Saturday, August 20, 2011

The federal government uses tax laws to affect economic desicions. like home mortgage interest. Why do you think this is so? Tax exemtions are...

Any time a tax break is given, it is an incentive, which,
by definition, is mean to motivate large numbers of people to take specific economic
action.  There are secondary effects as well.  When mortgage interest is deductible, it
makes homes more affordable, even if the interest rate is high, since the homeowner will
get some of that money back.  Now you are stimulating the real estate and construction
industries as well as the mortgage lending industry.  As those industries do more
business, theoretically, more taxes are paid by them and it covers some or all of the
original tax break given.  At least, that's how it's supposed to
work.


As for oil exploration, there are at least two major
forces at work to create such an incentive.  One, it is very expensive for the US to
continue to secure, day after day, 66% of its oil through imports from often unstable
regions.  Our military budget exceeds that of all other countries on Earth combined, and
to continue to secure this resource is one of the reasons why that is so.  Second, the
oil companies are some of the most profitable corporations in human history (In the case
of Exxon-Mobil, the most profitable), and that money buys a lot of
influence over the members of Congress who would create such a tax break.  It's the
oldest game in Washington.

No comments:

Post a Comment

In Act III, scene 2, why may the establishment of Claudius's guilt be considered the crisis of the revenge plot?

The crisis of a drama usually proceeds and leads to the climax.  In Shakespeare's Hamlet , the proof that Claudius is guilty...