Semi-OT - CBO: Electric cars are not cost-effective

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On 9/29/2012 6:10 PM, HeyBub wrote:

There was a case I remember about a guy who owned a corporation, was injured on the job, sued his own corporation then as CEO ordered the corporation's attorney to settle and he took a whopping settlement to the bank tax free. The IRS cried foul but a judge ruled against The IRS and said it was perfectly within the law for the fellow to sue and walk away with the money tax free. It's been many years since I heard or read the story so I can't give a link but it could be interesting to research. ^_^
TDD
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On 9/28/2012 4:17 PM, nestork wrote:
...[over-generalizations elided for brevity]...

IOW, they are managed w/ the thought of managing their assets to their best advantage within the rules as laid out.
What you need to do is to request for revisions to tax _code_, not rail against those who simply respond to what rules they're required operate by.
As noted in other response, expecting personal liability for business is simply unrealistic if one has any hope at all of there being any economic activity at all.
Single-engine aircraft is a perfect example--back in the 70s-80s there was a veritable plethora of outrageous suits against manufacturers (Cessna, Beech, Piper, etc.) in the US and as a consequence there was a subsequent period of some 20 yr or so that there simply were no manufacturers in the US who were willing to take those financial risks any longer and the single-engine aircraft industry in the US came to a complete halt costing thousands of jobs and an inestimable loss of economic activity as a direct result.
--
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Mother Jones dug up some old Romney video from the 80s around the time Bain Capital was founded. It has Romney explaining that Bain was being formed to make investments in start-ups and existing companies where they could use their business consulting expertise to add value and make those companies successful. He then says the goal is to harvest those investments in a 5 to 8 year time period.
Now, to you and I and anyone that understands capitalism, that sounds like a very reasonable plan and a good one for the economy and America. But Mother Jones thinks it's a damning indictment of Romney. But the most illustrative part to it is I saw former Labor Secretary Robert Reich on MSNBC. And he's condemning the Romney video, saying what Romney means is that he's going to fire a lot of people, squeeze labor costs, for short term gain. Did that happen at Staples? Sports Authority? Steel Dynamics?
Now, I ask you this. How much damage do you think a jerk like Reich did when you put someone of that ilk in charge of the Dept of Labor? And how many similar termites do you think Obama has eating away at the core of the American economy right now? And then with GDP growing at 1.2% we're supposed to keep believing that Obama's plan is working......
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The contractor would still need to buy this truck we have been discussing. But I've always taken it as a deal breaker if the contractor wants money in advance. Progress payments sure, but full payment, including his profit, in advance? No way.
-- Doug
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revenue
operate
I call foul. To be fair, let's wonder where this businessman's trucks, tools, phones, business licenses, insurance, etc. come from . . . Hmmm. Seems contractors operate somewhat differently than the model you've proposed for most (all? some?) of them. I can't think of very many businesses not located in the magical kingdom of Heybubbalonia that operate on a "bank the revenue before buying raw materials" model.
In fact, most smart customers refuse to pay the whole bill up front and will only advance partial payments to the contractor to purchase materials. An unfortunately more like scenario for many contractors is that they're already in the red when a deposit/down payment comes in for a new job so there's not much (very little? none?) "bankable" revenue left, especially when you consider that the contractor *should* be buying the materials required for the job with that down payment. That's why people are reminded of the dangers of dealing with unlicensed contractors. There's a rich tradition of them taking deposits but never actually buying supplies or doing the work.
I've had several businesses and they all required substantial upfront investments. Photography required lots of cameras, lenses, filters, tripods, lightstands, (and back then film), darkroom gear, carrying cases, studio flash gear, blank invoices, printed contracts, business cards and advertising costs. Computer consulting required computers, compilers, copy machines, cd duplicators, coursework fees, carrying cases and much, much more. What business do you know of that actually operates as you propose?
Tools, operational costs, meals and much more have typically *always* been borne by the contractor until the job is complete, and even then, the profit on any one job rarely (sometimes? ever?) pays for all the equipment and other costs involved. IOW, it's a pretty weak argument you're advancing and it's one that Trader and Gfretwell have pretty thoroughly debunked.
They both won this "case" hands down because of their accurate description of "differed" (sic) costs, recapture, depreciation, etc. If that weren't enough, KRW admitted defeat by resorting to his standard middle school insults. As Trader quite astutely noted, that is KRW's "tell" when he's trying to make a pair of deuces sound like a royal flush.
-- Bobby G.
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On Fri, 28 Sep 2012 20:21:14 -0400, "Robert Green"
<snip>

[..../] IRONY
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wrote:

Where did your money come from? Obama?

Where did the capital come from, dummy?
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On Sep 29, 2:23pm, " snipped-for-privacy@att.bizzzzzzzzzzzz"

It doesn't matter where the capital came from. How about Uncle Abe dies and leaves Johnny $100,000. Johnny takes that and borrows $100,000 more against the equity in his house. He starts a business and buys a truck for $25,000 putting $5,000 down and taking a loan for $20,000. Now explain to us how the accelerated depreciation for his truck is different than the accelerated depreciation for any other business. Does the IRS have a different form for Johnny to figure out his deduction on? Like many businesses, the source of funding for the truck isn't traceable directly to profits as you insist. In this example, it came from inheritance, home equity and a loan on the truck. With other businesses it may come from loans, accumulated profits, new investors, new sale of stock, the sale of other assets, etc. And the specific source isn't even identifiable, for obvious reasons. It's like the owner of the local bakery taking $20 out of the cash register and buying a cake pan with it. Where did that dollar come from?
And of course it doesn't matter because it has nothing to do with accelerated depreciation. Accelerated depreciation just means that a business gets to take depreciation on an asset faster than they normally would. That let's them pay less in taxes in the year the asset is placed in service. It means they will have less depreciation for that asset in future years. Accelerated depreciation does not work like you claimed:
"It's really the other way around. The business pays the taxes on the income used to buy the vehicle up front, only to get it refunded in later years. "
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Name calling again. What are you trying to accomplish? It doesn't improve your arguments.
But the capital could have come from savings from my wages, my social security checks, my uncle, bank loans, bank robbery, or yes, profits from some other business.
-- Doug
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On Wed, 26 Sep 2012 11:40:36 -0400, snipped-for-privacy@aol.com wrote:

It's not a problem. The recapture is simply a differed tax payment.

Differed payment.
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On Wed, 26 Sep 2012 20:16:16 -0400, " snipped-for-privacy@att.bizzzzzzzzzzzz"

You are right that it is basically a free loan from the government but you need to know you will be owing it to optimize your quarterlies (or quarter lies if you are cheating) ;)
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On Thu, 27 Sep 2012 01:35:16 -0400, snipped-for-privacy@aol.com wrote:

No, it isn't a free loan at all. You invested the money and wrote it as such on your taxes. When sold, you made a profit (investment taken out of the business) so it's taxable. No one loaned anyone money, unless you look at all money being the government's.
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On Sep 26, 8:16pm, " snipped-for-privacy@att.bizzzzzzzzzzzz"

That must be one of the terms you learned in the accounting class you never took. "Differed payment". What you mean apparently is "deferred payment" and that is NOT what it is. As Gfretw correctly points out, if you depreciate an asset and later sell that asset for more than the depreciated value, it's a "recapture".
But keep digging your hole deeper.
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On Thu, 27 Sep 2012 05:51:42 -0700 (PDT), " snipped-for-privacy@optonline.net"

No, you're simply lying, again. You do like to do that.
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On Wed, 26 Sep 2012 05:43:05 -0700 (PDT), " snipped-for-privacy@optonline.net"

If you think the argument is lost, you're as dumb as you pretend.

Sorry, you're the moron, here.

They are expenses paid out of profits or borrowed against tomorrow's. Tax law makes it much more profitable to do the latter (or rent). More government forced sub optimization.

Actually, it is. Large corporations carry capital equipment on their books the same as cash. It's another government forced sub optimization.

Wrong.
They do that now.

A government forced sub optimization.
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As always, the argument being lost, the name calling begins.

More convoluted nonsense. The issue is how accelerated depreciation on a business truck works. I provided an example, complete with numbers. Here it is again:
The accelerated depreciation deduction is taken when the truck is bought and consequently less tax money is sent in to the govt right then.
Let's say it's the second quarter of the year. I figure out all my revenue and expenses. One of those expenses would be normal depreciation on a $25,000 truck that I just bought. Let's say that depreciation was $5,000. After all the revenue and expenses, including that normal truck depreciation, I have a taxable profit of $100,000. Let's say I'm paying tax at a 30% rate. I would send the govt a check for $30,000 for the estimated tax payment for that quarter.
Now instead, let's look at what happens when the govt has an accelerated depreciation allowance for that truck. Now instead of writing the truck off over say 5 years, the allowance lets me write it off faster, let's say in just one year. So, instead of having a $5,000 depreciation on that truck in the the current year, I now have a $25000 deduction. Now my taxable business profit is not $100,000, but $20,000 LESS, or $80,000. Paying tax at a 30% rate, I send the govt a check for $24,000
Instead of paying $30,000 in tax, I just paid $24,000 That is how accelerated depreciation works. That $6,000 stays in the business checking account.
Now that is how I say accelerated depreciation works. IT's how Gfretw says it works. What say you? Is the above correct or not? Yes or no?
And note that it has nothing to do with paying taxes today and then getting them back in subsequent years.

Keep digging your hole deeper. Corporations do not expense eqpt when they buy it. The DEPRECIATE it, just like the truck example. And you apparently think this is purely a tax issue. As I pointed out, it's not. It's an accounting issue to accurately reflect the true profit and loss of a business. Under the accrual system of accounting, which all large corporations use, the accounting goal is to match revenue with expenses associated with those revenues. If you build a new factory, fill it with eqpt, it's depreciated over the useful life of the asset so that the expense is matched with revenue over those years that it generates. The same thing with the truck. That way, you get a true picture of the profits and losses of a business. Without accrual accounting, businesses would have wild fluctutations in profit and loss that do not reflect reality. Capiche?

Keep digging your hole. So, let's say a corporation builds two new major factories and fills them with expensive eqpt. They will be used for the next 25 years. Under the accrual system of accounting, which is what they actually use, the cost of those factories is taken as a depreciation expense over the next 25 years. Each year they take as an expense a portion of it. If it's straightline, then beginning with year one, they would take an expense for 1/25th of the total cost. In year one, presumably they also have revenues, so the cost is offset against those revenues. The business winds up with a normal year, normal profits.
Under your proposed system of cash accounting, the corporation would have a horrific loss in the year they built the factories because the cost would wipe out all their profits. And the next year, they would have an abnormally large profit, because the cost of the factories is totally absent even though they are using them to produce revenue. T he profit and loss would swing wildly and it would NOT represent an accurate picture of the financial condition of the corporation to investors, lenders, tax authorities, etc. This really is the first day of accounting 101.

Per the above, that is not true because they use accrual accounting, not cash basis. Have you ever even read a corporate annual report with financial statement?
But keep digging that hole.

It's not an issue of govt sub optimizing anything. It's an issue of accounting to accurately reflect the true financial situation of a business. That has been going on for hundreds of years.
http://www.investopedia.com/terms/a/accrualaccounting.asp#axzz27fwG1bhU
"Definition of 'Accrual Accounting' An accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur. The general idea is that economic events are recognized by matching revenues to expenses (the matching principle) at the time in which the transaction occurs rather than when payment is made (or received). This method allows the current cash inflows/ outflows to be combined with future expected cash inflows/outflows to give a more accurate picture of a company's current financial condition. "
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snipped-for-privacy@att.bizzzzzzzzzzzz wrote:

Huh? That's crazy talk.
Solyndra didn't "make" a dime but spent a BIG pile of cash.
If I get a loan to start a business, it may be YEARS before I "make," or even take in, any money.
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On Sep 25, 9:13pm, " snipped-for-privacy@att.bizzzzzzzzzzzz"

How exactly does the govt get the taxes on the profits made up front and refund it back over time? There is no magic deduction later. The accelerated depreciation deduction is taken when the truck is bought and consequently less tax money is sent in to the govt right then.
Let's say it's the second quarter of the year. I figure out all my revenue and expenses. One of those expenses would be normal depreciation on a $25,000 truck that I just bought. Let's say that depreciation was $5,000. After all the revenue and expenses, including that normal truck depreciation, I have a taxable profit of $100,000. Let's say I'm paying tax at a 30% rate. I would send the govt a check for $30,000 for the estimated tax payment for that quarter.
Now instead, let's look at what happens when the govt has an accelerated depreciation allowance for that truck. Now instead of writing the truck off over say 5 years, the allowance lets me write it off faster, let's say in just one year. So, instead of having a $5,000 depreciation on that truck in the the current year, I now have a $25000 deduction. Now my taxable business profit is not $100,000, but $20,000 LESS, or $80,000. Paying tax at a 30% rate, I send the govt a check for $24,000
Instead of paying $30,000 in tax, I just paid $24,000 That is how accelerated depreciation works. That $6,000 stays in the business checking account.

Already collected by whom? As a business you send in quarterly estimated tax payments based on what you estimate you owe. That expected amount includes any deductions you are entitled too, including the accelerated depreciation under discussion. The only way the taxes would have been collected would be if you yourself were dumb enough to send in more than you had to. And even then, you'd be entitled to it back as soon as you file the return at the end of the year. Or if you made a mistake and realized it, you could also just send in less with the next estimated quarterly payment and recover it the very next quarter. The same applies to individuals that have to file quarterly estimated taxes so the comments on the rich don't make any sense either.

I have. Per gfretw, it's obvious you haven't filed quarterly taxes and have no idea how accelerated depreciation works.

That is totally convoluted and wrong. Per the example above, that is not how it works.

And that in turn results in the business paying LESS TAXES in the year the truck was bought. Not tax money refunded in later years. Less tax money PAID in the year the truck was bought.

Again, paid by whom? You calculate profits and make tax payments quarterly. You'd have to be pretty dumb to send in tax money that you don't owe because you have the extra deduction for the truck.

And as usual, being completely wrong, you start with the snide comments. Typical. Very typical. Now instead of admitting you're wrong, you're going to dig that hole very deep and start with the name calling and vulgarity.
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On 9/25/2012 7:30 AM, Hell Toupee wrote:

The section 179 deduction was one of the reasons you saw so many his & hers Excursions and other mammoth above 6,000 lb SUVs transporting individuals and their large beverage.

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On 9/24/2012 2:48 PM, HeyBub wrote:

http://www.cbo.gov/publication/43576?utm_source edblitz&utm_mediumedBlitzEmail&utm_content2526&utm_campaign=0
They ignore pollution caused in mining the extra materials that make up the batteries. Most of it is out of the country so it don't count. When the Prius first came out I googled cost of battery replacement and somebody in Australia said it was $7,500 Australian dollars.
I met a woman that just loves to drive and might go 50,000 miles per year and just loves her Prius. This old dude with only 1/10 that mileage would be stupid to buy one.
Took a ride in a Prius a few months ago and while the car was very nice and rode well it was surprisingly noisy. I thought the electric motors were supposed to be extremely quite but it was road noise.
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