By Amy Silverman
By Olivia LaVecchia
By Monica Alonzo and Stephen Lemons
By Chris Parker
By Michael Lacey
By Weston Phippen
"The mortgage deduction was never targeted for that," says Congressman Tim Walz (D-Minnesota). "It was meant to make home ownership more affordable for the middle class."
So Walz wrote the Ending Taxpayer Subsidies for Yachts Act, hoping to bar the über-wealthy from sponging off the mortgage deduction. Once again, Congressman Dave Camp refuses to let it come up for a vote.
That leaves everyday taxpayers to subsidize toys like Microsoft CEO Steve Ballmer's $200 million yacht, which comes equipped with an indoor pool, basketball court, and its own submarine.
"It's a loophole in the tax code that benefits a few people at the very top," says Walz, a sergeant major in the National Guard and former teacher. "I certainly feel if they want to grab their luxury liners, I'm glad they do. And I'm glad we have people making them. I'm just not certain we subsidize that."
5. Big Oil's Cadillac welfare. Last month, Mitt Romney traveled to Iowa, where wind energy has become an economic force, responsible for 7,000 jobs and 20 percent of the state's electricity.
He announced that, as president, he would kill the $3.3 billion in tax incentives that now go to this nascent form of electricity. In Romney's eyes, the industry has had more than enough time to stand on its own two feet.
"He will allow the wind credit to expire, end the stimulus boondoggles, and create a level playing field on which all sources of energy can compete on their merits," Romney spokesman Shawn McCoy told The Des Moines Register.
It's a laughable position. After all, Romney has announced no similar crackdown on a much older and larger welfare queen: Big Oil.
The five largest U.S. oil companies collect a spectacular $20 billion a year in tax breaks. And they'd prefer that wind farms not compete for that lucrative welfare dollar. During this year's presidential race, the industry has paid Romney $3.4 million to ensure wind goes away.
Technically, the oil giveaway is supposed to defray the cost of searching for new sources. But even George W. Bush realized the industry didn't need subsidies back in 2005, when the price of a barrel was at $55. "We don't need incentives to oil and gas companies to explore," he said at the time. "There are plenty of incentives."
These days, the price of a barrel routinely hovers around $100. But the five biggest companies — BP, Chevron, ConocoPhillips, ExxonMobil, and Shell — still get their breaks, despite collective record profits of $137 billion last year.
"The oil industry is doing fine," says Johnson, the University of Texas tax expert. "They don't need or deserve a dime of subsidy. It's all money thrown away to make shareholders richer. The private market will provide any subsidies by increasing the price. It's time to get the government out of the business of special subsidies. It's like Cadillac welfare."
4. A break for shipping your job to China. In April, 750 workers at a Kimberly-Clark paper mill in Everett, Washington, lost their jobs when the company shipped them to a lower-cost facilities overseas.
Steelworkers in Stevens Point, Wisconsin, suffered the same fate. Their mill's owner, Joerns Heathcare, took away 150 jobs last month by moving operations to Mexico.
In each case, American taxpayers will subsidize the evacuation.
It's not just cheap labor that pushes work overseas. The U.S. tax code allows companies to expense every last cost of sending your job abroad.
At a time of 8 percent unemployment, one would think Congress would rush to kill a loophole that actually encourages economic misery. One would be wrong.
This summer, Senate Democrats introduced the Bring Jobs Home Act, which would kill the loophole and offer a 20 percent tax credit to companies that bring work back to America.
Republicans filibustered the bill to death. Senator Orrin Hatch (R-Utah) went so far as to call the measure "a joke," ensuring another nervous Christmas for the country's blue-collar workers.
3. The behaving-like-an-asshole deduction. In 1989, third mate Gregory Cousins was negotiating the 986-foot Exxon Valdez through Bligh's Reef in Alaska while Captain Joe Hazelwood slept off a bender below deck.
The vessel crashed, spilling upwards of 25 million gallons of oil into Prince William Sound. The disaster could have been avoided if the ship's collision-avoidance radar was working. It had broken a year before, but Exxon chose not to fix it due to the cost of repair and operation.
Overnight, 1,300 miles of pristine shoreline turned to blacktop. Wildlife caked in oil looked like a Hollywood casting call for an Al Jolson biopic. The remote locale made clean-up difficult. Twenty-three years later, fish stocks have yet to return to their pre-spill levels.
A court would eventually level $5 billion punitive damages against Exxon — equal to a single year's profit at the time. The company appealed, chipping away at the sanction until the Supreme Court (natch!) slashed that figure to $500 million 2008.
Yet through the miracle of the tax code, Exxon would end up paying only about $325 million. No matter how negligent a company is, court judgments are considered nothing more than a business expense and, therefore, tax deductible.
Romney claims he will keep the richest in America paying Sixty Percent?
Romney pays what less than Fourteen Percent?
Right Romney we don't think your Lying.
Sorry Romney I am a Hard Working American, you know, one of the Forty-Seven Percent you don't care about.
Romney provides no discussion or answers for the urgent issue of the day - the broken criminal justice system that is devouring America.
2012 Sundance Docs Pt.1 - Eugene Jarecki "The House I Live In" starts at 24:45 min. mark) and Kirby Dick (The Invisible War) - YouTube
If Flipflopper Mitt gets in we the middleclass will have to support his rich friends so our taxes go up while the rest sat on lazy behinds
The biggest tax loophole that needs to be closed is to start requiring people on all public assistance to pay their fair share of taxes. For example, if somebody gets $600 a month in Section 8 housing payments and another $300 in food stamps, that is $900 a month in taxable income that must be paid because if my job only paid me that same amount I would have to pay taxes.
Presidents are limited to what they can do on their own; they need Congress and the House of Representatives approval to get things done. Oboma doesn’t appear to know how lead or to work together; and remember that Barack Hussein Obama has increased taxes by 2 trillion dollars and increased the national debt by 6.5 trillion dollar in only 4 years. Even bumbling Bush didn’t do that much damage in 8 years. Mitt Romney says: this is what I plan on doing. He will meet with the Democrats and Republicans and together they will work out how to accomplish what he wants to do. There is going to have to be changes to the social programs and nations spending. The government can’t keep giving out more than it takes in. The Democrats do not appear to understand that if they keep this up, soon there will be nothing left to give away. We will be totally bankrupt and owned by China, wait and see how much free cheese you get when China is running the U.S.A.
Barack Hussein Obama has been a very destructive force to the U.S. economy; he has already added 6.5 Trillion dollars to the national debt. If by chance he gets re-elected and then he doubles the national debt. It will be too late to say…Oops! Beware of the Enemy from within!!
Now don't let me hear you liberals complain about tax loopholes because you people are the ones who want to exploit them. If the Republicans want to close any loophole you complain but yet if you try to close it it is okay? You don't really want any loopholes closed, you just act like you do. The biggest loophole that must be closed is anchor babies, welfare and public assistance. Time to put a stop to all of them.
The author confuses the mortgage deduction with the taxpayer subsidizing the underlying home (or yacht). The mortgage interest deduction subsidizes the cost of a loan not the house (or yacht). If Steve Ballmer paid cash for his $200M yacht he gets no mortgage interest deduction and if he financed the entire $200M he runs up against the $1M max.
Then there is the matter of the mortgage interest deduction phasing out for people with an adjusted gross income > $166K. Since Steve makes far in excess of $166K he probably faces the maximum reduction of 80% of his itemized deductions so for that $200M mortgage on his $200M yacht he would get the same mortgage interest deduction as someone making < $166K who owned a $200,000 house.
So much for the taxpayers subsidizing that $200M yacht.
If this were a creative writing class I'd say you get an A+ for imagination and nonsensical comparisons! For example the $500 per week unemployed electricians taxable income compared to $120 million tax incentive for building a stadium.
The taxes due on $500 per week or $26,000 per year with zero deductions and zero dependents filing single equals $2006 or 7.7% of their gross income. The $500 per week is money in his pocket and he doesn't have to do anything for it. He doesn't have to pay any employees or take any risk of any kind other than not being able to find a job when the benefits run out.
The stadium deal is not money in the team owners pocket. The stadium is owned by the City of Oklahoma City and it also plays host to major concerts, family and social events, conventions, ice shows, civic events and sporting events from local universities and high schools.
The team actually pays rent to use the stadium and the residents of the city actually voted to increase their sales tax 1% to pay for the renovations.
Again it's not income or cash in the team owners pocket merely a place for his team to play that they rent.
I'm sure this logic is lost on you and a complete waste of my time. There are many more examples in your article that are possibly technically correct but in truth the outcome is much different that you write.
Although the core of your article is right on the money... the tax laws are ridiculous at best stupid at worst.
My question is this... What's it got to do with Romney? He hasn't been the one writing the tax laws in this country!!! For you to even suggest that he or any other politician including the current president can single-handedly change the tax code is moronic!
Current party in charge couldn't do it when they controlled the office of the President, The House and The Senate. Maybe I should say they wouldn't do it. The truth is there is very little incentive for the congress to make the changes we all want because we don't hold them accountable for much in most cases.
Go out and ask any ten people on the street and see it they can name our 2 senators and 8 representatives. My bet is most don't even know how many we have much less which party they represent or how they vote on any issue.
In my humble opinion it's lame journalism to link anyone Romney included to this article. But then I guess you gotta get your shots in justified or not!
Good luck with this one... I have a feeling it's going down to the wire!
@ghostme15 Romney's 47% is the "easy" pickings for the mass industrial prison complex that is America -- #1 Jailer in the World -- a shameful and immoral condition in the "land of the free" (a myth).
@kerry.penn Have been watching President Obama with New Jersey Governor Christy touring the devastation by Hurricane Sandy. Looks like the President got FEMA in action to help the people.
@kerry.penn GOP troll.
Have you ever considered gettig a "JOB"............................LOL
Oh that is BS that taxpayers are not subsidizing that yacht. Sure IF he paid cash for it we would not be subsidizing it, but he didn't and with the tax loophole being in existence it's an incentive to finance it that people will take.
Your second paragraph is just as much BS. Ok, he makes enough to force him into the same mortgage interest deduction as someone making >$166k who owned a $200,000 house but it's still taxpayers subsidizing a $200M yacht no matter how you slice it. Just because he is paying the same as anyone else would is not the point. The taxpayer IS subsidizing that yacht.
You are really picking at straws in an attempt to spin this but it's just not working.
@HermanBernstein I have a good job. Do you have one?
@Flyer9753 How much welfare do you cost the taxpayers?
@Flyer9753 No, it is taxpayer's subsidizing the interest on a $200,000 loan.
Not a $200,000,000 yacht.
In fact no different than if he bought a $200,000 vacation home and financed it. Exactly the same size deduction.
But it sure sounds impressive to say $200M yacht. Wow! Steve Ballmer is getting a tax break on a $200M yacht, oh my! Yep, at 4% interest it would knock $8000 off his income and save him maybe $3000 on his tax bill.
No different than the tax deduction you get on a $200,000 loan on your house.
Sucking Joe Arpaio's Johnson is not a real job.
hmmm... let's see... I have owned my own business since 1992, I started it entirely with my own funds, no loans. We have been profitable since 1995 and employ 22 full time employees all of them with profit sharing and health care.
I have never taken any welfare assistance, nor student loans or tuition assistance or anything else. I bought my house for cash.
So the answer is none.
How much welfare do you cost the taxpayer?
Tomato, tomato and exactly what is wrong with this country.