Wednesday, October 17, 2012

'Tommy Flanagan-Pathological Liar!' Should Run for President!

Old-timers will remember Jon Lovitz of 'Saturday Night Live' as 'Tommy Fla-NA-gan, Pathological Liar!'

Maybe he should run for POTUS sometime!



We are sure that both sides felt like 'the other guy' lied his pants off last night.  We don't have the time or the resources to go through and fact-check every single white lie, black lie or flat-out complete transgression committed last night in the second debate.

But we do know where to go to get some facts, as we hope we have proven to you over the last few years.  Here's some on the 'How Are You Gonna Pay for Your Tax Cut, Governor?' question put forth by President Obama simply because if we hear it one more time, we are afraid we might blow our brains out.

Here's a link to some very important information you ought to download and keep by your armchair at least for the remainder of this interminable presidential campaign.  (Regardless of who wins or loses on November 6, can we PUH-LEESE have a respite of at least 2 full years before we hear about Hillary Clinton going to Iowa or Marco Rubio planning a major speech in New Hampshire?)

We have done all the hard work for you and downloaded the entire Tax Expenditures chart put out by the OMB, the Office of Management and Budget in the White House each year under Republican and Democratic Presidents.

The numbers might have changed some over the years but for all intents and purposes, these estimates have been virtually the same for years.

 Table 17–3. INCOME TAX EXPENDITURES RANKED BY TOTAL FISCAL YEAR 2012–2016 PROJECTED REVENUE EFFECT
(In millions of dollars)
Provision  2012      2012-16 
131 Exclusion of employer contributions for medical insurance premiums and medical care    184,460 1,071,210 (reduce deduction by 1/2)
58 Deductibility of mortgage interest on owner-occupied homes      98,550 609,180 (all by itself)
73 Step-up basis of capital gains at death   61,480 357,080
149 401(k) plans     67,590 356,260 713,340
62 Exclusion of net imputed rental income     50,640 302,800
172 Deductibility of nonbusiness State and local taxes other than on owner-occupied homes       48,640 292,290 595,090
77 Accelerated depreciation of machinery and equipment (normal tax method)     24,450 269,680
71 Capital gains (except agriculture, timber, iron ore, and coal)    38,490 256,280 525,960
125 Deductibility of charitable contributions, other than education and health  43,110 248,930
148 Employer plans   45,230 245,970 494,900
170 Exclusion of interest on public purpose State and local bonds    36,960 230,440
61 Capital gains exclusion on home sales    35,200 216,820 447,260
5 Deferral of income from controlled foreign corporations (normal tax method)    42,000 212,840
59 Deductibility of State and local property tax on owner-occupied homes    24,910 142,290
51 Exclusion of interest on life insurance savings    22,660 129,060 484,190
163 Social Security benefits for retired workers    21,830 129,040
152 Keogh plans   17,070 103,880
63 Exception from passive loss rules for $25,000 of rental loss   13,110 83,750
81 Deduction for US production activities   14,630 82,000
150 Individual Retirement Accounts   15,610 80,490
1 Exclusion of benefits and allowances to armed forces personnel    13,710 65,500 544,660
134 Deductibility of medical expenses    10,010 60,020
122 Child credit  10,580 49,200
161 Earned income tax credit   8,500 45,060
164 Social Security benefits for disabled workers    7,510 41,240
144 Exclusion of workers’ compensation benefits   7,410 40,940
132 Self-employed medical insurance premiums   6,690 38,840
64 Credit for low-income housing investments   6,290 36,070
7 Expensing of research and experimentation expenditures (normal tax method)    5,770 35,080
166 Exclusion of veterans death benefits and disability compensation   5,010 30,850
2 Exclusion of income earned abroad by US citizens   5,400 30,500
99 Lifetime Learning tax credit   5,530 28,620
110 Deductibility of charitable contributions (education)   4,900 28,300
98 HOPE tax credit  5,410 28,280
138 Deductibility of charitable contributions (health)  4,870 28,110 521,110
135 Exclusion of interest on hospital construction bonds  4,290 26,760
137 Credit for employee health insurance expenses of small business    3,440 20,640
4 Inventory property sales source rules exception   3,160 18,770
79 Graduated corporation income tax rate (normal tax method)    3,220 17,840
106 Exclusion of interest on bonds for private nonprofit educational facilities   2,840 17,710
165 Social Security benefits for spouses, dependents and survivors    3,270 17,390
84 Exclusion of reimbursed employee parking expenses   3,180 17,350
97 Exclusion of scholarship and fellowship income (normal tax method)    3,130 16,820
158 Additional deduction for the elderly   2,980 16,700
109 Parental personal exemption for students age 19 or over    3,400 14,690
74 Carryover basis of capital gains on gifts  1,990 13,860
133 Medical Savings Accounts / Health Savings Accounts  1,980 11,120
153 Premiums on group term life insurance   2,080 10,790
8 Credit for increasing research activities   3,080 10,320
104 State prepaid tuition plans  1,750 9,760
56 Exclusion of interest on owner-occupied mortgage subsidy bonds   1,490 9,300
15 New technology credit    1,740 9,250
156 Special ESOP rules  1,600 8,700
117 Employer provided child care exclusion  1,450 8,410
50 Exemption of credit union income    1,310 7,920
57 Exclusion of interest on rental housing bonds  1,270 7,920
123 Credit for child and dependent care expenses   1,710 7,900
173 Deferral of interest on US savings bonds   1,300 6,650
168 Exclusion of GI bill benefits    1,010 6,540
121 Exclusion of employee meals and lodging (other than military)    1,170 6,510
151 Low and moderate income savers credit  1,320 6,490
89 Exclusion of interest for airport, dock, and similar bonds   1,020 6,370
60 Deferral of income from installment sales  830 6,100
3 Exclusion of certain allowances for Federal employees abroad  1,070 5,910
10 Excess of percentage over cost depletion, fuels   1,120 5,820
102 Deductibility of student-loan interest  900 5,160
16 Energy investment credit   960 4,650
139 Tax credit for orphan drug research   650 4,630
127 Exclusion of parsonage allowances  750 4,310
105 Exclusion of interest on student-loan bonds   660 4,140
145 Exclusion of public assistance benefits (normal tax method)    710 3,860
35 Excess of percentage over cost depletion, nonfuel minerals    770 3,810
92 New markets tax credit   810 3,530
55 Exclusion of interest spread of financial institutions   550 3,450
36 Exclusion of interest on bonds for water, sewage, and hazardous waste facilities   550 3,450
46 Capital gains treatment of certain income   520 3,440
140 Special Blue Cross/Blue Shield deduction    680 3,120
119 Assistance for adopted foster children  530 3,030
85 Exclusion for employer-provided transit passes     520 2,990
91 Empowerment zones, Enterprise communities, and Renewal communities   570 2,940
114 Qualified school construction bonds  400 2,930
72 Capital gains exclusion of small corporation stock   290 2,730
80 Exclusion of interest on small issue bonds  200 2,470
9 Expensing of exploration and development costs, fuels   700 2,300
29 Credit for energy efficiency improvements to existing homes 2270 2,270
39 Tax incentives for preservation of historic structures   400 2,090
142 Distributions from retirement plans for premiums for health and long-term care insurance    330 2,020
126 Exclusion of certain foster care payments  410 2,010
154 Premiums on accident and disability insurance 350 1,810
160 Deductibility of casualty losses 320 1,800
23 Credit for investment in clean coal facilities  460 1,770
167 Exclusion of veterans pensions  300 1,770
19 Tax credit and deduction for clean-fuel burning vehicles 140 1,590
38 Expensing of multiperiod timber growing costs  290 1,540
143 Exclusion of railroad retirement system benefits 310 1,380
66 Discharge of mortgage indebtedness 1100 1,350
115 Work opportunity tax credit 680 1,280
33 Advanced Energy Property Credit 900 1,180
31 30% credit for residential purchases/installations of solar and fuel cells 220 1,150
20 Exclusion of utility conservation subsidies  220 1,070
53 Tax exemption of certain insurance companies owned by tax-exempt organizations  210 1,070
87 Exclusion of interest on bonds for Financing of Highway Projects and rail-truck transfer facilities   240 1070
44 Expensing of certain multiperiod production costs 150 860
107 Credit for holders of zone academy bonds 200 790
34 Expensing of exploration and development costs, nonfuel minerals 130 710
43 Expensing of certain capital outlays 100 610
90 Exemption of certain mutuals’ and cooperatives’ income 110 600
120 Adoption credit and exclusion 190 590
147 Exclusion of military disability pensions 110 550
47 Income averaging for farmers 90 470
41 Industrial CO2 capture and sequestration tax credit 30 450
101 Education Individual Retirement Accounts 80 450
25 Natural gas distribution pipelines treated as 15-year property 100 430
49 Expensing of reforestation expenditures 80 420
21 Credit for holding clean renewable energy bonds 70 350
13 Capital gains treatment of royalties on coal 50 340
37 Capital gains treatment of certain timber income 50 340
17 Alcohol fuel credits 130 330
27 Allowance of deduction for certain energy efficient commercial building property 90 300
75 Ordinary income treatment of loss from small business corporation stock sale 60 300
155 Income of trusts to finance supplementary unemployment benefits 40 300
11 Alternative fuel production credit 120 290
94 Credit to holders of Gulf Tax Credit Bonds 70 270
26 Amortize all geological and geophysical expenditures over 2 years 90 250
69 Exceptions from imputed interest rules 50 250
157 Additional deduction for the blind 40 240
42 Deduction for endangered species recovery expenditures 30 220
146 Exclusion of special benefits for disabled coal miners 40 200
52 Special alternative tax on small property and casualty insurance companies 40 200
14 Exclusion of interest on energy facility bonds 30 170
12 Exception from passive loss limitation for working interests in oil and gas properties 30 150
54 Small life insurance company deduction 30 150
32 Qualified energy conservation bonds 20 140
169 Exclusion of interest on veterans housing bonds 20 140
108 Exclusion of interest on savings bonds redeemed to finance educational expenses 20 120
96 Tribal Economic Development Bonds 30 110
45 Treatment of loans forgiven for solvent farmers 20 100
48 Deferral of gain on sale of farm refiners 20 100
83 Deferral of tax on shipping companies 20 100
88 Investment credit for rehabilitation of structures (other than historic) 20 100
113 Discharge of student loan indebtedness 20 100
124 Credit for disabled access expenditures 20 100
40 Exclusion of gain or loss on sale or exchange of certain brownfield sites 40 80
82 Special rules for certain film and TV production 30 40
86 Tax credit for certain expenditures for maintaining railroad tracks 30 40
159 Tax credit for the elderly and disabled 10 30
28 Credit for construction of new energy efficient homes 20 20
128 Employee retention credit for employers affected by Hurricane Katrina, Rita, and Wilma 10 10
6 Deferred taxes for financial firms on certain income earned overseas 0 0
18 Bio-Diesel and small agri-biodiesel producer tax credits 0 0
30 Credit for energy efficient appliances 0 0
70 Treatment of qualified dividends 0 0
95 Recovery Zone Bonds 0 0
100 Lifetime Learning tax credit 0 0
103 Deduction for higher education expenses 0 0
111 Exclusion of employer-provided educational assistance  0 0
112 Special deduction for teacher expenses 0 0
116 Welfare-to-work tax credit 0 0
118 Employer-provided child care credit 0 0
129 Exclusion for benefits provided to volunteer EMS and firefighters 0 0
130 Making work pay tax credit 0 0
141 Tax credit for health insurance purchased by certain displaced and retired individuals 0 0
162 Exclusion of unemployment insurance benefits 0 0
171 Build America Bonds 0 0 458,380
TOTALS OF REVENUES LOST TO TAX BREAKS $1,101,060 $6,465,280 Estimated 10-year cost
equals $14 trillion
22 Deferral of gain from dispositions of transmission property to implement FERC restructuring policy -150 -520
68 Cancellation of indebtedness  -130 0
93 Expensing of environmental remediation costs -140 -640
24 Temporary 50% expensing for equipment used in the refining of liquid fuels 520 -1700
136 Refundable Premium Assistance Tax Credit  0 -2540
78 Expensing of certain small investments (normal tax method) -710 -3290
67 Credit for homebuyer -2160 -5190
65 Accelerated depreciation on rental housing (normal tax method)  -1580 -5640
76 Accelerated depreciation of buildings other than rental housing (normal tax method) -13750 -74470
Totals of Revenue Gainers in Tax Code due to Tax Expenditure Policies -18,100 -93,990

On the right side are the expected revenue effects (loss of revenue to the Treasury) caused by each specific tax break. Note how many of them are targeted to the general middle-class of America, not just the top 1% President Obama and the Democrats always seek to demonize.

If you want to look for people who are 'taking advantage of the tax code', look no further than your own mirror if you have a mortgage you deduct interest on or a company who pays for your health care coverage and then deducts it from their taxes as 'part of doing business' nowadays.

The second to the right column is the one-year effect of the tax break.  The next is the 5-year accumulated budget effects of the tax break (as in 'lost revenue to the Treasury').

The notations in the far right are our running summaries of the amounts of the tax breaks that would have to be reduced or eliminated to 'pay for' the 20% tax cut that Governor Romney is talking about.  For example, if the tax breaks such as the ones afforded to the labor unions for their Cadillac health care plans were reduced by 50%, the bulk of the savings for paying for the 20% tax cut would be 'paid for' (as if anyone in Washington cares about PAYGO anymore.  This Obama Administration certainly has not.)

Or we could just eliminate the mortgage interest deduction and that would 'pay for' the 20% tax cut all by itself.

Now, getting both of these through Congress would be next to impossible, we understand that given the political popularity of both tax break programs.

One thing to take a look at, however is this juicy morsel:
'If you take the last 128 tax deductions and eliminate them in toto in terms of size of lost revenues to the federal budget, those would pay entirely for the 20% additional tax cut Mitt Romney has proposed.'

Here's an exercise you can do all by yourself on the link to the Google spreadsheet noted above this chart:

'Go in the tax code yourself and figure out which tax breaks can or should be eliminated, curtailed or cut in order to pay for ALL the tax cuts Mitt Romney has proposed or President Obama HAS PROPOSED HIMSELF!

Remember:  President Obama has proposed extending the Bush Tax cuts as well, except for the higher income people. He wants to increase the deficit by close to $3.4 trillion....and has never shown how he would pay for it to be revenue-neutral either. Ever.

The revenue generated by the hike on the top 1% would amount to about $680 billion over 10 years.  Hardly a drop in the bucket when you consider we have $16 trillion of debt to service, including $6 trillion President Obama has signed into law in his first 4 years.

If you want to extend the Bush tax cuts forever, as many want to do, you can simply eliminate EVERY SINGLE DEDUCTION listed above....and our deficits will not explode and the national budget deficit will flat-line.  Plain and simple.

However, if you want to pick and choose, be our guest.  Consider this your chance to be on the various cooking channel shows where someone throws a basket of stuff at you and expects you to concoct a gourmet meal in 30 minutes and win $10,000.

Contact us if you have any questions or need any clarifications.  We know that this stuff is as clear as the mud-filled Mississippi River.

After taking a look at this, if you are not totally convinced that the US tax code is broken beyond repair and needs to be completely thrown out and replaced with one simple consumption tax at time of purchase, then we really don't know what else to tell you.

Except as Tommy Fla-NA-Gan would say: 'You must be the smartest person in the universe!  Yeah, that's the ticket!'



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