying 0%, or actually getting money back for a negative tax rate.  You, the regular schmoe, will still be paying.  Probably more in the long run, to make up all the lost corporate taxes.


There were already companies paying zero, or even less than zero.
 
2018-01-03 10:03:32 AM  

Dancin_In_Anson: I wonder if the employees of Boeing and those in the supply chain are as pissed off about this development as Fark is.


This just proves that when Republicans say things like "The tax code shouldn't be choosing winners and losers", they're lying. What they mean is "I don't like who the tax code is choosing to be a winner. It should be someone/something else."
 
2018-01-03 10:23:21 AM  
Yea, i'm on board with people who think this is not something to be upset about.  Investing money back into your company, like upgrading your fleet, should definitely be a write-off.  We want companies to re-invest all there money, that's why the highest corporate tax rate should be 99%.  We want to encourage companies to re-invest all of their profits.
 
2018-01-03 10:32:30 AM  
On this particular case, the decision would be made regardless of tax reform. All the bill does is make the timing of the purchases a little quicker. The final result is, instead of the airline taking depreciation over 7-10 years for each plane, they get a big deduction in year 1 with more of the revenue taxable in years 2 on. All in all, it comes out close to a wash.
 
2018-01-03 10:40:03 AM  

hobbes0022: We want companies to re-invest all there money, that's why the highest corporate tax rate should be 99%.  We want to encourage companies to re-invest all of their profits.


OTOH, maybe we don't want the entire economy to collapse every time there's a downturn because it's de facto illegal to have cash reserves.
 
2018-01-03 11:23:28 AM  

RminusQ: Dancin_In_Anson: I wonder if the employees of Boeing and those in the supply chain are as pissed off about this development as Fark is.

This just proves that when Republicans say things like "The tax code shouldn't be choosing winners and losers", they're lying. What they mean is "I don't like who the tax code is choosing to be a winner. It should be someone/something else."


i is simpler than that, "democrats shouldn't be picking losers"
 
2018-01-03 11:46:53 AM  

OccamsWhiskers: debug: Anyone that actually believed that corporations in the US were paying 35% is an idiot.  There's a reason we had to add the Alternative Minimum Tax at 20%.  Because businesses weren't even paying that much.  Now the tax rate IS 20% and they have removed the AMT, so there will be plenty of companies paying 0%, or actually getting money back for a negative tax rate.  You, the regular schmoe, will still be paying.  Probably more in the long run, to make up all the lost corporate taxes.

The personal AMT was 26% after an exemption and 28% over about $180k. And it's not removed, it's just significantly raised with automatic ties to inflation, so it should affect far fewer taxpayers. Which I think is also a non-offensive change. AMT was a stupid pita and years of inaction made it hassle lots of people. Adding a secondary tax system is not a good fix for a tax system that's too complicated and exploitable.

But I agree with your main point that no one has ever been paying the "retail" tax rate, especially businesses.


I'm not talking about the personal AMT rate, I'm talking about the business AMT rate which was just eliminated in the new tax law.  It was 20%
 
2018-01-03 11:53:44 AM  

Telos: debug: Anyone that actually believed that corporations in the US were paying 35% is an idiot.  There's a reason we had to add the Alternative Minimum Tax at 20%.  Because businesses weren't even paying that much.  Now the tax rate IS 20% and they have removed the AMT, so there will be plenty of companies paying 0%, or actually getting money back for a negative tax rate.  You, the regular schmoe, will still be paying.  Probably more in the long run, to make up all the lost corporate taxes.

There were already companies paying zero, or even less than zero.


Isn't that why the AMT was brought into being in the first place?  To combat this issue?

So like I said, anyone that though corporations were actually paying that 35% number that republicans like to throw around, was an idiot.
 
2018-01-03 12:40:18 PM  
Hmm... does this mean Canada and USA are equal on the whole Bombardier government support thing?
 
2018-01-03 12:47:15 PM  
debug:
So like I said, anyone that though corporations were actually paying that 35% number that republicans like to throw around, was an idiot.

Happy new year to you too, asshole.
 
2018-01-03 12:52:50 PM  

hobbes0022: Yea, i'm on board with people who think this is not something to be upset about.  Investing money back into your company, like upgrading your fleet, should definitely be a write-off.  We want companies to re-invest all there money, that's why the highest corporate tax rate should be 99%.  We want to encourage companies to re-invest all of their profits.


maybe its the motivation.  If your fleet needs an upgrade but you couldn't write it off, would you forgo the upgrade?  It may make the purchase easier to bear if it is a tax-write off, but that shouldn't be the deciding factor of a capital upgrade.

It sounds akin to the argument that there is a salary threshold where you pay 100% taxes

the fun irony will be business who re-invest in automation
 
2018-01-03 01:04:53 PM  

Hyjamon: maybe its the motivation.  If your fleet needs an upgrade but you couldn't write it off, would you forgo the upgrade?  It may make the purchase easier to bear if it is a tax-write off, but that shouldn't be the deciding factor of a capital upgrade.


Are you talking about long term depreciation, or not a write-off at all?  Because if you can't write off business expenses, there are a lot of businesses that would just instantly cease operations because they would no longer be profitable.
 
2018-01-03 01:07:42 PM  

Hyjamon: hobbes0022: Yea, i'm on board with people who think this is not something to be upset about.  Investing money back into your company, like upgrading your fleet, should definitely be a write-off.  We want companies to re-invest all there money, that's why the highest corporate tax rate should be 99%.  We want to encourage companies to re-invest all of their profits.

maybe its the motivation.  If your fleet needs an upgrade but you couldn't write it off, would you forgo the upgrade?  It may make the purchase easier to bear if it is a tax-write off, but that shouldn't be the deciding factor of a capital upgrade.

It sounds akin to the argument that there is a salary threshold where you pay 100% taxes

the fun irony will be business who re-invest in automation


It has always been a tax deduction. New law allows you to write off the cost entirely in the first year. Old law was you would depreciate over seven years. So it is mainly a timing difference.
 
2018-01-03 01:21:13 PM  

Manfred J. Hattan: debug:
So like I said, anyone that though corporations were actually paying that 35% number that republicans like to throw around, was an idiot.

Happy new year to you too, asshole.


This is Fark. Of course you will have idiots show up in the business tab with no clue as to what they are talking about or have any experience with how business taxation works before offering their opinion.
 
2018-01-03 01:36:43 PM  

fusillade762: Good thing they closed all those tax loopholes. Wait, sorry, I mean: Created more loopholes.


It's not a loophole, it's there by design to spur new manufacturing by allowing businesses to immediately deduct depreciation instead of spreading out over several years.  Depreciation was already part of the tax code, this just accelerates it.
 
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