Haha, you're a taxpayer.....

[rabbitproof]

...... sucka.

Study says most corporations pay no U.S. income taxes
Tue Aug 12, 2008 12:54pm EDT

WASHINGTON (Reuters) - Most U.S. and foreign corporations doing business in the United States avoid paying any federal income taxes, despite trillions of dollars worth of sales, a government study released on Tuesday said.

The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.

More than half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years in that period, the report said.



http://www.reuters.com/article/newsO...080812?sp=true

[Epitome22]

One of the perks of the upcoming Obama administration will be a fully funded and staffed IRS. Rich people and corporations are skilled at avoiding taxes but the current administration has underfunded and understaffed the IRS to such a degree that it can't afford to waste resource going after the bigger tax cheats.

[alexamenos]

Originally Posted by Epitome22

One of the perks of the upcoming Obama administration will be a fully funded and staffed IRS.

A fully funded and staffed IRS...if that isn't the epitome of a government "perk", then I don't know what is.

[u2sarajevo]

Originally Posted by alexamenos

A fully funded and staffed IRS...if that isn't the epitome of a government "perk", then I don't know what is.

That's the mindset of the liberal though..... sad but true.

[Flacolaco]

"Rich people and corporations" <-- A phrase thrown around with such negative connotations these days..with such hate, and I'm talking about it in general, outside of the tax issue.

Why do people hate success so much? Why are people so spiteful and jealous?

[DirkFTW]

There's not a whole lot of detail to go on, but it certainly does suggest that someone's skimping on taxes, ie whatever company(ies) is(are) shifting their income overseas. Probably a tax loophole that needs to be closed.

However, I know with individuals working overseas, they are often subject to foreign income taxes, and the US has a rule against double-taxation. Dunno if they same applies for companies, but it's a huge disincentive for companies to be taxed twice at 30-40% each. Yea, it'd be nice if the US government had a slice of the pie, but if the result is no pie at all...

[mcsluggo]

Originally Posted by Flacolaco

"Rich people and corporations" <-- A phrase thrown around with such negative connotations these days..with such hate, and I'm talking about it in general, outside of the tax issue.

Why do people hate success so much? Why are people so spiteful and jealous?

I don't get the feeling there is much specific hate towards "rich people and corporations" but there is a general "us" and "them" feeling that runs through everyone. And since most of us are neither rich nor corporations... we can safely call that "them"

[rabbitproof]

57% of US companies didn't pay US income taxes for a year. That's one of the causes for the general divide.. they have means to avoid things we can't.

If the Mavs had to pay the luxury tax but the Spurs didn't, you'd complain as well.

[DirkFTW]

Originally Posted by rabbitproof

57% of US companies didn't pay US income taxes for a year. That's one of the causes for the general divide.. they have means to avoid things we can't.

If the Mavs had to pay the luxury tax but the Spurs didn't, you'd complain as well.

Oh, another thing is how many of these corporations are S-corporations? Those are arranged so that income/profit is taxed at the shareholder level, not the corporate level. So the company will pay zero taxes regardless. Same double-taxation concerns on the same dollar.

Interesting view on it from the corporate perspective:

Eliminating Double Taxation

The way corporations are taxed provides some interesting and challenging planning decisions. A corporation is a taxpaying entity. That is, it must file an annual tax return and pay taxes on its income. If those earnings are distributed to a shareholder, this distribution is treated as a dividend, which is then taxable to the shareholder. The effect of this is that corporate earnings are taxed twice—once at the corporate level and once at the shareholder level, when the earnings are distributed in the form of dividends.

The problem of double taxation may be eliminated in one of two ways. First, the corporation can pay out as salary an amount equal to its net earnings. This is called zeroing out the corporation. As an example, a medical corporation might have a profit of $100,000. If this amount is paid to one or more of the officers of the corporation as compensation for services, the corporation will get a tax deduction for this $100,000 in salary. That will reduce taxable income to zero, and no federal income taxes would be due. The $100,000 is included in income, and the tax is paid by the recipient. This eliminates the problem of double taxation.

The Internal Revenue Code imposes certain limitations on this technique by allowing a deduction to the corporation, only if the amount of compensation paid to a particular individual is "reasonable." The salary cannot be excessive based upon the actual services provided by the individual. There have been thousands of cases litigated by the Internal Revenue Service on this issue, and no firm rule has developed. Basically, if the salary is comparable to that received by others in similar businesses, it is unlikely that there will be a challenge from the IRS.

If you attempt to pay salary to your children or your grandmother without any services performed by them, the deduction could be disallowed as unreasonable. If the salary is disallowed as unreasonable, this amount is added back to the corporation’s income and a tax is assessed on this income. Also, the amount which was distributed is treated as a dividend to the recipient and is taxable to that individual. This produces a double tax on the same income and is clearly a disastrous result.

Using a S-Corporation

The second method for eliminating double taxation is the use of a device called an S Corporation. This is a type of corporation specifically provided for in the Internal Revenue Code. An S Corporation is treated differently for tax purposes than a conventional corporation (which is known as a "C Corporation"). If elected by the shareholders, an S Corporation will not be subject to tax at the corporate level. Instead, all corporate income is included directly in the income of the shareholders. There is no need to zero out the corporation with salaries since corporate income is now subject to tax only once, at the shareholder level. Additionally, if the corporation has a net loss, that loss can be used by the shareholders to offset other business income.

In order to qualify, the stock of an S Corporation must be held by 75 or fewer individuals and all shareholders must consent to the election. An S Corporation has all of the lawsuit protection features of a C Corporation. If unreasonable compensation is an issue or the corporation is expected to show net losses, an S Corporation would be a useful planning technique.

[Mavdog]

it isn't the lack of irs tax collectors, there are plenty of people there.

the problem is the tax code and the compilation of special treatment for those industries who have hired lobbyist to convince the lawmakers to grant them these concessions.

the news really says a lot about how we need to overhaul our tax code more than anything else. get rid of the loopholes and make the code more simple and transparent.

[mary]

Originally Posted by Flacolaco

"Rich people and corporations" <-- A phrase thrown around with such negative connotations these days..with such hate, and I'm talking about it in general, outside of the tax issue.

Why do people hate success so much? Why are people so spiteful and jealous?

If corporations started paying their fair share of taxes, then maybe we would be able to decrease some marginal tax rates on individuals, therefore providing a benefit to rich people.

After all, the purpose of collecting taxes is to generate tax revenue, not to punish people....and despite popular belief, there is little empirical evidence that shows lower tax rates bring about greater tax revenue.

So we've got to tax someone - and since large corporations inherently enjoy a disproportionate amount benefits from the government (hey, nobody's offering to bail me out), I'd have no problem shifting some tax burden their way.

[dude1394]

Good grief...what exactly do you think businesses are going to do when you excessively raise taxes on them.

1. Either move their businesses or operations.
2. Raise their prices
3. Fire people
4. Don't grow as much
5. Hire more lawyers and more lobbyists to get more tax breaks by arguing #'s 1-4.

[Mavdog]

Originally Posted by dude1394

Good grief...what exactly do you think businesses are going to do when you excessively raise taxes on them.

1. Either move their businesses or operations.
2. Raise their prices
3. Fire people
4. Don't grow as much
5. Hire more lawyers and more lobbyists to get more tax breaks by arguing #'s 1-4.

the inclusion of the word "excessive" betrays your view on the subject.

the point made is the report that almost 3/4 of non-american corps and over 1/2 of american corps paid NO taxes for at least one calender year in which they had positive net income.

there is a great deal of difference in no taxes and excessive taxes...

corps should pay their fair share of taxes, and that is the subject. do you disagree that corps should pay their fair share?

[dude1394]

Do you believe that you should get a tax break for your mortgage? Or that if you invest all of your profits (legally) back into the business that you should pay taxes on those profits?

Your use of the word "fair" is the misnomer here and it's used by illogical people talking about taxes. They are taxed at "x" rate, they (like you) use the tax code to invest in capital that the guvment feels helps them grow their business, ergo...they allow them to take that off their profits.

Would you rather they NOT re-invest their profits so that the guvment could tax them more and they would hire less people?

[Flacolaco]

Would you rather they NOT re-invest their profits so that the guvment could tax them more and they would hire less people?

See the next 4 years for more on this.

[Mavdog]

Originally Posted by dude1394

Do you believe that you should get a tax break for your mortgage? Or that if you invest all of your profits (legally) back into the business that you should pay taxes on those profits?

Your use of the word "fair" is the misnomer here and it's used by illogical people talking about taxes. They are taxed at "x" rate, they (like you) use the tax code to invest in capital that the guvment feels helps them grow their business, ergo...they allow them to take that off their profits.

Would you rather they NOT re-invest their profits so that the guvment could tax them more and they would hire less people?

you are making a huge assumption that these corporations who paid zero taxes on their profits "re-invest[ed] their profits".

more than likely they used some loophole (ie an obscure regulation in our complex and abused tax code) to avoid paying the taxes that they otherwise would owe.

these rules allow for writeoffs and increased depreciation of assets to shelter the net income from the taxman. while investing is good for the continued viability of the businesses, it's pretty inconceivable that these corporations truly reinvested their total net income in the tax year.

we have an effective tax rate on businesses that is less than half of the stated tax rate. we need to clean up the tax code to be more effective and transparent in how businesses are taxed. that would indeed make the tax policies more FAIR to both all businesses and to individuals who would otherwise bear the burden of taxation.

[dude1394]

Originally Posted by Mavdog

you are making a huge assumption that these corporations who paid zero taxes on their profits "re-invest[ed] their profits".

more than likely they used some loophole (ie an obscure regulation is our complex and abused tax code) to avoid paying the taxes that they otherwise would owe.

You have personal knowledge of this? I do not at my industry?

Sounds like you are making the assumption. Please cite these prolific loopholes?

[Mavdog]

Originally Posted by dude1394

You have personal knowledge of this? I do not at my industry?

Sounds like you are making the assumption. Please cite these prolific loopholes?

uh, YOU are the one who made the claim that these corporations who paid zero taxes "invest... in capital [to] grow their business"...

why don't YOU prove it? let us know how these write offs and rapid depreciations actually benefited our country's competitiveness.

[dude1394]

You said I was "making a huge assumption" here, please show me how.

I should have realized that you would pick around the edges instead of actually addressing the question, by throwing out a fairness doctrine that you cannot debate.

I'll rephrase...imo...most tax breaks are built to provide businesses (and people) with the ability to keep their dollars. For a business...that usually means keeping their dollars by investing in capital of some sort, or write-offs as the cost of doing business.

There is a possibility that there IS (horrors) a tax break that is not used for this, however your smearing of all business by saying they don't pay their "fair share" shows much more your biases, than any facts you are trying to bring to this discussion.

Which of these tax deductions do you think businesses should not take, but pay more taxes instead?
http://www.nolo.com/article.cfm/obje...1/277/235/ART/
- Auto expenses
- Cost of going into business
- Education Expenses
- Legal Expenses
- Bad debts
- Business entertaining
- Travel
- New Equipment
- Interest
- Moving expenses
- Software
- Charitable Donations
- Taxes
- Advertising

[DirkFTW]

Originally Posted by Mavdog

the point made is the report that almost 3/4 of non-american corps and over 1/2 of american corps paid NO taxes for at least one calender year in which they had positive net income.

I am reading it very differently.

Most U.S. and foreign corporations doing business in the United States avoid paying any federal income taxes, despite trillions of dollars worth of sales, a government study released on Tuesday said.

Collectively, US and foreign corporations made trillions of dollars worth of sales, not income. And there is no indication on which companies made money, or how much money they made. I just don't think there's enough information in this to be anything more than sensationalist. It's the same as someone saying "In 2007, one-third of all taxpayers in the United States paid ZERO taxes despite earning over a trillion dollars." There's a good reason for the statistic that is lost when the details aren't included.

I'm sure there is something in the tax system to criticize and fix, but it's likely not the systemic type of flaw that the article suggests. Out of (i)"zeroing out", (ii)S-corporations, (iii)avoiding double taxation, and (iv)tax credits... I think the only one that might be problematic is tax credits. But only because I don't know much about them. And I might be missing other ways of avoiding taxes that are also problematic. But, the other three methods are legitimate setups that maintain fair treatment towards businesses.

[Mavdog]

Originally Posted by dude1394

You said I was "making a huge assumption" here, please show me how.

I should have realized that you would pick around the edges instead of actually addressing the question, by throwing out a fairness doctrine that you cannot debate.

I'll rephrase...imo...most tax breaks are built to provide businesses (and people) with the ability to keep their dollars. For a business...that usually means keeping their dollars by investing in capital of some sort, or write-offs as the cost of doing business.

There is a possibility that there IS (horrors) a tax break that is not used for this, however your smearing of all business by saying they don't pay their "fair share" shows much more your biases, than any facts you are trying to bring to this discussion.

Which of these tax deductions do you think businesses should not take, but pay more taxes instead?
http://www.nolo.com/article.cfm/obje...1/277/235/ART/
- Auto expenses
- Cost of going into business
- Education Expenses
- Legal Expenses
- Bad debts
- Business entertaining
- Travel
- New Equipment
- Interest
- Moving expenses
- Software
- Charitable Donations
- Taxes
- Advertising

it isn't the categories themselves as much as the opportunities for abuse.
should a company get to deduct renting a bentley when another car will do just as well?
should a company be allowed to depreciate a new piece of equipment in one year when its useful life is 5 years?
should companies be given a tax credit for advertising when they don't really need to advertise (drug cos come to mind here)?
should a company get to deduct costs of a move when it was intended to just get closer to the ceo's residence?
there really isn't a need to cite how companies abuse the "business entertaining" deduction is there...

in 2006 businesses paid a total of $395.5B in income tax, while individuals paid $1,366.241B in income tax and $834.732B in employment taxes.

in 2006 the total revenue of all businesses in the usa was over $21.851 Trillion. total deductions were $19.688 Trillion. that produces an effective tax rate of 18.2% on net income.

in 2006 total income by individuals was $8.030 trillion, with adjusted income of $5.579 trillion. that produces an effective tax rate of 24.5% on adjusted income (not including the employment tax, which would make it even more skewed).

so no, I do not see businesses carrying their fair burden of taxes.

[Mavdog]

Originally Posted by DirkFTW

I am reading it very differently.

Collectively, US and foreign corporations made trillions of dollars worth of sales, not income. And there is no indication on which companies made money, or how much money they made. I just don't think there's enough information in this to be anything more than sensationalist. It's the same as someone saying "In 2007, one-third of all taxpayers in the United States paid ZERO taxes despite earning over a trillion dollars." There's a good reason for the statistic that is lost when the details aren't included.

I'm sure there is something in the tax system to criticize and fix, but it's likely not the systemic type of flaw that the article suggests. Out of (i)"zeroing out", (ii)S-corporations, (iii)avoiding double taxation, and (iv)tax credits... I think the only one that might be problematic is tax credits. But only because I don't know much about them. And I might be missing other ways of avoiding taxes that are also problematic. But, the other three methods are legitimate setups that maintain fair treatment towards businesses.

yes, you are correct, it isn't net income but revenue.

sub-s corps are not going to skew the numbers, the gross revenue and number of owners is limited by law.

[dude1394]

Originally Posted by Mavdog

it isn't the categories themselves as much as the opportunities for abuse.
should a company get to deduct renting a bentley when another car will do just as well?

Companies have two masters...profits and possibly shareholders.
Does your company rent bentleys? If so don't you think the shareholders would have something to say. As well as if they didn't rent bentley's, they could spend more on employees or bonus's.

should a company be allowed to depreciate a new piece of equipment in one year when its useful life is 5 years?

I don't know, nor do you. Give me an example?

should companies be given a tax credit for advertising when they don't really need to advertise (drug cos come to mind here)?

Who's to say they shouldn't, the guvment? Why wouldn't someones life be enhanced by seeing a drug that might resolve one of their symptoms? Do you think somehow that doctors know everything?

should a company get to deduct costs of a move when it was intended to just get closer to the ceo's residence?

Do you have examples of this, it sounds ludicrous. See #1.

there really isn't a need to cite how companies abuse the "business entertaining" deduction is there...

Have you ever been on a business meeting that went through dinner? Do you ever try to make a sale anywhere? Do you ever host a business client? Thinking that all business gets done 9-5 is asinine.

in 2006 businesses paid a total of $395.5B in income tax, while individuals paid $1,366.241B in income tax and $834.732B in employment taxes.

in 2006 the total revenue of all businesses in the usa was over $21.851 Trillion. total deductions were $19.688 Trillion. that produces an effective tax rate of 18.2% on net income.

in 2006 total income by individuals was $8.030 trillion, with adjusted income of $5.579 trillion. that produces an effective tax rate of 24.5% on adjusted income (not including the employment tax, which would make it even more skewed).

so no, I do not see businesses carrying their fair burden of taxes.

Of course those individuals were less than 50% of the population...if I recall about 60% of that tax revenue comes from 10% of the people already.

It's great that you think businesses should be taxed more...but don't think that it's free, which you are inferring. Don't think that they will not:
- raise prices, cut workers, curtail expansion, move etc.

[Mavdog]

Originally Posted by dude1394

Companies have two masters...profits and possibly shareholders.
Does your company rent bentleys? If so don't you think the shareholders would have something to say. As well as if they didn't rent bentley's, they could spend more on employees or bonus's.

b of directors set the compensation, not the shareholders, and you didn't even answer the question. nice avoidance.

I don't know, nor do you. Give me an example?

there are many examples in the voluminous tax code. that's the issue...

Who's to say they shouldn't, the guvment? Why wouldn't someones life be enhanced by seeing a drug that might resolve one of their symptoms? Do you think somehow that doctors know everything?

uh, yes, I do "think...that doctors know" what drug is best for the patient, and that the patient (that's who sees these tv ads btw) doesn't know the ins and outs of the drugs.

pretty ridiculous for you to argue that the patient knows more about medicine and drugs than the doctor...

Do you have examples of this, it sounds ludicrous. See #1.

oh let's see, the relocation of quaker state to dallas from pennsylvania?
the relocation of union pacific from omaha to dallas (and the move back when the ceo was changed).

not so ludicrous....

Have you ever been on a business meeting that went through dinner? Do you ever try to make a sale anywhere? Do you ever host a business client? Thinking that all business gets done 9-5 is asinine.

have you ever had a supposed business event be nothing more than a social event?
c'mon, you can't be serious in arguing that this is not abused, it happens every day.

Of course those individuals were less than 50% of the population...if I recall about 60% of that tax revenue comes from 10% of the people already.

???? please try to make sense...

It's great that you think businesses should be taxed more...but don't think that it's free, which you are inferring. Don't think that they will not:
- raise prices, cut workers, curtail expansion, move etc.

in a word, no.