The Debt Ceiling And What Republicans Are Protecting

If you are curious about the reason for the stalemate in the debt ceiling negotiations, it has to do with GOP insisting there be no tax increases or ending of any tax subsidies, which they also view as a tax increase. All newly elected Republicans are asked to sign a pledge given to them by Grover Norquist that essentially says they will never vote for any tax increase, and all current Republicans serving in office have signed this pledge. 

This has created a road block in efforts to fix our budget crisis. Economists, conservative, liberal, and nonpartisan, have gone on record saying there is no way to balance our budget without tax increases. We cannot cut our way (Medicare, Medicaid, Social Security) out of this financial mess. 

Are you curious about some of the tax subsidies the Republicans are protecting? An estimated $40 million in write-offs that owners of motorsports entertainment complexes are given; the $162 million in expensing rules for U.S. film and television productions; and $30 million (over ten years) that could be saved by eliminating a withholding provision for those lucky enough to win at horse and dog race tracks. 

Taxpayers for Common Sense compiled a list of some of the tax expenditures Democrats are looking to end. The money that would be saved in comparison to our fiscal crisis is not a large amount but it is a starting point, however, the GOP will not even agree to end these expenditures. Keep in mind our tax code is full of these kind of expenses, and Democrats feel all should be put on the table. 

What do you think….could our government do without this kind of spending (aka corporate socialism)? 

Extension of Seven Year Straight Line Cost Recovery Period for Motorsports Entertainment Complexes (NASCAR tracks)  
Estimated cost to taxpayers in 2011: $40 million 

Extension of Special Expensing Rules for U.S. Film and Television Productions
Estimated cost to taxpayers in 2011: $162 million  

Extension of Temporary Increase in Limit on Cover Over of Rum Excise Tax Revenues to Puerto Rico and the Virgin Islands 
Estimated cost to taxpayers in 2011: $235 million 

Extension of American Samoa Economic Development Credit
In general, this credit allows certain corporations operating in American Samoa to offset a portion of their U.S. tax liability on income earned in American Samoafrom active business operations, sales of assets used in a business, or certain investments in American Samoa. This credit would be extended for two years (through 2011). 
Estimated cost to taxpayers in 2011: $15 million 

Special tax withholding break on Horse & Dog track winnings 
The American Jobs Creation Act of 2004 eliminated a 30% tax withholding on income earned by foreigners who gamble at American horse racing and dog racing tracks. Other forms of gambling such as lotteries do not receive this special treatment. 
10-year savings: $30 million

Starbucks Roasting Provision  
The American Jobs Creation Act of 2004 jobs bill also declared that coffee roasting, but not coffee preparation, is a manufacturing activity. This special classification allows Starbucks to qualify for a corporate tax reduction designed for hard-hit domestic manufacturing companies. 
10-year savings: not estimated 

Race horse owners depreciation 
The 2008 farm bill permitted racehorse owners to depreciate horses over three years instead of the normal seven year period.   
10-year savings: $126 million


6 responses to “The Debt Ceiling And What Republicans Are Protecting

  1. Angela, are these tax cuts you wrote about good or bad for the economy.

    • The ones I have listed are subsidies going out to various entities. These, along with other tax subsidies/loopholes, should be dropped and/or closed. We should not cut Medicare/Medicaid/Education funding and benefits while continuing to allow these tax cuts and subsidies to remain.

  2. I don’t support subsidies or tax code incentives for any business. The Democrats are cherry-picking just a few of these from the tax code to go after. If they are truly serious about ending these “corporate subsidies,” they should be willing to end the Democratic supported subsidies such as ethanol.

    For the Republican position (at the moment) of not raising taxes, it is impossible to clean up the tax code without taxes going up on someone. Even if the overall tax burden is reduced, implementing a tax code that is void of incentives would mean that those who took advantage of those caveats would likely see a tax increase, while those who received no favors from the tax code would see a lower tax rate.

    • You are right about the cherry picking. I think they are trying to point out the most absurd subsidies in our tax code to make a point. There are things that can be done away with to help increase revenue. It doesn’t have to just come from cutting our social safety net, and it does need to be a fair balance.

  3. Is “promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity…;“ only for a privileged few (George III; some barons, dukes and earls; and some very rich ‘commoners’. Many Americans felt it NOT best for Americans in the late 1700’s. I find it amazing… and at the same time normal, in 2011; to see, hear and watch “Conservatives” preach 1776 “Life, Liberty and the pursuit of Happiness (Progressivism),” 2011 “Don’t Tread on Me—Sons of Liberty (Regressivism)” and see none of the hypocrisy.

    I see three choices: 1) continue the insanity, expecting something different; 2) convince the ‘privileged few’ to “promote the general Welfare”; or 3) “@YouGottaVote: Progressive. I believe we must realize corporations (RUN BY ‘THE RICH & POWERFUL’-@jjch54) are motivated by profit; not for the greater good…” I also must vote… and educate other progressives of the necessity of voting.

    The citizens of California (irregardless of other irresponsible referendums) have taken responsibility for redistricting from the Legislature. The past has been unkind for most in the “Golden State”. The future of a non-elected “board” is just that; will Californians receive a better result than an elected one: I find it disappointing the representation is five Dems, five Reps and four Independents. I believe a 4-4-5 “board” would give a better result: 1) there wouldn’t be an even split and 2) there are more Independents than either Dems or Reps.

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