What The Top U.S. Companies Pay In Taxes

[ElNono]

Business In The Beltway
Forbes: What The Top U.S. Companies Pay In Taxes (http://www.forbes.com/2010/04/01/ge-exxon-walmart-business-washington-corporate-taxes_print.html)
Christopher Helman, 04.01.10, 3:00 PM ET

HOUSTON -
As you work on your taxes this month, here's something to raise your hackles: Some of the world's biggest, most profitable corporations enjoy a far lower tax rate than you do--that is, if they pay taxes at all.

The most egregious example is General Electric. Last year the conglomerate generated $10.3 billion in pretax income, but ended up owing nothing to Uncle Sam. In fact, it recorded a tax benefit of $1.1 billion.

Avoiding taxes is nothing new for General Electric. In 2008 its effective tax rate was 5.3%; in 2007 it was 15%. The marginal U.S. corporate rate is 35%.

How did this happen? It's complicated. GE's tax return is the largest the IRS deals with each year--some 24,000 pages if printed out. Its annual report filed with the Securities and Exchange Commission weighs in at more than 700 pages.

Inside you'll find that GE in effect consists of two divisions: General Electric Capital and everything else. The everything else--maker of engines, power plants, TV shows and the like--would have paid a 22% tax rate if it was a standalone company.

It's GE Capital that keeps the overall tax bill so low. Over the last two years, GE Capital has displayed an uncanny ability to lose lots of money in the U.S. (posting a $6.5 billion loss in 2009), and make lots of money overseas (a $4.3 billion gain). Not only do the U.S. losses balance out the overseas gains, but GE can defer taxes on that overseas income indefinitely. The timing of big deductions for depreciation in GE Capital's equipment leasing business also provides a tax benefit, as will loan losses left over from the credit crunch.

But it's the tax benefit of overseas operations that is the biggest reason why multinationals end up with lower tax rates than the rest of us. It only makes sense that multinationals "put costs in high-tax countries and profits in low-tax countries," says Scott Hodge, president of the Tax Foundation. Those low-tax countries are almost anywhere but the U.S. "When you add in state taxes, the U.S. has the highest tax burden among industrialized countries," says Hodge. In contrast, China's rate is just 25%; Ireland's is 12.5%.

Corporations are getting smarter, not just about doing more business in low-tax countries, but in moving their more valuable assets there as well. That means setting up overseas subsidiaries, then transferring to them ownership of long-lived, often intangible but highly profitable assets, like patents and software.

As a result, figures tax economist Martin Sullivan, companies are keeping some $28 billion a year out of the clutches of the U.S. Treasury by engaging in so-called transfer pricing arrangements, where, say, Microsoft's overseas subsidiaries license software to its U.S. parent company in return for handsome royalties (that get taxed at those lower overseas rates).

"Corporations are paying lower amounts of their profits in taxes now than in the past," says Douglas Schackelford, who teaches tax law at the University of North Carolina at Chapel Hill. "Other countries have been lowering their rates, but not the U.S."

Mind you, not all global megacorps enjoy such low tax rates. Try to muster some pity for Big Oil. ExxonMobil paid more income taxes than any other U.S. company last year, some $15 billion, or 47% of pretax earnings. Exxon's peers Chevron and ConocoPhillips likewise paid out more than half their earnings in income taxes. The oil companies are oddities among the multinationals because many of the oil-rich countries where they do business levy even higher taxes than the U.S.

Exxon tries to limit the tax pain with the help of 20 wholly owned subsidiaries domiciled in the Bahamas, Bermuda and the Cayman Islands that (legally) shelter the cash flow from operations in the likes of Angola, Azerbaijan and Abu Dhabi. No wonder that of $15 billion in income taxes last year, Exxon paid none of it to Uncle Sam, and has tens of billions in earnings permanently reinvested overseas.

Likewise, GE has $84 billion in overseas income parked indefinitely outside the U.S.

Naturally the Obama administration wants to put an end to this. It has proposed doing away with tax deferrals on overseas income. If the plan passes, a U.S. company that pays a 25% tax on profits in China would have to pay an additional 10% income tax to Uncle Sam to bring it up to the 35% corporate rate. "Eliminating deferrals would put U.S. companies on an unlevel playing field," says the Tax Foundation's Hodge, "especially if competing with the likes of Germany, which only taxes companies on domestic operations."

Hewlett-Packard and others among the top 25 state in their annual reports that if Obama's tax measures pass it would mean a certain tax hike, probably amounting to billions of dollars.

Would no more tax holiday for GE really end up helping Mr. and Mrs. Taxpayer? Doubtful. "The average Joe should be in favor of lower corporate taxes," says Hodge, "because ultimately they are paying the corporate income tax. Either as workers, getting lower wages and fewer jobs, or as consumers, paying higher prices, or as retirees, getting lower dividends and earnings on their investments."

In the same vein, JPMorgan Chase Chief Executive Jamie Dimon has spoken out against an Obama proposal to levy a special tax on banks to recoup bailout costs. "Using tax policy to punish people is a bad idea," said Dimon. "All businesses tend to pass costs on to customers."

[boutons_deux]

"All businesses tend to pass costs on to customers."

:lol All business executives pocket savings from destroying jobs. They NEVER pass savings onto customers.

[DMX7]

"All businesses tend to pass costs on to customers."

:lol All business executives pocket savings from destroying jobs. They NEVER pass savings onto customers.

Exactly. If there's a supply-demand equilibrium, then raising prices would upset that and not maximize business.

[greyforest]

rich people and corporations lobby for tax loopholes and then use them

[DMX7]

rich people and corporations lobby for tax loopholes and then use them

Well, Obama may finally stand up to it if his proposal can survive.

[Trainwreck2100]

not gonna red the article just gonna say "jack shit"

[Wild Cobra]

Can someone tell me why congress would write such tax laws that allows GE to get $1.09 billion from us tax payers?

Who are they friends with in congress to write such great deals in the tax laws? Must have been authorized by this new administration. For 2008, they paid $1.052 billion in taxes. $4.130 billion in 2007.

Could it be Congress' way of giving their banker friends money since Bank of America own 100,440,166 shares?

[ChumpDumper]

You might want to read the article, WC.

[spursncowboys]

Business In The Beltway
Forbes: What The Top U.S. Companies Pay In Taxes (http://www.forbes.com/2010/04/01/ge-exxon-walmart-business-washington-corporate-taxes_print.html)
Christopher Helman, 04.01.10, 3:00 PM ET

HOUSTON -
As you work on your taxes this month, here's something to raise your hackles: Some of the world's biggest, most profitable corporations enjoy a far lower tax rate than you do--that is, if they pay taxes at all.

The most egregious example is General Electric. Last year the conglomerate generated $10.3 billion in pretax income, but ended up owing nothing to Uncle Sam. In fact, it recorded a tax benefit of $1.1 billion.

Avoiding taxes is nothing new for General Electric. In 2008 its effective tax rate was 5.3%; in 2007 it was 15%. The marginal U.S. corporate rate is 35%.

How did this happen? It's complicated. GE's tax return is the largest the IRS deals with each year--some 24,000 pages if printed out. Its annual report filed with the Securities and Exchange Commission weighs in at more than 700 pages.

Inside you'll find that GE in effect consists of two divisions: General Electric Capital and everything else. The everything else--maker of engines, power plants, TV shows and the like--would have paid a 22% tax rate if it was a standalone company.

It's GE Capital that keeps the overall tax bill so low. Over the last two years, GE Capital has displayed an uncanny ability to lose lots of money in the U.S. (posting a $6.5 billion loss in 2009), and make lots of money overseas (a $4.3 billion gain). Not only do the U.S. losses balance out the overseas gains, but GE can defer taxes on that overseas income indefinitely. The timing of big deductions for depreciation in GE Capital's equipment leasing business also provides a tax benefit, as will loan losses left over from the credit crunch.

But it's the tax benefit of overseas operations that is the biggest reason why multinationals end up with lower tax rates than the rest of us. It only makes sense that multinationals "put costs in high-tax countries and profits in low-tax countries," says Scott Hodge, president of the Tax Foundation. Those low-tax countries are almost anywhere but the U.S. "When you add in state taxes, the U.S. has the highest tax burden among industrialized countries," says Hodge. In contrast, China's rate is just 25%; Ireland's is 12.5%.

Corporations are getting smarter, not just about doing more business in low-tax countries, but in moving their more valuable assets there as well. That means setting up overseas subsidiaries, then transferring to them ownership of long-lived, often intangible but highly profitable assets, like patents and software.

As a result, figures tax economist Martin Sullivan, companies are keeping some $28 billion a year out of the clutches of the U.S. Treasury by engaging in so-called transfer pricing arrangements, where, say, Microsoft's overseas subsidiaries license software to its U.S. parent company in return for handsome royalties (that get taxed at those lower overseas rates).

"Corporations are paying lower amounts of their profits in taxes now than in the past," says Douglas Schackelford, who teaches tax law at the University of North Carolina at Chapel Hill. "Other countries have been lowering their rates, but not the U.S."

Mind you, not all global megacorps enjoy such low tax rates. Try to muster some pity for Big Oil. ExxonMobil paid more income taxes than any other U.S. company last year, some $15 billion, or 47% of pretax earnings. Exxon's peers Chevron and ConocoPhillips likewise paid out more than half their earnings in income taxes. The oil companies are oddities among the multinationals because many of the oil-rich countries where they do business levy even higher taxes than the U.S.

Exxon tries to limit the tax pain with the help of 20 wholly owned subsidiaries domiciled in the Bahamas, Bermuda and the Cayman Islands that (legally) shelter the cash flow from operations in the likes of Angola, Azerbaijan and Abu Dhabi. No wonder that of $15 billion in income taxes last year, Exxon paid none of it to Uncle Sam, and has tens of billions in earnings permanently reinvested overseas.

Likewise, GE has $84 billion in overseas income parked indefinitely outside the U.S.

Naturally the Obama administration wants to put an end to this. It has proposed doing away with tax deferrals on overseas income. If the plan passes, a U.S. company that pays a 25% tax on profits in China would have to pay an additional 10% income tax to Uncle Sam to bring it up to the 35% corporate rate. "Eliminating deferrals would put U.S. companies on an unlevel playing field," says the Tax Foundation's Hodge, "especially if competing with the likes of Germany, which only taxes companies on domestic operations."

Hewlett-Packard and others among the top 25 state in their annual reports that if Obama's tax measures pass it would mean a certain tax hike, probably amounting to billions of dollars.

Would no more tax holiday for GE really end up helping Mr. and Mrs. Taxpayer? Doubtful. "The average Joe should be in favor of lower corporate taxes," says Hodge, "because ultimately they are paying the corporate income tax. Either as workers, getting lower wages and fewer jobs, or as consumers, paying higher prices, or as retirees, getting lower dividends and earnings on their investments."

In the same vein, JPMorgan Chase Chief Executive Jamie Dimon has spoken out against an Obama proposal to levy a special tax on banks to recoup bailout costs. "Using tax policy to punish people is a bad idea," said Dimon. "All businesses tend to pass costs on to customers."

Here is a great idea Barry. Lower the taxes on all brackets. That is of course if you do want companies to return back to america.

[ChumpDumper]

Here is a great idea Barry. Lower the taxes on all brackets. That is of course if you do want companies to return back to america.Then what?

[Aggie Hoopsfan]

Well, Obama may finally stand up to it if his proposal can survive.

LOL, you do realize that GE has been one of the largest corporate beneficiaries (and donors) of the Obama Administration, right?

You can bet any corporate tax proposals will put even more money into the pockets of those who own GE.

[ChumpDumper]

But tax breaks are good right?

[LnGrrrR]

Here's my question: Do board conservatives/Repub's think that we can lower the tax bracket enough to wipe out the advantage held by employing cheap, overseas labor?

Unless you're coupling a tax break with an elimination of the minimum wage, I don't see how the tax reduction will work. (And that would open up a whole new can of worms.)

[boutons_deux]

If corps are persons who deduct operating expenses from taxable income, then why can't a real person deduct their operating expenses (gasoline, utilities, mortgage, rent) from their taxable income?

btw, the 25 top hedge fund managers in 2009 averaged EACH 3 $B in income, but were taxed at only 15% (capital gains), if they are stupid enough to pay even that much.

Their income is for management FEES of other people's capital, not for proceeds of investing their own capital.

[ElNono]

A tax break mean shit for these big corps. They don't pay taxes no matter what the rate is anyways.

[TeyshaBlue]

Here's my question: Do board conservatives/Repub's think that we can lower the tax bracket enough to wipe out the advantage held by employing cheap, overseas labor?

Unless you're coupling a tax break with an elimination of the minimum wage, I don't see how the tax reduction will work. (And that would open up a whole new can of worms.)

China's and other countries' currency manipulation plays a much larger role in overseas labor development than taxes, imho. Artificially keeping their currency devalued, thus making their labor and costs cheaper, is the major driver behind China's recent manufacturing upsurge.

[TeyshaBlue]

If corps are persons who deduct operating expenses from taxable income, then why can't a real person deduct their operating expenses (gasoline, utilities, mortgage, rent) from their taxable income?


They can if they are contractors or own their own businesses. It's the nature of the definition of "person" that matters. "person" is not equal to citizen.

[spursncowboys]

LOL, you do realize that GE has been one of the largest corporate beneficiaries (and donors) of the Obama Administration, right?

You can bet any corporate tax proposals will put even more money into the pockets of those who own GE.

And they biggest benefactor of all this "green energy"

[spursncowboys]

Here's my question: Do board conservatives/Repub's think that we can lower the tax bracket enough to wipe out the advantage held by employing cheap, overseas labor?

Unless you're coupling a tax break with an elimination of the minimum wage, I don't see how the tax reduction will work. (And that would open up a whole new can of worms.)
This has shown that there is an incentive for corp. to move overseas to avoid paying more in taxes. By lowering the taxes, you aren't going to be leveling the cost field but atleast it will make the american work forces' strengths more appealing. If there was a flat tax for corp, every business would come to america. all the money they would save from accounting, lawyer fees and labor costs.

With our taxes right now, even cost differentiation companies are leaving.

[Winehole23]

If there was a flat tax for corp, every business would come to america. all the money they would save from accounting, lawyer fees and labor costs.How does changing tax rates affect labor costs and overhead again? Somehow I doubt it brings us in line with India and China.

[LnGrrrR]

China's and other countries' currency manipulation plays a much larger role in overseas labor development than taxes, imho. Artificially keeping their currency devalued, thus making their labor and costs cheaper, is the major driver behind China's recent manufacturing upsurge.

Oh yes, I'd agree that plays a big part. But what about, let's say for example, phone support jobs being outsourced to India? If the economy in a foreign country is low enough to make it profitable for countries to employ work there, I don't see how lowered tax rates would convince them to keep their jobs in the US.

[TeyshaBlue]

Oh yes, I'd agree that plays a big part. But what about, let's say for example, phone support jobs being outsourced to India? If the economy in a foreign country is low enough to make it profitable for countries to employ work there, I don't see how lowered tax rates would convince them to keep their jobs in the US.

Correct. I doubt we could lower taxes enough to offset the type of advantage a suppressed economy offers.

[LnGrrrR]

By lowering the taxes, you aren't going to be leveling the cost field but atleast it will make the american work forces' strengths more appealing. If there was a flat tax for corp, every business would come to america. all the money they would save from accounting, lawyer fees and labor costs.

Is there any proof that lowering said taxes will create as much profitability as outsourcing to another country, though?

That's the info I'd like to see, personally.

I'm sure lowering taxes would be a FACTOR in getting companies to employ people in the US; however, I doubt that would provide enough profit/incentive on its own.

[DarrinS]

Question to board libs:

If you own stocks in any of these companies as part of your 401k, don't you want these companies to maximize their profits?

[TeyshaBlue]

Question to board libs:

If you own stocks in any of these companies as part of your 401k, don't you want these companies to maximize their profits?

Maximizing profits is not the droid you're looking for.

Sustainable profits are.

[ElNono]

I think wanting to lower the tax bracket is certainly fair, but you also have to close the loopholes these companies are using to basically completely avoid paying taxes at all.

[DarrinS]

I think wanting to lower the tax bracket is certainly fair, but you also have to close the loopholes these companies are using to basically completely avoid paying taxes at all.


Who makes the laws that make these loopholes possible?


Also, is it bad that they figured out a way to pay no taxes? Or, is it bad that they figured out a way to pay no taxes AND they're rich? As an individual tax payer, I always try to figure out ways to pay the least amount of taxes possible. Am I unethical?

[spursncowboys]

How does changing tax rates affect labor costs and overhead again? Somehow I doubt it brings us in line with India and China.

It wouldn't affect the direct labor, but it would definitely lower factory overhead. If a company is marketing quality or patriotism, then it will help them stay competitive by keeping their labor in america. Bill O. thinks that the flat tax will even bring back the companies competing with price. I am not one hundred percent sold on that.

[coyotes_geek]

But it's the tax benefit of overseas operations that is the biggest reason why multinationals end up with lower tax rates than the rest of us. It only makes sense that multinationals "put costs in high-tax countries and profits in low-tax countries," says Scott Hodge, president of the Tax Foundation. Those low-tax countries are almost anywhere but the U.S. "When you add in state taxes, the U.S. has the highest tax burden among industrialized countries," says Hodge. In contrast, China's rate is just 25%; Ireland's is 12.5%.

Corporations are getting smarter, not just about doing more business in low-tax countries, but in moving their more valuable assets there as well. That means setting up overseas subsidiaries, then transferring to them ownership of long-lived, often intangible but highly profitable assets, like patents and software.

These two paragraphs seem to have been overlooked. Here's where the benefit to lowering corporate tax rates is. It's not about outsourcing. Jobs are going to be outsourced no matter what the corporate income tax rate is. It's about getting rid of the corporate shell game companies play to dodge US taxes, and making the U.S. the tax-friendly place for global corporations to park their assets. If it were up to me, I'd cut the corporate income tax rate in half.

[spursncowboys]

Other nations have cut tax rates deeply. Ireland doesn't have a flat tax, but it has slashed its corporate tax rate from 50 percent to 12.5 percent. Combined with other tax cuts, this helped turn the "Sick Man of Europe" into the "Celtic Tiger." Unemployment has dropped from 17 percent to 5 percent, and Ireland is now the second-richest nation in the European Union.

Tax competition has forced other European nations to cut their corporate tax rates. Indeed, there has been so much progress that every nation in Europe now has a lower corporate tax rate than America -- even socialist countries such as France and Sweden!
http://www.heritage.org/Research/Commentary/2005/04/A-Flat-Out-Case-for-Tax-Reform

[Winehole23]

If it were up to me, I'd cut the corporate income tax rate in half.What makes you think that would do the trick? Honest question. If I said something like that it'd just be PFA. But for you, I tend to think you'd have a reason for saying that.

Do you?

[RandomGuy]

Can someone tell me why congress would write such tax laws that allows GE to get $1.09 billion from us tax payers?

Who are they friends with in congress to write such great deals in the tax laws? Must have been authorized by this new administration. For 2008, they paid $1.052 billion in taxes. $4.130 billion in 2007.

Could it be Congress' way of giving their banker friends money since Bank of America own 100,440,166 shares?


During the fourth quarter of 2007, we completed the sale of
our U.S. mortgage business. In connection with the transaction,
WMC retained certain obligations related to loans sold prior to
the disposal of the business, including WMC’s contractual obligations
to repurchase previously sold loans as to which there was an
early payment default or with respect to which certain contractual
representations and warranties were not met. Reserves related
to these obligations were $205 million at December 31, 2009,
and $244 million at December 31, 2008.

http://www.ge.com/ar2009/pdf/ge_ar_2009_notes.pdf



During the period April 1, 2009, through December 31, 2009,
we recorded pre-tax, other-than-temporary impairments of
$780 million, of which $455 million was recorded through earnings
($42 million relates to equity securities), and $325 million was
recorded in accumulated other comprehensive income (AOCI).
Prior to April 1, 2009, we recognized impairments in earnings
of $423 million associated with debt securities still held. As of
April 1, 2009, we reversed previously recognized impairments of
$99 million ($62 million after tax) as an adjustment to retained
earnings in accordance with the amendments to ASC 320.
Subsequent to April 1, 2009, we recognized first time impairments
of $108 million and incremental charges on previously
impaired securities of $257 million. These amounts included
$124 million related to securities that were subsequently sold.

To answer your question:

GE is a large conglomerate, mainly manufacturing, although they do also own NBC.

Their operations span most, if not all, of the states having just about $781,000,000,000 in assets.

(NOTE: about 70 bn in "plants property and equipment" i.e. mostly factories of some sort)

The telling part of the recent reduction in GE's tax burden is the nature of the largest portion of that $781bn comes from:

Finanancing receivables: $329bn

They have had a lower tax burden mostly because they have taken a huge bath from the actions of their financing unit, who (suprise!) offered mortgages, both commercial and residential.


The big GE Capital finance unit - the source of most of GE's problems in 2009 - squeezed out a modest profit in the fourth quarter. But it was still dogged by problems in its holdings and lending in commercial real estate. GE Capital's $336 million in overall earnings dropped 67 percent from a year earlier.

Profits fell 30 percent at NBC Universal, which has struggled with much lower advertising income and flops in its movie business. GE is selling its majority stake in the ailing entertainment unit to cable operator Comcast in a deal expected to close this year.

For the quarter, GE posted net income of $2.94 billion, or 28 cents per share. That compared with $3.65 billion, or 35 cents, a year earlier. Analysts expected 26 cents per share in earnings.

Fairfield, Conn.-based GE is considered a barometer of the nation's economic health since it is involved in sectors ranging from energy to finance. Homeowners buy GE kitchen appliances, power plants use GE gas turbines and hospitals buy GE MRI machines. Consumers use credit cards backed by GE money and businesses turn to the company for loans to buy expensive equipment.

http://www.scpr.org/news/2010/01/22/ge-4th-qtr-income-falls-signs-improving/

The article in the OP does point out the effect of different company tax rates on "transfer pricing" though.

Companies will put costs in countries where corporate tax burdens are high, and profits in countries where corporate tax burdens are low.

[RandomGuy]

The article then goes on to call for a lowering of US corporate tax rates, using the much tauted "fact" that "US tax rates are among the highest in the world".

This is a lie of omission, unsurprisingly.

While that is true for direct corporate income taxes, it fails to capture the entirety of taxes, i.e. coporate+individual and federal+state.

Many of the lower corporate tax-rates in other countries are so low simply because they have different tax systems.

Some have Value Added Taxes (think sales taxes), but no income taxes, and some tax individuals at higher rates, effectively subsidising their corporations to some degree, when compared to the US.

The problem of cost/income-shifting through the transfer prices is one that the US government/IRS has been struggling with for some time, but proves to be devilishly hard to nail down, especially when it comes to companies like GE whose operations are so diverse and global.

[RandomGuy]

Further muddying the waters is the fact that the cost of many government services get "pushed down" to the state and local level.

Many other countries tax at higher rates per capita at the federal level, but have almost no taxation at the state/local level.

This is much easier to do in countries with less geographical area than the US, such as any given country in Europe, where most countries have about the same population/area as some of the larger US states.

I find most comparisons about "we pay more/less taxes than X" to be disingenuous at best. It is hard to fairly compare taxes from one country to another, due to the myriad ways goverments are or aren't funded.

I would lastly note that the countries that tend to have the lowest federal tax rates either provide little in the way of social safety nets, or any other government services, or have massive state-run investment funds that provide large portions of the goverment budget.

[spursncowboys]

So for every dollar earned, how much of that goes to taxes? How does America rank?

[coyotes_geek]

What makes you think that would do the trick? Honest question. If I said something like that it'd just be PFA. But for you, I tend to think you'd have a reason for saying that.

Do you?

I've got a couple of reasons. Cutting corporate income tax rates would have the dual effect of removing the incentive for U.S. companies to hide income overseas through subsidiaries and such, as well as providing an incentive to overseas companies to hide their income here.

Additionally, I think people tend to not think through exactly what it is that companies do with money. A company can't just go out and spoil itself with a huge pile of cash the same way individuals can. A company needs to do something with their cash, be it hiring more people, investing in R&D, paying out dividends, and yes, giving their executives lavish compensation packages. I certainly don't consider hiring (i.e. job creation) and R&D to be bad things. If they pay it out in dividends, then those get taxed at the individual level so the government still ends up getting a cut of that money. Even if the company decides to just give their execs a bunch of money then that money still ends up getting taxed and it gets taxed at a rate higher than what the corporate income tax rate is. In fact, if you're someone who wants as much corporate money ending up in the hands of the government as possible, big payouts to executives is where the government gets to take the biggest bite out of every dollar.

Lastly, people also need to keep in mind that the taxes corporations pay get passed along to individuals. Effectively, corporations aren't the ones paying corporate income taxes, we are. Cut corporate taxes and one of two things happens. Either consumer costs go down, or corporate profits go up and get distributed as described above.

I'm sure my opinion is not a popular one, but I do see a lot of benefits to be realized here.

[RandomGuy]

So for every dollar earned, how much of that goes to taxes? How does America rank?

Actually looked that up.

http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_ GDP

The US is roughly in the middle of the pack overall, and lower than just about any other developed country.

My memory of other similar stats/articles is that the US actually has a total tax burden (federal/state corporate/personal) pretty much on par with other industrialised countries, if a bit lower.

I suspect we are underspending on infrastructure compared to other countries. Both in terms of human capital, and physical.

The US will always be a good country to do business in simply because of the strong rule of law.

[RandomGuy]

Even if the company decides to just give their execs a bunch of money then that money still ends up getting taxed and it gets taxed at a rate higher than what the corporate income tax rate is.

Pretty sure this statement is wrong.

Most executive compensation these days is through stock options. Stock options get taxed at capital gains tax rates, much LOWER than coporate tax rates.

[RandomGuy]

Lastly, people also need to keep in mind that the taxes corporations pay get passed along to individuals. Effectively, corporations aren't the ones paying corporate income taxes, we are. Cut corporate taxes and one of two things happens. Either consumer costs go down, or corporate profits go up and get distributed as described above.

I'm sure my opinion is not a popular one, but I do see a lot of benefits to be realized here.

I don't think it is much of a stretch. Your "opinion" simply reflects the understanding of such effects on the part of most economists.

I would add:
Most corporate stocks are held by mutual funds or other similar vehicles for saving/investment created to help Americans save for retirement.

Think about the ramifications of that.

[ElNono]

Who makes the laws that make these loopholes possible?

Congress. I thought it was plainly stated when I'm complaining about closing loopholes.


Also, is it bad that they figured out a way to pay no taxes? Or, is it bad that they figured out a way to pay no taxes AND they're rich? As an individual tax payer, I always try to figure out ways to pay the least amount of taxes possible. Am I unethical?

I have no beef with the corps themselves other than the fact that their indirect purchase through lobbying of representatives open up loopholes only for them. I mean, you couldn't possibly be so naive to think that Congress left those loopholes there just because they thought nobody would exploit them. Furthermore, now that the loophole is vox populi the only ethical thing to do is to close it.

[coyotes_geek]

Pretty sure this statement is wrong.

Most executive compensation these days is through stock options. Stock options get taxed at capital gains tax rates, much LOWER than coporate tax rates.

I'm not a tax accountant so I'll certainly concede a possibility of being wrong. That being said, I thought that the difference between the option price and the fair market value on the date of the option grant got taxed as normal income and the capital gains only applied to the difference between the sale price and the FMV on the date of the option grant.

[DarrinS]

Congress. I thought it was plainly stated when I'm complaining about closing loopholes.



I have no beef with the corps themselves other than the fact that their indirect purchase through lobbying of representatives open up loopholes only for them. I mean, you couldn't possibly be so naive to think that Congress left those loopholes there just because they thought nobody would exploit them. Furthermore, now that the loophole is vox populi the only ethical thing to do is to close it.


Then, by all means, call your congressman.

[ElNono]

Then, by all means, call your congressman.

My congressman was brought to me by:
http://www.listphile.com/Fortune_500_Logos/General_Electric/image/006_GE.png

:lol

[ElNono]

http://www.reagan.utexas.edu/archives/photographs/large/h15a.jpg

[spursncowboys]

Does anyone think that if we cut taxes and made the tax code easier, enough so to lower the costs from lawyers, accoutants, and equipment, that we wouldn't get back companies?

[ElNono]

Does anyone think that if we cut taxes and made the tax code easier, enough so to lower the costs from lawyers, accoutants, and equipment, that we wouldn't get back companies?

Companies haven't left in the first place... I mean, they still conduct business here.
Now, if you mean getting back part of their business or their capital, then I would say no. As far as business, we have a competitive problem, not necessarily a tax problem. As far as capital, well, if with the current rates not only they're not paying, but they're actually getting basically subsidized with a 1B perk, then that's not going to work either.

I think you want to close the loophole and at the same time lower the taxes. If you don't close the loophole, the point is really moot. There's always a small island somewhere that give better tax rates than the US.

The competitive issue on the business side is much more complicated though.

[Winehole23]

No no no. You're missing the point ElNono.

Tax breaks fix everything!

[Wild Cobra]

You might want to read the article, WC.
I did Mr. Peanut Gallery...

Isn't it possible I wish to bring something else into the mix?

[Wild Cobra]

Other nations have cut tax rates deeply. Ireland doesn't have a flat tax, but it has slashed its corporate tax rate from 50 percent to 12.5 percent. Combined with other tax cuts, this helped turn the "Sick Man of Europe" into the "Celtic Tiger." Unemployment has dropped from 17 percent to 5 percent, and Ireland is now the second-richest nation in the European Union.

Tax competition has forced other European nations to cut their corporate tax rates. Indeed, there has been so much progress that every nation in Europe now has a lower corporate tax rate than America -- even socialist countries such as France and Sweden! http://www.heritage.org/Research/Commentary/2005/04/A-Flat-Out-Case-for-Tax-Reform
How many times have I said something similar, that reducing or elimination corporate taxes would give us a robust economy... How many times?

[ElNono]

How many times have I said something similar, that reducing or elimination corporate taxes would give us a robust economy... How many times?

You've said it many times...doesn't mean you're right though

[Sec24Row7]

What a company owes in taxes on a given year is going to be greatly influenced by their profit/loss...

When the company does shitty the country gets less money... thats the only reason obama gives a shit about the economy... so he can collect taxes... to give money away free to the people that vote for him.

[Wild Cobra]

What a company owes in taxes on a given year is going to be greatly influenced by their profit/loss...

When the company does shitty the country gets less money... thats the only reason obama gives a shit about the economy... so he can collect taxes... to give money away free to the people that vote for him.
Then why is he doing everything that makes the economy worse?

[Winehole23]

Cutting corporate income tax rates would have the dual effect of removing the incentive for U.S. companies to hide income overseas through subsidiaries and such, as well as providing an incentive to overseas companies to hide their income here.for example:


One of the world's biggest manufacturing companies diverted more than $8bn in profits to Switzerland in order to avoid US taxes, according to investigators working for the Senate.


Caterpillar, the world's largest maker of construction and mining equipment, allegedly avoided paying more than $2.4bn in US taxes over a decade by striking a deal with Swiss tax authorities to pay as little as 4% on the profits from its lucrative international spare parts business through a Geneva-based subsidiary.


Though the practice of basing such subsidiaries offshore is widespread among multinationals, and Senate investigators refused to say whether they believe the company broke US tax law, the elaborate accounting strategy appears to take so-called 'transfer pricing' practices to new extremes.


The report, which was produced by the Senate subcommittee on investigations (http://www.hsgac.senate.gov/subcommittees/investigations/hearings/caterpillars-offshore-tax-strategy) under chairman Carl Levin, a Michigan Democrat, claims that 85% of Caterpillar’s international profits from selling parts – its most profitable activity – were routed through its Swiss subsidiary, even though the vast majority of associated manufacturing, research and employment remained in the US.

http://www.theguardian.com/business/2014/mar/31/caterpillar-avoid-4billion-us-taxes-senate-report

[boutons_deux]

"$8bn in profits to Switzerland in order to avoid US taxes"

avoiding taxes isn't illegal, it's how the tax code is rigged by the evaders. Avoiders, eg Caterpillar and its bankers/accountants, don't a give a shit about such publicity. They've got their $Bs.

evading taxes is illegal, but somehow the NSA's prying snoops are not snooping personal/corporate tax evaders.

My guess is that there are plenty of NSA snoops who know so much about networks, etc that they are tax avoiders/evaders themselves.

[boutons_deux]

Defending the company’s use of the Swiss tax strategy, Julie Legacy, who oversees Caterpillar’s tax operations, argued (http://www.swissinfo.ch/eng/news/business/Caterpillar_Says_Legal_Swiss_Tax_Move_Pared_Unneed ed_Costs.html?cid=38297108) that “we cannot remain competitive, we cannot create jobs, and we cannot increase exports by incurring unnecessary expenses.”

She added, “And as an American company, we pay the taxes we owe, not more.”

http://www.nationalmemo.com/senate-democrats-republicans-divided-caterpillars-tax-avoidance/


I'm sure the Repugs adore Caterpillar for being one hardass, vindictive, punitive Warrior on Employees

http://www.jsonline.com/business/caterpillars-tough-labor-negotiation-reaches-milwaukee-qo9q5h5-206221231.html

[Winehole23]

An army of corporate lobbyists is trying to push a huge package of tax cuts through Congress without drawing public attention.


The 55 cuts, known on Capitol Hill as “extenders,” expired at the end of 2013 but in the past have been renewed retroactively on a bipartisan basis with little fanfare. Altogether, according to the Congressional Budget Office, they could cost the federal government $46 billion in revenues in 2014 and as much as $700 billion over the next 10 years. While some of the breaks would help working people, 90 percent of them would benefit the bottom lines of large, US-based multinationals.


A report released on Monday by Americans for Tax Fairness and Public Campaign calculates that (http://www.americansfortaxfairness.org/files/Corporate-Lobbying-on-Tax-Extenders-and-the-GE-Loophole-3.pdf), “1,359 individual lobbyists swarmed Capitol Hill to press members of Congress on the issue between January 2011 and September 2013.” Lobbyists appeared “12,378 times in quarterly lobbying reports in the period studied – each report representing from one to dozens of contacts with members of Congress and their staffs during the quarter it was filed.”


Arguably the most controversial of these tax breaks is known as the Active Financing Exception loophole (AFE), which allows companies to avoid paying taxes on interest and dividends earned on overseas cash. Lobbying for the AFE has been especially intense.
Dubbed the “GE loophole” by critics, the report says that General Electric “employed 48 lobbyists to work on tax extenders and… the AFE” — more than any other corporation. The authors note that while ”it is not possible to know how much the AFE saves GE,” the loophole played a significant role in the company paying “less federal income taxes than an average American family pays in one year” on profits of $27.5 billion earned between 2008 and 2012.


According to the report, “58 percent of the lobbyists who worked on tax extenders have passed through the revolving door – they have worked for Congress or the executive branch.” They include former Sen. John Breaux (D-LA) — who sat on the Senate Finance Committee — and former Senate Majority Leader Trent Lott (R-MS).

http://billmoyers.com/2014/04/03/an-army-of-lobbyists-is-quietly-fighting-for-budget-busting-corporate-tax-breaks/

the report:http://www.americansfortaxfairness.org/files/Corporate-Lobbying-on-Tax-Extenders-and-the-GE-Loophole-3.pdf.

[Winehole23]

The intensity of lobbying on tax extenders is startling.These lobbyists appeared12,378 times in quarterly lobbying reports in the period studied – each report representing from oneto dozens of contacts with members of Congress and their staffs during the quarter it was filed

http://www.americansfortaxfairness.o...Loophole-3.pdf (http://www.americansfortaxfairness.org/files/Corporate-Lobbying-on-Tax-Extenders-and-the-GE-Loophole-3.pdf). .

[boutons_deux]

http://www.americansfortaxfairness.o...Loophole-3.pdf (http://www.americansfortaxfairness.org/files/Corporate-Lobbying-on-Tax-Extenders-and-the-GE-Loophole-3.pdf). .

lobbyists as proxies "voting" for their employers in the "voting booths" of Congressional offices, where their "votes" count 100s of times more than Human-Americans' votes.

Blantant quid pro quo corruption.

btw, America is more fucked today than yesterday, and therefore much more unfuckable.

[Winehole23]

THE MISSING WEALTH OF NATIONS: ARE EUROPE AND

THE U.S. NET DEBTORS OR NET CREDITORS?*

Gabriel Zucman
This article shows that official statistics substantially underestimate the
net foreign asset positions of rich countries because they fail to capture most of
the assets held by households in offshore tax havens. Drawing on a unique
Swiss data set and exploiting systematic anomalies in countries’ portfolio
investment positions, I find that around 8% of the global financial wealth of
households is held in tax havens, three-quarters of which goes unrecorded. On
the basis of plausible assumptions, accounting for unrecorded assets turns the
eurozone, officially the world’s second largest net debtor, into a net creditor. It
also reduces the U.S. net debt significantly. The results shed new light on
global imbalances and challenge the widespread view that after a decade of
poor-to-rich capital flows, external assets are now in poor countries and debts
in rich countries. I provide concrete proposals to improve international statis-
tics.
JEL
Codes: F32, H26, H87.
I. Introduction
There are two puzzles in international investment statistics.
The first is a set of statistical anomalies. At the global level,
liabilities tend to exceed assets: the world as a whole is a net
debtor (Lane and Milesi-Ferretti 2007). Similarly, the global bal-
ance of payments shows that more investment income is paid
than received each year. Since the problem was identified in
the 1970s, the International Monetary Fund (IMF) has commis-
sioned a number of reports to investigate its causes, and national
statistical agencies have put considerable resources into improv-
ing their data. Yet despite a great deal of progress, large anoma-
lies remain; many European securities, in particular, have no
identifiable owner (Milesi-Ferretti, Strobbe, and Tamirisa 2010).
The second puzzle is a theoretical challenge. Since the latter
half of the 1990s, capital has been flowing from poor to rich
*countries. As a result, the rich world now appears to be a sizable


net debtor in the official data, dragged down by the United States
and Europe. Although the literature has put forward possible
explanations for the U.S. net debt and the rise in China’s
assets,
1
the negative net positions of Europe and the overall
rich world remain largely unexplained. Despite this, many obser-
vers have grown accustomed to the view that external assets are
now in poor countries and debts in rich countries. In the public
debate, the view that ‘‘China owns the world’’ has become parti-
cularly popular. Should it be correct, the implications for policy
making and open-economy modeling would be far-reaching.
My article challenges this view. The negative net foreign
asset position of the rich world, I argue, is an illusion caused by
tax havens. International statistics fail to capture most of the
assets held by households through tax havens: they overlook
the portfolios of equities, bonds, and mutual fund shares that
households own via banks in Switzerland and other countries
with strict bank secrecy rules. This coverage gap explains many
of the long-standing anomalies in global data. My computations
find that around 8% of households’ financial wealth is held
through tax havens, three-quarters of which goes unrecorded.
This stock of unrecorded assets is double the recorded net debt
of the rich world (Figure I). Because a body of evidence suggests

that most of the wealth in tax havens belongs to residents of rich
countries, accounting for it turns the rich world into a net cred-
itor.http://gabriel-zucman.eu/files/Zucman2013QJE.pdf

[Winehole23]

GABRIEL ZUCMAN is a 27-year-old French economist who decided to solve a puzzle: Why do international balance sheets each year show more liabilities than assets, as if the world is in debt to itself?


Over the last couple of decades, the few international economists who have addressed this question have offered a simple explanation: tax evasion. Money that, say, leaves the United States for an offshore tax shelter is recorded as a liability here, but it is listed nowhere as an asset — its mission, after all, is disappearance. But until now the economists lacked hard numbers to confirm their suspicions. By analyzing data released in recent years by central banks in Switzerland and Luxembourg on foreigners’ bank holdings, then extrapolating to other tax havens, Mr. Zucman has put creditable numbers on tax evasion, showing that it’s rampant — and a major driver of wealth inequality.


Mr. Zucman estimates — conservatively, in his view — that $7.6 trillion — 8 percent of the world’s personal financial wealth — is stashed in tax havens. If all of this illegally hidden money were properly recorded and taxed, global tax revenues would grow by more than $200 billion a year, he believes. And these numbers do not include much larger corporate tax avoidance, which usually follows the letter but hardly the spirit of the law. According to Mr. Zucman’s calculations, 20 percent of all corporate profits in the United States are shifted offshore, and tax avoidance deprives the government of a third of corporate tax revenues. Corporate tax avoidance has become so widespread that from the late 1980s until now, the effective corporate tax rate in the United States has dropped from 30 percent to 15 percent, Mr. Zucman found, even though the tax rate hasn’t changed.


Mr. Zucman, an assistant economics professor at the London School of Economics, is part of a wave of data-focused economists led by his mentor, Thomas Piketty, of the Paris School of Economics. Mr. Zucman’s short book on tax evasion, “The Missing Wealth of Nations,” was a best seller in France last year.


Mr. Zucman’s tax evasion numbers are big enough to upend common assumptions, like the notion that China has become the world’s “owner” while Europe and America have become large debtors. The idea of the rich world’s indebtedness is “an illusion caused by tax havens,” Mr. Zucman wrote in a paper published last year. In fact, if offshore assets were properly measured, Europe would be a net creditor, and American indebtedness would fall from 18 percent of gross domestic product to 9 percent.

http://www.nytimes.com/2014/06/16/opinion/a-piketty-proteges-theory-on-tax-havens.html?ref=opinion&_r=0

[Winehole23]

from the WSJ:


The economist Gabriel Zucman, a protégé and co-author of the French economist Thomas Piketty, has published a new book that attempts to document money hiding out in tax havens. Mr. Zucman’s book, “The Hidden Wealth of Nations, (http://gabriel-zucman.eu/hidden-wealth/)” documents just how dramatic the recent rise has been.


To estimate the amount of hidden money, Mr. Zucman begins with a simple trick. If you add up all the financial liabilities and all the assets in the world, they ought to balance. One person’s liability ought to be another’s asset. (Or one company’s, one country’s, etc.) But if you add up all the world’s reported liabilities, the figure is about $6 trillion higher than the reported assets—a sum that’s been growing. The likeliest explanation: around $6 trillion in assets are being hidden.



http://si.wsj.net/public/resources/images/BN-KL824_Zucman_G_20150924114707.jpg
Mr. Zucman has delved into the world’s byzantine financial accounts data and unveiled a wealth of information (much of it available on his website (http://gabriel-zucman.eu/hidden-wealth/)) that documents the extent of this rise. For example, he finds a rapidly growing share of U.S. equities are being managed offshore.



http://si.wsj.net/public/resources/images/BN-KL822_zucman_G_20150924114547.jpg
The U.S. Treasury did not conduct a regular survey on foreign portfolio liabilities until 1984. But a one-off survey in 1974 showed little rise compared with a survey in 1941. Beginning in the 1990s, however, the share began to rise, accelerating in the 2000s.

http://blogs.wsj.com/economics/2015/09/28/is-wealth-inequality-hidden-in-tax-havens-pikettys-co-author-thinks-so/

[boutons_deux]

Tax inversions allow firms to avoid state taxes

http://www.usatoday.com/story/money/business/2014/07/21/stateline-tax-inversions-state-taxes/12941521/

[boutons_deux]

Facebook paid £4,327 corporation tax in 2014

Its most recent Companies House filing shows the company as making a pre-tax loss of £28.5m last year, but the firm also paid its 362 UK staff a total of £35.4m in share bonuses.

The share bonuses amount to £96,000 on average per UK Facebook employee.

It means Facebook's UK corporation tax bill was less than the tax the average UK employee paid on their salary.

The average UK salary is £26,500 on which employees pay a total of £5,392.80 in income tax and national insurance contributions.

In January, Facebook reported global fourth-quarter profits (http://www.bbc.co.uk/news/business-31031650) of $701m (£462m), a 34% increase on the same period a year earlier.

Total profits for the year were $2.9bn, almost double its profit for 2013.

Facebook said at the time that advertising revenue grew by 53% to $3.59bn, with nearly 70% of that coming from mobile ad sales.


EU probe

The latest revelations will reignite the debate about how much UK corporation tax companies pay at a time when several multinational corporations are being investigated by the European Commission over the tax arrangements they have with European Union member states.

Google, Amazon, a division of the Fiat motor company and Starbucks are all subject to the investigation and the European Commission has said it could widen its probe further.

The investigation came after Starbucks was revealed to have paid just £8.6m in UK corporation tax in the 14 years between 1998 and 2012, despite making more than £3bn in UK sales in the same period.

Last week, EU finance ministers agreed to boost information sharing in response to the so-called LuxLeaks scandal that emerged last year. The scandal showed Luxembourg had issued hundreds of tax rulings allowing companies to lower their tax bill by funnelling their profits through the country.

http://www.bbc.com/news/business-34504474


http://www.bbc.com/news/business-34504474

[boutons_deux]

Ireland, Accused of Giving Tax Breaks to Multinationals, Plans an Even Lower Rate

The Irish government, long criticized by other European countries and the United States for its friendly tax treatment of multinational giants like Apple and Google, on Tuesday announced a move that seemed likely to further incense its critics.

Ireland, whose corporate tax rate of 12.5 percent is already one of the lowest in the developed world, said it would cut that rate in half for a new tax category — one covering revenue pegged to companies’ patents and other intellectual property.

Companies that could be poised to benefit include Apple, Google, Facebook and Microsoft — all of which have significant operations in Ireland and have troves of intellectual property that might be eligible for the new tax treatment.

Google and Facebook declined to comment on Tuesday, and Apple and Microsoft did not immediately respond to requests for comment.

The new 6.25 percent rate would apply to a tax category that Ireland announced last year, which it calls a “knowledge development box,” and would be put into effect early next year. The category is meant to provide tax breaks for revenue and royalties derived from intellectual property held in a specific country.

Other countries, including Britain, Luxembourg and the Netherlands, have created similar tax categories for intellectual property, often in the hope of enticing overseas companies to set up shop in their territories.

But critics contend that the royalties paid on intellectual property under such arrangements often do not adequately reflect where the inventions were made or where the innovations generate the most revenue.

http://www.nytimes.com/2015/10/14/business/international/ireland-tax-rate-breaks.html?_r=0

[boutons_deux]

New Studies: Do ‘Competitive’ Corporate Tax Cuts Boost Growth? (http://www.nakedcapitalism.com/2015/12/new-studies-do-competitive-corporate-tax-cuts-boost-growth.html)

Nicholas Shaxson summarizes a very important study, which finds that corporate tax cuts lead to cash hoarding, which lower growth. Moreover, this cash hoarding started in the 1990s, which is just before the famed Bernanke “saving glut”.

We’ve disputed his claim that it played the role he suggested in the global financial crisis (the best debunking of that idea is in a paper by Claudio Borio and Petit Disyatat of the Bank of International Settlements, Global imbalances and the financial crisis: Link or no link? (http://www.bis.org/publ/work346.pdf)” (see Andrew Dittmer’s translation for laypeople here (http://www.nakedcapitalism.com/2011/09/the-very-important-and-of-course-blacklisted-bis-paper-about-the-crisis.html)).

However, we’ve been calling attention to corporate dis-saving, as in liquidation rather than investing, since 2005, and cash hoarding and stock buybacks are part of this pattern.

that ‘competitive’ corporate tax cuts are likely to be equivalent to pushing on a string. They will tend to feed corporate cash hoarding (what Mark Carney has called ‘dead money’) instead of business investment – while sucking revenue and investment and spending power out of the government sector, depressing demand and investment. The likely result is slower growth.

http://www.nakedcapitalism.com/2015/12/new-studies-do-competitive-corporate-tax-cuts-boost-growth.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[boutons_deux]

from the WSJ:

http://blogs.wsj.com/economics/2015/09/28/is-wealth-inequality-hidden-in-tax-havens-pikettys-co-author-thinks-so/

It was the Repug/St Ronnie tax act of 1986 that got the BigCorp tax-haven/tax-avoidance rolling.

Repugs, not radical Muslims, are the biggest threat to America

[Winehole23]

as of 2011, at least 54% of US corporate income isn't subject to corporate income tax:


Pass-through entities — partnerships, tax code subchapter S corporations, and sole proprietorships — are not subject to corporate income tax. Their income passes directly to their owners and is taxed under whatever tax rules those owners face. In contrast, the income of traditional corporations, more specifically subchapter C corporations, is subject to corporate income taxes, and after-tax income distributed from the corporation to its owners is also taxable.


In 1980, pass-through entities accounted for 20.7 percent of U.S. business income; by 2011, they represented 54.2 percent. Over roughly the same period, the income share of the top 1 percent of income earners doubled. Previous research has shown that the two phenomena are linked: The growth of income from pass-through entities accounted for 41 percent of the rise in the income of the top 1 percent. By linking 2011 partnership and S corporation tax returns with federal individual income tax returns, in particular Form 1065 and Form 1120S K-1 returns, the researchers find that over 66 percent of pass-through business income received by individuals goes to the top 1 percent. The concentration of partnership and S corporation income is much greater than the concentration of dividend income (45 percent to the top 1 percent) which proxies for income from C corporations (traditional corporations). While taxpayers in the top 1 percent are eight times as likely to receive dividends as taxpayers in the bottom 50 percent, the ratio for partnerships is more than 50 to 1.


Many partnerships are opaque. A fifth of partnership income was earned by partners that the study's authors were not able to classify into one of several categories, such as a domestic individual or a foreign corporation. In addition, some partnerships are circular, in the sense that they are owned by other partnerships, which could in turn be owned by yet other partnerships.


http://www.nber.org/digest/jan16/business_bar.jpg Pass-through business income faces lower tax rates than traditional corporate income. The tax rate on the income earned by pass-through partnerships is a relatively low 15.9 percent, excluding interest payments and unrepatriated foreign income. That compares with a 31.6 percent rate for C corporations and a 24.9 percent rate for S corporations. Only sole proprietorships have a lower average rate, 13.6 percent. Combining both taxes on corporations and taxes on investors, the researchers calculate that the U.S. business sector as a whole pays an average tax rate of 24.3 percent.

http://www.nber.org/digest/jan16/w21651.html

[boutons_deux]

as of 2011, at least 54% of US corporate income isn't subject to corporate income tax:

http://www.nber.org/digest/jan16/w21651.html

iow, America is fucked and unfuckable. The 1% and BigCorp continue to amass unknown $Ts and political power to buy enough govt to keep that shitball rolling over the 99%.

any suggestions how to unfuck America? :lol

[Winehole23]

In short, deferral provides a mammoth incentive for multinational corporations to disguise their U.S. profits as profits earned in tax havens. And they have responded to this incentive: 82 percent of the U.S. tax revenue loss from income shifting is due to profit shifting to just seven tax-haven countries.

Firms have also become increasingly adept at manipulating the rules here in the United States to avoid taxation. Lower tax rates on “pass-through” business entities and poor regulatory responses have given firms the chance to reorganize as “S-corporations” or opaque partnerships in order to avoid paying any corporate income tax at all.


This intentional erosion of the U.S. corporate income tax base has real consequences. Rich multinational corporations avoiding their fair share of U.S. taxes means that domestic firms and American workers have to foot the bill. It also means that corporations are not paying their fair share for our infrastructure, schools, public safety, and legal systems, despite depending on all of these services for their profitability.

http://www.americansfortaxfairness.org/corporate-tax-chartbook-how-corporations-rig-the-rules-to-dodge-the-taxes-they-owe/

[Winehole23]

Corporate profits are way up, and corporate taxes are way down. In 1952, corporate profits were 5.5 percent of the economy, and corporate taxes were 5.9 percent. Today, corporate profits are 8.5 percent of the economy, and corporate taxes are just 1.9 percent of GDP.




Corporations used to contribute $1 out of every $3 in federal revenue. Today, despite very high corporate profitability, it is $1 out of every $9.



As of 2015, U.S. corporations had $2.4 trillion in untaxed profits offshore. Another study, looking at S&P 500 companies, found they held $2.1 trillion as of 2014. This roughly five-fold increase from $434 billion in 2005 stems largely from anticipation of a tax holiday.



Just two industries—high-tech and pharmaceutical/health care—hold half the untaxed offshore profits.

http://www.taxjustice.net/2016/09/20/report-new-data-disproves-us-corporations-false-narrative-taxes/

[RandomGuy]

http://www.taxjustice.net/2016/09/20/report-new-data-disproves-us-corporations-false-narrative-taxes/

Kinda hard to argue with that.

Corporations somehow are overtaxed today, when their share of the national income is up, and their overall paid tax percentage is down?

smh

[101A]

So go after the "Top" or "Big" companies. I have a corporation, and I pay a ton of taxes. Converting to an LLC from a C right now as we restructure ownership. I want to build cash reserves, but if I don't spend the money, it gets jacked at 35%! So I deplete reserves at the end of the year by advance paying bills, or taking/giving bonuses. BUT, once a downturn hits, and we lose a few clients...don't have as big a cushion as I'd like to ride it out. Hasn't happened, but I could see it doing so. The tax structure specifically encourages us to be more cavalier than I am comfortable with. 25% over 50K & 34% for everything over 75K profit is just Bullshit.

Meanwhile the enormous companies shelter billions, that make the "effective" rate in aggregate low, giving people not paying attention reason to believe that were all skating without paying taxes. Fuck you all.

[CosmicCowboy]

So go after the "Top" or "Big" companies. I have a corporation, and I pay a ton of taxes. Converting to an LLC from a C right now as we restructure ownership. I want to build cash reserves, but if I don't spend the money, it gets jacked at 35%! So I deplete reserves at the end of the year by advance paying bills, or taking/giving bonuses. BUT, once a downturn hits, and we lose a few clients...don't have as big a cushion as I'd like to ride it out. Hasn't happened, but I could see it doing so. The tax structure specifically encourages us to be more cavalier than I am comfortable with. 25% over 50K & 34% for everything over 75K profit is just Bullshit.

Meanwhile the enormous companies shelter billions, that make the "effective" rate in aggregate low, giving people not paying attention reason to believe that were all skating without paying taxes. Fuck you all.

X2

i have to gut the corporation every year with bonuses to avoid double taxation (35% on the C corp and then 35%+ on the personal when I finally take it out) Fortunately my corporate tax year is grandfathered and starts March 1 instead of January 1 so I can do better crossover tax planning.

[boutons_deux]

"Meanwhile the enormous companies shelter billions"

The economy, the tax system, voting, lawmakers, etc are all rigged, corrupted by BigCorp / 1% / VRWC.

But there's NOTHING to be done, legislatively (there's nowhere else), because the Fed, state legislatures are corrupted, owned by BigCorp / 1% / VRWC.

America is fucked and unfuckable.

btw, BigCorp creates bogus "small business" to suck up $Bs in contracts from the Feds, $Bs intended exclusively for "truly" small business.

[tlongII]

Lower the corporate tax rate and legislate so that companies are no longer able to accumulate profits in other lower tax international jurisdictions. Change the laws relating to transfer pricing. That would help.

[ducks]

iow, America is fucked and unfuckable. The 1% and BigCorp continue to amass unknown $Ts and political power to buy enough govt to keep that shitball rolling over the 99%.

any suggestions how to unfuck America? :lol

DO NOT VOTE FOR CLINTON!

[101A]

Lower the corporate tax rate and legislate so that companies are no longer able to accumulate profits in other lower tax international jurisdictions. Change the laws relating to transfer pricing. That would help.

I finally know who I'm writing in for President.

[ElNono]

So go after the "Top" or "Big" companies. I have a corporation, and I pay a ton of taxes. Converting to an LLC from a C right now as we restructure ownership. I want to build cash reserves, but if I don't spend the money, it gets jacked at 35%! So I deplete reserves at the end of the year by advance paying bills, or taking/giving bonuses. BUT, once a downturn hits, and we lose a few clients...don't have as big a cushion as I'd like to ride it out. Hasn't happened, but I could see it doing so. The tax structure specifically encourages us to be more cavalier than I am comfortable with. 25% over 50K & 34% for everything over 75K profit is just Bullshit.

Meanwhile the enormous companies shelter billions, that make the "effective" rate in aggregate low, giving people not paying attention reason to believe that were all skating without paying taxes. Fuck you all.

Perhaps you need to look into a tax dodging scheme as described above. Apparently, there's nothing illegal about them.

The real question is if you need to be too big not to be chased around by the IRS.

[101A]

Perhaps you need to look into a tax dodging scheme as described above. Apparently, there's nothing illegal about them.

Too busy doing what my business does (and/or doing SpursTalk);)

[boutons_deux]

Lower the corporate tax rate and legislate so that companies are no longer able to accumulate profits in other lower tax international jurisdictions. Change the laws relating to transfer pricing. That would help.

there are no remedies, because all remedies come from legislatures which are corrupted by BigMoney (although some legislators are really "value priced")

[ElNono]

Too busy doing what my business does (and/or doing SpursTalk);)

same :toast

[Winehole23]

how big you are matters. compliance is much harder for companies without a war chest.

that's a feature, not a bug.

[Winehole23]

maybe the big boys need a kick in nuts

[Winehole23]

Olly olly oxen free:



Chuck Schumer, likely to be majority leader next year if Democrats take back the Senate, told CNBC Tuesday (http://www.cnbc.com/2016/10/18/schumer-what-trump-tolerates-is-poisonous-to-america.html) that one of his top two 2017 priorities would be an enormous corporate tax cut.

Speaking of himself in the third person, Schumer said that “we’ve got to get things done. … The two things that come, that pop to mind — because Schumer, Clinton, and Ryan have all said they support these — are immigration and some kind of international tax reform tied to a large infrastructure program.”


American multinational corporations are now holding a staggering $2.5 trillion in profits overseas, refusing to bring the money back at the current tax rates until they get a special deal.
Revenue-starved Democratic leaders have broadly hinted they are prepared to cave, either for a “holiday” period or permanently.

https://theintercept.com/2016/10/19/democratic-sen-chuck-schumer-says-top-priority-for-next-year-is-giant-corporate-tax-cut/

[Winehole23]

Nasty woman: Hilary Clinton plots in secret with insurance brokers to cut corporate taxes.


Hillary Clinton has not publicly supported such a plan. However, during a private October 13, 2014, speech to the Council of Insurance Agents and Brokers, Clinton told the audience (https://theintercept.com/2016/10/10/hillary-clinton-privately-pitched-corporations-on-really-low-tax-rate-for-money-stashed-abroad/) that “A number of business leaders have been talking to my husband and me about an idea that would allow the repatriation of the couple trillion dollars that are out there. And you would get a lower rate — a really low rate — if you were willing to invest a percentage in an infrastructure bank.”

[Winehole23]

But here’s the thing. In May 2013, Apple got into a pickle because it had decided to fund its stock-buy-back and dividend program by taking on a record $17 billion in debt rather than “repatriating” part of its “offshore” cash and paying income taxes on it.


The Senate subcommittee investigation and hearings, chaired by Senator John McCain (http://www.hsgac.senate.gov/download/?id=4809CB53-7D40-4B8A-B294-4D28A42B7FEE), showed that Apple had sheltered at least $74 billion from US income taxes between 2009 and 2012 by using a “complex web” of offshore mailbox companies. The investigation found untaxed “offshore” profits of $102 billion held by Irish subsidiaries – which Apple refused to “repatriate” in order to keep that income from being taxed in the US.'


But according to the Senate report, Apple doesn’t have to repatriate that moolah because it’s already in the US. The Irish mailbox subsidiaries, on whose books this money is for tax purposes, transferred it to Apple’s bank accounts in New York. The money is managed by an Apple subsidiary in Reno, Nevada, and is invested in all kinds of assets in the US. Apple’s accountants in Austin, Texas, keep the books,


Money doesn’t stop at borders. Tax accounting does.


These revelations explained another corporate mystery that had long baffled economists. In 2004, after heavy lobbying by our Corporate Titans, Congress declared a “repatriation holiday” to encourage the “return” of $300 billion in overseas cash to be invested in the US. This would cause a burst of investment and hiring in the US, it was said. This was similar to what Moody’s is now clamoring for on behalf of its clients, except this time, they want permanent tax reform rather than a one-time “repatriation holiday.”


So in 2004, our heroes made some adjustments on their books to “repatriate” these profits that were then taxed at the special and minuscule rate of 5.25%, less than the payroll taxes withheld from their US working stiffs.


And then nothing happened. There were no investments and no hiring and no benefits for the economy because the money had already been deployed in the US, as we now know. In May 2013, as a result of the Senate hearings, the New York Times (http://www.nytimes.com/2013/05/22/business/for-us-companies-money-offshore-means-manhattan.html) summarized the 2004 phenomenon this way:


On the contrary, some of the companies that brought back the most money laid off thousands of workers, and a study by the National Bureau of Economic Research later concluded that 92 cents on every dollar was used for dividends, stock buybacks or executive bonuses.

http://www.nakedcapitalism.com/2016/11/wolf-richter-come-on-moodys-spare-us-these-falsehoods-that-1-3-trillion-overseas-cash-is-already-in-the-us.html

[Winehole23]

the richest companies in the world still not paying their fair share:


By combining new macroeconomic statistics on the activities of multinational companieswith the national accounts of tax havens and the world’s other countries, we estimate thatclose to 40% of multinational profits are shifted to low-tax countries each year. Profitshifting is highest among U.S. multinationals; the tax revenue losses are largest for theEuropean Union and developing countrieshttp://gabriel-zucman.eu/missingprofits/

[Winehole23]

Throughout the world, for one $1 in wage paid, US multinationals say they make around 50 cents in (pre-tax) profits.

Except in Ireland, Bermuda, Luxembourg and the like, where they say they make... 3.5 dollars.

[boutons_deux]

The '70s/'80s push for globalization was not only for exporting jobs and factories from USA to low-cost/unregulated countries, but for the free movement of capital, resulting in $Ts sloshing around the planet, searching for greater returns, causing booms and busts, and Capitalism's infamously destructive financial/social instability. And of, $Ts of that capital escapes taxes

[Marius Titulescu]

maybe the big boys need a kick in nuts
If only someone would have the power to do so.
It's an unlikely scenario, unfortunately.
_______________________________________
Marius
transfer pricing outsourcing services (https://transferpricing.global/)

[boutons_deux]

If only someone would have the power to do so.


the only countervailing power is govt, and govt is now owned and operated by BigCorp/wealthy/oligarchy, with the anti-American Repugs (politicians and judges) doing the dirty work.

Even the Dems are compromised by progressive BigDonor, who, even if progressive on social matters, are as protective of their fantastic wealth as right wing BigDonors.

Repugs will never make progress (see the DNC blackballing challengers to Dem incumbents), and the Dems refuse to be progressive, so ...

America is fucked and unfuckable.

Imagine that Dems retain the House, win 51 or more in the Senate, and take the WH, they simply will not be able to reverse the damage done over the past 10 years by the Repugs.

eg, restore $500M that Repugs cut from the IRS? G M A F B

eg, Dems impeach Kavanaugh for lying to Congress under oath? an open-and-shut case to remove him from SCOTUS, but Dems don't have the hardassness to do it.

[Winehole23]

Perhaps you need to look into a tax dodging scheme as described above. Apparently, there's nothing illegal about them.

The real question is if you need to be too big not to be chased around by the IRS.The IRS has basically admitted it lacks the resources to go after wealthy tax dodgers and corporations.

After the 2017 tax cut. 91 Fortune 500 companies made 101 billion in profits, but paid zero federal tax.

https://www.washingtonpost.com/business/2019/12/16/corporations-paid-percent-tax-rate-last-year-steep-drop-under-president-trumps-law/

[boutons_deux]

The IRS has basically admitted it lacks the resources to go after wealthy tax dodgers and corporations.

After the 2017 tax cut. 91 Fortune 500 companies made 101 billion in profits, but paid zero federal tax.

https://www.washingtonpost.com/business/2019/12/16/corporations-paid-percent-tax-rate-last-year-steep-drop-under-president-trumps-law/

From 2010, the Repugs cut almost $1B from IRS funding, just what the oligarchy ordered to become unaudited.

So yes, the IRS only goes after easy, simple returns by the bottom, doesn't have the resources for intentionally tax-evading hyper-complex stuff like Trash's 500 companies.

[Winehole23]

cool idea

1371460543161176064

1371618831710314503

[Ef-man]

Waiting to hear from ducks that he will no longer buy items from linkedin.

LinkedIn billionaire: Cut off funding for politicians who limit voting rights.

A growing number of CEOs are speaking out on voting rights. LinkedIn co-founder Reid Hoffman is urging business leaders to back up their verbal support with concrete action that will send a message to politicians.

"Protecting voter rights and making voting more accessible is both pro-business, and more importantly, pro-American," Hoffman told CNN Business in an email.

The billionaire investor hopes companies will withhold economic support from politicians who seek to limit the right of any American citizen to vote.

I believe that companies who show a strong support for American values and the right to vote for all citizens may gain more business and elevated brand value,"

"This should be a simple, single-issue reason to stop supporting any politician," said Hoffman, who was LinkedIn's founding CEO.

https://www.cnn.com/2021/04/19/business/voting-rights-reid-hoffman-linkedin/index.html

[Winehole23]

no taxes for Tesla


Elon Musk’s Tesla paid a total of $0 in federal income taxes in 2024, new tax reports show, despite the company having raked in billions of dollars in income and being the most valuable car company in the world.

Citing Tesla’s year-end financial report (https://www.sec.gov/Archives/edgar/data/1318605/000162828025003063/tsla-20241231.htm) released this week, the Institute on Taxation and Economic Policy (ITEP) reports (https://itep.org/tesla-reported-zero-federal-income-tax-in-2024/) that Tesla paid a 0 percent federal income tax rate last year, even as the company reported $2.3 billion in income.

In 2023, Tesla paid $48 million in taxes on $3.1 billion in income — a 1.5 percent rate. And, in 2022, when it reported $5.5 billion in income, Tesla also paid a 0 percent tax rate.

This brings Tesla’s average tax rate over the past three years to 0.4 percent, or 50 times less than the statutory corporate tax rate of 21 percent.

This is despite the fact that Tesla is valued at over $1.2 trillion (https://finance.yahoo.com/quote/TSLA/) and is owned by the richest man in the world, with a net worth of (https://www.forbes.com/profile/elon-musk/) over $400 billion and who was awarded a $101 billion (https://www.aljazeera.com/economy/2024/12/3/musks-fifty-five-point-eight-bn-tesla-pay-package-rejected-by-us-judge) pay package by Tesla shareholders last year — though this package has been rejected by a judge.
https://truthout.org/articles/tesla-paid-zero-federal-income-tax-in-2024-despite-2-3-billion-in-income/