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Thread: The US Recovery

  1. #586
    Global Moderator Defense Professional JAD_333's Avatar
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    Sanjac:

    Loopholes? That was just an example. I agree on tax simplification.

    If you think the political process is a farce now, you might want to brush up on some US history; it's been worse. : )
    To be Truly ignorant, Man requires an Education - Plato

  2. #587
    Senior Contributor GVChamp's Avatar
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    Quote Originally Posted by DOR View Post
    I was not aware that the POTUS had the kind of congressional power necessary to enact a sequester, nor that this President would do such a thing. Let's not rewrite history: That shameful downgrade of the country's sovereign credit rating was purely a GOPer disaster.
    There's no increase in US interest rates, the US continues to be a safe haven, continues to be the world's strongest economy, and we cut government trend-line spending.

    Sounds like great success.

    Re: tax simplification, it would probably be a good idea, since the last major overhaul we had was in 1986. Unfortunately, we've had a LOT of polarization since then. I really don't think we'd get any agreement on widespread tax reform. Simpson-Bowles went nowhere.
    Last edited by GVChamp; 31 Aug 15, at 16:04.
    "The great questions of the day will not be settled by means of speeches and majority decisions but by iron and blood"-Otto Von Bismarck

  3. #588
    Senior Contributor DOR's Avatar
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    Quote Originally Posted by JAD_333 View Post
    Sanjac:

    Loopholes? That was just an example. I agree on tax simplification.

    If you think the political process is a farce now, you might want to brush up on some US history; it's been worse. : )
    Here’s a short list, certainly not complete, of US loopholes:

    Shell corporations
    Trusts
    Foreign Leveraged Investment Program (FLIP)
    Offshore Portfolio Investment Strategy (OPIS)
    Transfer pricing
    Alcohol fuel credit
    Life insurance company reserves
    Mortgage interest deductions
    Inventory accounting techniques (FIFO, LIFO)
    $25,000 tax credit for buying a business vehicle weighing in excess of 6,000 lbs (the “Hummer Tax Loophole”)
    The Chicken Tax loophole allows Ford (and I’m sure others) to import light trucks fitted with just enough extras to qualify as passenger vehicles, and then retrofit them back into light trucks, thereby saving a ton on import duties

  4. #589
    Global Moderator Defense Professional JAD_333's Avatar
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    Quote Originally Posted by DOR View Post
    Here’s a short list, certainly not complete, of US loopholes:

    Shell corporations
    Trusts
    Foreign Leveraged Investment Program (FLIP)
    Offshore Portfolio Investment Strategy (OPIS)
    Transfer pricing
    Alcohol fuel credit
    Life insurance company reserves
    Mortgage interest deductions
    Inventory accounting techniques (FIFO, LIFO)
    $25,000 tax credit for buying a business vehicle weighing in excess of 6,000 lbs (the “Hummer Tax Loophole”)
    The Chicken Tax loophole allows Ford (and I’m sure others) to import light trucks fitted with just enough extras to qualify as passenger vehicles, and then retrofit them back into light trucks, thereby saving a ton on import duties
    Looks to me like you're mixing up tax loopholes with loopholes in ordinary laws. A tax loophole occurs when a tax provision is poorly written allowing people to take advantage of it in unintended ways. The mortgage interest deduction is not a classic loophole: It was meant to stimulate mortgage lending and home ownership. And that it does.
    To be Truly ignorant, Man requires an Education - Plato

  5. #590
    Senior Contributor DOR's Avatar
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    Fair cop.
    What about the other 10?

  6. #591
    Global Moderator Defense Professional JAD_333's Avatar
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    Quote Originally Posted by DOR View Post
    Fair cop.
    What about the other 10?
    What about them?
    To be Truly ignorant, Man requires an Education - Plato

  7. #592
    Senior Contributor DOR's Avatar
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    Come on, JAD_333, what do you think of the other loopholes?

  8. #593
    Senior Contributor GVChamp's Avatar
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    Gotta talk about them one by one...some of them aren't loopholes, some of them are loopholes but the tax is stupid (the chicken tax on light trucks is a good example).
    Transfer pricing to me makes me think we need a broader corporate tax reform, but part of that reform is going to lower broader corporate tax rates (which I think should be zero as only individuals should be taxed, but whatever).

    FIFO.LIFO pricing is a pretty nasty loophole, I do agree, though it does have bipartisan support: http://www.taxjusticeblog.org/archiv..._a_tax_bre.php
    "The great questions of the day will not be settled by means of speeches and majority decisions but by iron and blood"-Otto Von Bismarck

  9. #594
    Global Moderator Defense Professional JAD_333's Avatar
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    Quote Originally Posted by DOR View Post
    Come on, JAD_333, what do you think of the other loopholes?
    They aren't all loopholes. How do you define a loophole? Some of them are special interest breaks. That doesn't make them loopholes, as I understand the term.

    As GV points out, FIFO-LIFO is a loophole for sure. But I think it should stand until we overhaul the corporate tax structure. If we cut the corporate tax rate, I think business will accept ending the loophole because the lower rate will make up for the higher taxabe income.
    To be Truly ignorant, Man requires an Education - Plato

  10. #595
    Senior Contributor DOR's Avatar
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    The Fed made the right decision this week.

    http://www.nytimes.com/2015/09/18/bu...nged.html?_r=0

  11. #596
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    has anyone else noticed that China is dumping her US treasury debt and the overall effect on interest rates in the US is...absolutely nothing?

    or that commodity prices are at shocking lows, and how we're on the verge of dipping into -deflation-?

    so much for the OMG US DEFICIT = GREECE, CHINA OWNS THE US story.
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

  12. #597
    Senior Contributor GVChamp's Avatar
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    You aren't holding all else equal. US debt yields should be falling because investors flee to safe havens when the markets tumble.

    EDIT: Probably should clarify a bit, since it sounds like I'm disagreeing :p

    The doomsayers of the last 7 years (holy crap it's been that long?!) exaggerated the immediate dangers of inflation and debt. I am sure I don't need to hash out the details as to why I say this because you would largely agree with them.

    I still think we're seeing some huge economic changes that we shouldn't gloss over and among these are the Chinese not buying debt anymore. China was a major factor in the global savings glut of the past decade, and while those savings maybe weren't deployed entirely effectively, removing a lot of those savings eventually means higher interest rates everywhere else.

    Obviously there's more than that, but the extra trillion or so in excess reserves is historically unparalleled and the best option the Fed has to control that are interest on reserves, which means the Fed has basically moved out of repurchase operations to interest on reserves as the most effective means of altering interest rates, with consequences best described as "unknown."
    Last edited by GVChamp; 09 Oct 15, at 14:07.
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  13. #598
    Senior Contributor DOR's Avatar
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    Q-3 GDP (second revision)

    The US economy is now thought to have expanded 2.2% in July-September 2015, as compared to the same 2014 period, which works out to 2.6% growth over the first nine months of the year. Although the headline reports point to a surge in inventories and a slow-down in private consumption – both of which would not be good for Q-4 growth – consumer spending lodged its 5th straight quarter of better-than 3% real year-on-year growth. That’s the longest strong run in nearly a decade.

    Here’s an interesting perspective as to why the economy is performing so sluggishly.

    Compare the average real growth rate in 1948-2005 (because we have the data) to that of the last five years. Measure the difference and see who's to blame.

    In order for the US economy’s key components to grow at the same pace as in the 1948-2005 period, Private Consumption Expenditure would have had to rise by 3.24% p.a., rather than the 2.26% actually recorded in 2011-15. That accounts for 22.5% of the slower overall growth rate.

    Capital investment, on the other hand, accounts for less than 3% of the slower growth. The culprit turns out to be government spending, which fell by an annual average of 1.62% p.a., rather than rising 0.59%. That accounts for just under 61% of the slow-down over the past five years.

    ---DOR

  14. #599
    Senior Contributor DOR's Avatar
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    Q-4 gdp

    The main cause of the slight slow-down in fourth quarter US real GDP was external demand, not that of US households.

    Private consumption grew 2.6% year-on-year, faster than the average since 2010 by 0.45 percentage points. By contrast, exports of goods fell 3.1%, which was 8.7 points below the average +5.6% pace since 2010.

    To put is more succinctly, US domestic demand rose 2.8% over Q-4 2014, as compared to the average 2.6% rise since 2010.

  15. #600
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    Quote Originally Posted by DOR View Post
    The main cause of the slight slow-down in fourth quarter US real GDP was external demand, not that of US households.

    Private consumption grew 2.6% year-on-year, faster than the average since 2010 by 0.45 percentage points. By contrast, exports of goods fell 3.1%, which was 8.7 points below the average +5.6% pace since 2010.

    To put is more succinctly, US domestic demand rose 2.8% over Q-4 2014, as compared to the average 2.6% rise since 2010.
    Is this largely due to the Chinese economy?

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