Post-debate tweet of the night.
That wasn’t a debate so much as Mitt Romney just took Obama for a cross country drive strapped to the roof of his car.
— Mark Hemingway (@Heminator) October 4, 2012
Post-debate picture of the night.
- Avik Roy on Healthcare: In the First Presidential Debate, Mitt Romney Told the Truth on Health Care and Obama Tried Not To - Forbes
- Patrick Brennan on The Phantom $5 Trillion Cut.
- The Washington Examiner: No, Romney will not raise taxes on the middle class.
- Reality Check, from the National Center for Policy Analysis. One of the few “fact checkers” that I’d actually trust.
Tax Breaks for Outsourcing?
I thought one of the better moments in the debate was when the question of tax breaks for outsourcing jobs came up. Romney said “Mr. President, I’ve been in business for 25 years and I have no idea what you’re talking about.” I was glad he said it, because I’ve had no idea what the President is talking about. It turns out, the President was mostly just making it up.
Kevin D. Williamson: The Tax Credit for Outsourcing Is Fiction.
So, here’s the deal: Business expenses are deductible against income for tax purposes. That is it.
I’m not a tax lawyer, so this will be very general, but business income is not like personal income: Your personal income is how much money you took in last year, but business income is how much money you took in minus your business expenses. As Inc. summarizes it:
All of the basic expenses necessary to run a business are generally tax-deductible, including office rent, salaries, equipment and supplies, telephone and utility costs, legal and accounting services, professional dues, and subscriptions to business publications… . Some other miscellaneous expenses that may be deductible in this category include computer software, charitable contributions, repairs and improvements to business property, bank service charges, consultant fees, postage, and online services.
Debbie Stabanow, for my money one of the least impressive senators (and that is saying something), introduced a bill that says, in short: Business expenses are still deductible, unless you use incur those expenses doing things I don’t want you to do.
… In other words, if you send a letter to your lawyer, the postage is a deductible expense. If you send a letter to your offshoring consultant, the postage is not a deductible expense.
So the special outsourcing tax credit isn’t really there — it’s just regular-ol’ deductible business expenses. Rather than repealing an instance of tax favoritism, Democrats (and some Republican miscreants) propose to use the tax code to inflict punitive measures on businesses that make business decisions at odds with Washington’s political preferences.
In a follow-up post Kevin Williamson quotes another authority.
Some additional perspective on President Obama’s fictitious outsourcing tax deductions via the [Joint Committee on Taxation’s] score of Senator Stabenow’s bill: “Under present law, there are no specific tax credits or disallowances of deductions solely for locating jobs in the United States or overseas. Deductions generally are allowed for all ordinary and necessary expenses paid or incurred by the taxpayers during the taxable year in carrying on any trade or business, which includes the relocation of business units.”