EPTUS Politics Mega-thread - Page 1581
| Forum Index > Closed |
Read the rules in the OP before posting, please. In order to ensure that this thread continues to meet TL standards and follows the proper guidelines, we will be enforcing the rules in the OP more strictly. Be sure to give them a re-read to refresh your memory! The vast majority of you are contributing in a healthy way, keep it up! NOTE: When providing a source, explain why you feel it is relevant and what purpose it adds to the discussion if it's not obvious. Also take note that unsubstantiated tweets/posts meant only to rekindle old arguments can result in a mod action. | ||
|
oneofthem
Cayman Islands24199 Posts
| ||
|
JonnyBNoHo
United States6277 Posts
On January 20 2015 15:08 oneofthem wrote: we were talking about business having incentive to prefer debt financing. I still am! Personal taxes play a role in that. THE BIAS TOWARD DEBT IN CURRENT TAX SYSTEMS Income tax systems almost always contain a bias toward debt. Corporate income taxes (CIT) generally allow a deduction of interest payments when determining taxable profits. The return on equity—whether dividends paid to shareholders or capital gains on shares—is typically not deductible. For domestic investors who are subject to personal income tax (PIT) on their capital income, taxes on interest mitigate this tax advantage of debt. Taxes on capital gains and dividends magnify debt bias. On balance, debt usually remains tax favored, both for PIT-exempt and for PIT-taxed investors. Link | ||
|
RvB
Netherlands6261 Posts
| ||
|
coverpunch
United States2093 Posts
On January 20 2015 17:30 RvB wrote: Debt financing is attractive because debt is cheaper than equity even without taxes. I'm not sure how much tax plays a roll in it but I doubt it will matter that much. Er, no. Most financial models assume a discount on debt because of tax benefits. Jonny's point on that is correct. You would be foolish to borrow money just for tax purposes, but it does make debt look more attractive when you compare costs of capital. | ||
|
RvB
Netherlands6261 Posts
On January 20 2015 17:50 coverpunch wrote: Er, no. Most financial models assume a discount on debt because of tax benefits. Jonny's point on that is correct. You would be foolish to borrow money just for tax purposes, but it does make debt look more attractive when you compare costs of capital. I know, that was the point I was trying to make. Maybe I was juts unclear. Debt financing will remain appealing because it's cheaper and all the returns you make above the interest of the debt will go to equity holders. Tax is an added benefit not the main cause for debt financing. | ||
|
oneofthem
Cayman Islands24199 Posts
it's still talking about investors, who are not the decisionmakers for form of financing corporations take. debt financing is preferred by the corporate actor because it is cheaper and more readily available. | ||
|
Crushinator
Netherlands2138 Posts
On January 20 2015 20:39 RvB wrote: I know, that was the point I was trying to make. Maybe I was juts unclear. Debt financing will remain appealing because it's cheaper and all the returns you make above the interest of the debt will go to equity holders. Tax is an added benefit not the main cause for debt financing. Taxes are actually the only reason that debt financing is preferred (up to a point) as per the Modigliani-Miller theorem. If there were no tax benefits, leverage would increase bankruptcy costs and destroy shareholder value. It is true that debt is cheaper than equity, however adding leverage increases the required return on equity since shareholders are only residual claimants. (this is ignoring certain types of agency problems, but since that was not part of your point I think it can be ignored) | ||
|
oneofthem
Cayman Islands24199 Posts
| ||
|
{CC}StealthBlue
United States41117 Posts
Officials said Monday that they were bringing truckloads of drinking water to the eastern Montana city of Glendive after traces of 50,000 gallons of oil that spilled into the Yellowstone River were found in the city's water supply. Preliminary tests at the city's water treatment plant indicated that at least some oil got into a water supply intake along the river, according to state and federal officials. About 6,000 people are served by the intake, Glendive Mayor Jerry Jimison said. Officials stressed that they were bringing in the shipments of drinking water as a precaution and did not know yet whether there was any health threat. Results of further tests to determine the scope of the danger were expected in coming days. Up to 50,000 gallons of oil spilled in the Saturday pipeline accident. Cleanup crews were being hampered by ice that covers most of the river, making it hard to find the oil. Officials with Bridger Pipeline LLC of Casper, Wyoming, have said the break in the 12-inch steel pipe happened Saturday morning in an area about 9 miles upstream from Glendive, a community in east-central Montana near the North Dakota border. Montana Gov. Steve Bullock toured the spill site Monday afternoon. He said he expected Bridger to continue its cleanup efforts "until it's cleaned up to our standards." Source | ||
|
{CC}StealthBlue
United States41117 Posts
| ||
|
Sub40APM
6336 Posts
| ||
|
IgnE
United States7681 Posts
| ||
|
Sub40APM
6336 Posts
On January 21 2015 05:29 IgnE wrote: You think he becomes personally richer by running for president than staying on at Fox? Thats what I'd like Jon to explore. Stuff like this: http://www.newrepublic.com/article/116237/newt-gingrich-herman-cain-are-now-making-money-spam An entire economy that targets GOP primary voters -- who by supporting marginal candidates like Cain signal that they are low information consumers and so are prime targets to other scams. Or like this National Review Cruise: http://nymag.com/news/features/republican-caribbean-cruise-2012-12/ It just seems like there is an entire industry out there to scoop up the savings of people in their 50s+ who vote Republican. | ||
|
JonnyBNoHo
United States6277 Posts
On January 21 2015 00:24 oneofthem wrote: the interest payment as tax deduction is basically a negative tax on debt and it's the reason for preferring debt. i don't really see how you can keep this and alter equity taxation in any reasonable way to get equity preferred over debt on a simple cost basis. Maybe if you explain your logic with an example? What 'simple cost basis' are you using? If you work off of a P&L equity is free and debt has an expense tied to it, albeit partially offset by the interest deduction. To get equity having a cost you have to bring investors into the equation. Once you do that you should consider their taxes as well. Taxes impact capital costs after all, as evidenced by tax free vs taxable bonds. The standard view is that a firm financed 100% with debt will have a capital cost that is the same as a firm financed with 100% equity. That only changes if there's some distortion going on, such as financial distress which makes debt more expensive, or taxes, which make equity more expensive. Your view seems quite a bit different from that, so I think you need to explain in more detail. | ||
|
JonnyBNoHo
United States6277 Posts
On January 21 2015 06:09 Sub40APM wrote: Thats what I'd like Jon to explore. Stuff like this: http://www.newrepublic.com/article/116237/newt-gingrich-herman-cain-are-now-making-money-spam An entire economy that targets GOP primary voters -- who by supporting marginal candidates like Cain signal that they are low information consumers and so are prime targets to other scams. Or like this National Review Cruise: http://nymag.com/news/features/republican-caribbean-cruise-2012-12/ It just seems like there is an entire industry out there to scoop up the savings of people in their 50s+ who vote Republican. It's not unusual for a politician to leverage political popularity to make a buck. After Clinton left office he made a boatload on speaking engagements ($100+ million). After his unsuccessful presidential run, Al Gore joined a private equity firm and made a few hundred millions. So there's definitely some money to be made there. I have to imagine though that a successful term in office is much more lucrative that an unsuccessful run. Edit: there are also a lot of big organizations out there scooping up money for Democrats. I doubt their admin expenses are zero either + Show Spoiler + | ||
|
{CC}StealthBlue
United States41117 Posts
| ||
|
Sub40APM
6336 Posts
On January 21 2015 06:40 JonnyBNoHo wrote: It's not unusual for a politician to leverage political popularity to make a buck. After Clinton left office he made a boatload on speaking engagements ($100+ million). After his unsuccessful presidential run, Al Gore joined a private equity firm and made a few hundred millions. So there's definitely some money to be made there. I have to imagine though that a successful term in office is much more lucrative that an unsuccessful run. Edit: there are also a lot of big organizations out there scooping up money for Democrats. I doubt their admin expenses are zero either + Show Spoiler + I am not talking about successful politicians -- even Gore was a Senator and then a Vice President. I am talking about pure griftters like Huckabee/Cain/Palin and they dont target big organizations, they target the vast, angry, GOP underclass. The vast Democrat underclass is targeted by more traditional scams like pyramid schemes or cash checking or title loans. Nice list though: Because 501(c) organizations do not disclose their donors, contributions to those groups are not included here, except in cases where the group discloses voluntarily, super useful. Oh look, evil billionaire Tom Sawyer donated 10x of the Koch Industries. | ||
|
JonnyBNoHo
United States6277 Posts
On January 21 2015 06:57 Sub40APM wrote: I am not talking about successful politicians -- even Gore was a Senator and then a Vice President. I am talking about pure griftters like Huckabee/Cain/Palin and they dont target big organizations, they target the vast, angry, GOP underclass. The vast Democrat underclass is targeted by more traditional scams like pyramid schemes or cash checking or title loans. Nice list though: Because 501(c) organizations do not disclose their donors, contributions to those groups are not included here, except in cases where the group discloses voluntarily, super useful. Oh look, evil billionaire Tom Sawyer donated 10x of the Koch Industries. What are you asking? I doubt Cain makes much off of email advertisements. Is this an evil conservative conspiracy thing? Edit: the article says he has a list of 360,000 and did 50 ads over the last two years. Average open rate on an email ad for medical services is 20.5%, average click through is 6.5% so 360,000*50*0.205*0.065 = 239850 click-throughs. If he's getting $2 per click through (avg. Health click rate for AdWords, no idea how appropriate that is) that's $479,700 revenue. Not sure what the expenses would look like. Mail Chimp offers large volume services for a few hundred per month, so sending email isn't free. | ||
|
farvacola
United States18842 Posts
Herman Cain knows how to turn a profit. The Atlanta-based businessman who spent several years as a motivational speaker before joining the presidential campaign trail still charges a $25,000 speaking fee for some of his public appearances, Joshua Green of Bloomberg Businessweek reports. Cain is making money, alright. Bloomberg News reported on Oct. 17 that his campaign paid more than $65,000 to his personal publishing company to buy copies of his books and pamphlets. In an interview before his address to the Arizona GOP, he told me that he continues to give motivational speeches to corporations at $25,000 a pop even as he campaigns for President. "I'm still doing paid speeches," he confirmed. "But I have not raised my prices. This economy's on life support, so I'm very mindful of those companies that would like to have me come and speak. But I'm not gonna take advantage of my newfound popularity just to put more dollars in my pocket." Even so, Cain estimates that he has earned $250,000 this year through his speeches. Instead of making the traditional rounds on the campaign trail in early-voting states like New Hampshire and Iowa, Cain has spent the past two weeks on a tour promoting his new book, This Is Herman Cain! My Journey to the White House. "He has a bare-bones staff, a thin calendar, and hasn't registered his name on the ballot in numerous primary states, although he has registered appearances on the Today show and dozens of others to pitch his book," Green writes. Herman Cain has earned $250,000 in speaking fees this year | ||
|
GreenHorizons
United States23515 Posts
On January 21 2015 05:29 IgnE wrote: You think he becomes personally richer by running for president than staying on at Fox? Well he made half a million a year at Fox as of 2011 and pulled in ~$16,000,000 during his 08 run. Of course it works better when you have some hobby or desire that can be woven into the spending. Gingrich and his zoo fetish is an example. On a day when other candidates were preparing for a major debate, Newt Gingrich spent the morning with Barnaby, an 85-year-old tortoise at a Des Moines zoo. It might have been viewed as one more possible sign that the former House speaker isn’t serious about his presidential aspirations. Turns out it was merely Gingrich indulging in one of his favorite pastimes as he plodded his slow, steady course to the front of the Republican pack. Gingrich, it seems, is crazy for zoos. Source | ||
| ||
![[image loading]](https://dl.dropboxusercontent.com/u/72070179/big%20orgs.PNG)
