Saturday, October 4, 2008

We're Saved!

Well, the financial bailout is signed into law. What did it take to get legislators to commit $700 billion for Wall St? Here's part of what I found.

* Creation of a seven-year cost recovery period for construction of a motorsports racetrack: Track owners currently follow a seven-year depreciation schedule and write each year's depreciation off their taxes. The IRS wanted to increase the depreciation timetable to 15 years, which would mean the track owner's depreciation would be cut in half. The measure in the keeps the seven-year depreciation schedule for two years and would cost taxpayers $100 million.

* Income averaging for amounts received in connection with the Exxon Valdez litigation: The measure would allow the plaintiffs who won damages from Exxon Mobile for the oil spilled by the Exxon Valdez to average the award over three years rather than treating it as income in a single year. The measure was backed by Alaska Rep. Don Young and would cost taxpayers $49 million.

* Secure rural schools and community self-determination program: The program replaces revenue rural communities used to enjoy from the sale of federal forest land. The measure is sponsored by lawmakers from Oregon and Idaho. The program would cost taxpayers $3.3 billion.

* Deduction of state and local sales taxes: The measure allows citizens who do not pay state income taxes to deduct the amount of sales tax they pay over a year from their federal income tax for two additional years. States that benefit include Texas, Nevada, Florida, Washington and Wyoming. The measure would cost taxpayers $3.3 billion.

* Transportation fringe benefit to bicycle commuters: The measure would allow employers to provide benefits to employees who commute to work via bicycle, such as help purchasing and maintaining a bicycle. The measure would cost taxpayers $10 million.

That's the way they made it work. To get something like this passed you find out what the "no's" want and add that to the bill. Make it more palatable for each legislator. But while it may be easier to stomach what they're doing is ignoring the cancer within.

How much longer do I have, doc?


Anonymous said...

I'm not going to disagree with your underlying premise--that any large bill such as this one includes a lot of provisions that don't get close scrutiny before the votes are cast.

You need to define "cost", though, before saying these are all costs of the bill, because these are different types of programs and benefits. And in any case, many or most of these are projections and estimates, so results may vary.

Picking on a couple of your examples--

The deductability of sales tax, for states that don't have income taxes, just levels the playing field, since people in states with an income tax get to deduct that. Those of us in a sales tax state like WA have been paying federal income taxes on money we don't actually have, since it was spent on taxes. The income-tax-state residents have had an advantage all these years that only recently got addressed, in a measure sponsored by Sen. Maria Cantwell; this just extends that existing provision.

"Cost" really means "foregone revenue from taxes we would otherwise have collected if that measure expired" in that instance.

The bicycle commuter tax is another field-leveler. There is already a federal commuter tax benefit (see that allows employers to give employees up to $115 per month in tax-free transit and vanpool benefits. Bike commuters were included in an earlier version of the bill that created this, but were stripped out. A modest $20/month, which will pay for a couple of tubes or a new bike light, doesn't come close to this benefit for people using vanpools or transit.

"Cost" again means "income tax revenue we might not collect because we'll let people lower their taxable income by a possible maximum of $240/year, IF they bike and IF their employer offers this benefit."

All tax policies encourage certain behaviors, and discourage other behaviors, by design. If a tax benefit can increase bike commuting by even a fraction, the positive impacts for everyone are enormous.

Public policy. Always a spicy stew.


Anonymous said...

Oh, and one more thing on the commuter benefit--

The vanpool transit amount allowed is $115/month. The PARKING amount--that is, tax-subsidized parking for someone in a single-occupancy vehicle, whether or not they doing a park & ride--is $220/month.

The bike commuter gets a potential $20/month benefit.

The driver gets a $220/month benefit.


Hank Greer said...

As usual, and quite likely, I'm probably unclear as to what my point is. It's not that the add-ons are bad. It's that the bailout is and the add-ons were used to convince those that wouldn't support it to change their minds.

It's like putting frosting on manure. It makes it look and smell better and you could stand the taste as long as you got only frosting. But once you dig into it, you'd have to say, "What is this shit?"

Yes, I know, horrible analogy skills.

Anonymous said...

Actually, quite a vivid analogy! Made me snort.