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Author Topic: Yep, big business sure pays their fair share!  (Read 3496 times)
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Blackadar
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« on: August 12, 2008, 11:57:35 PM »

http://www.msnbc.msn.com/id/26145921/?GT1=43001

No surprise...Government only exists to further the interests of businesses.  It's one of the working definitions of fascism.
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Mookee
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« Reply #1 on: August 13, 2008, 01:47:01 AM »

This may be a lot of things, but I don't think you understand what fascism is. How are you making that connection?
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Brendan
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« Reply #2 on: August 13, 2008, 02:23:59 AM »

Wikipedia:

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Fascism also operated from a Social Darwinist view of human relations. Their aim was to promote "superior" individuals and weed out the weak. In terms of economic practice, this meant promoting the interests of successful businessmen while destroying trade unions and other organizations of the working class.  Historian Gaetano Salvemini argued in 1936 that fascism makes taxpayers responsible to private enterprise, because "the State pays for the blunders of private enterprise... Profit is private and individual. Loss is public and social."

Emilio Gentile on Fascism:

The "ideal type" of fascism (meaning the platonic ideal of the ideology, in effect) would incorporate:
Quote
a corporate organization of the economy, which eliminates union liberty, enlarges the spheres of intervention of the State and aims at achieving, on the basis of technocratic and solidarity principles, the collaboration of the productive classes under the control of the regime, in order to reach its goal of power while preserving private property and class division"
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Eduardo X
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« Reply #3 on: August 13, 2008, 02:43:19 AM »

Yeah, that's one way to define fascism. It's too bad the people don't have the resources to fight back against stupidity like this.
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pr0ner
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« Reply #4 on: August 13, 2008, 04:47:11 AM »

Quote from: Blackadar on August 12, 2008, 11:57:35 PM

http://www.msnbc.msn.com/id/26145921/?GT1=43001

No surprise...Government only exists to further the interests of businesses.  It's one of the working definitions of fascism.

Your subject line is extremist and misleading.  The vast majority of businesses not paying corporate income taxes (75% of them) are small or medium businesses (the article clearly cites 25% as big business).  The article also clearly states that half (HALF!) of all business income is taxed through individual tax codes!

And, as a government employee, I take massive offense to your line "government only exists to further the interests of businesses".  This couldn't be further from the truth.
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brettmcd
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« Reply #5 on: August 13, 2008, 06:56:54 AM »

Quote from: Eduardo X on August 13, 2008, 02:43:19 AM

Yeah, that's one way to define fascism. It's too bad the people don't have the resources to fight back against stupidity like this.

Sure we do, its called the ballot, if you want all of this to change vote in people who believe as you do, if you cant do that, well maybe your ideas arent as popular or right as you think they are.
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Moliere
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« Reply #6 on: August 13, 2008, 12:30:19 PM »

Quote from: brettmcd on August 13, 2008, 06:56:54 AM

Quote from: Eduardo X on August 13, 2008, 02:43:19 AM

Yeah, that's one way to define fascism. It's too bad the people don't have the resources to fight back against stupidity like this.

Sure we do, its called the ballot, if you want all of this to change vote in people who believe as you do, if you cant do that, well maybe your ideas arent as popular or right as you think they are.

Changes via the ballot equals mobocracy and doesn't imply righteousness.
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Eduardo X
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« Reply #7 on: August 13, 2008, 12:37:53 PM »

Quote from: brettmcd on August 13, 2008, 06:56:54 AM

Quote from: Eduardo X on August 13, 2008, 02:43:19 AM

Yeah, that's one way to define fascism. It's too bad the people don't have the resources to fight back against stupidity like this.

Sure we do, its called the ballot, if you want all of this to change vote in people who believe as you do, if you cant do that, well maybe your ideas arent as popular or right as you think they are.
Polls show that people in the US think a LOT differently than our policies would have us believe. Most people support an immediate withdrawal from Iraq, universal healthcare, etc. Of course, polls are bullshit.... There are no politicians who seem to be against corporate clout.

Another point is that a lot of money gets sent in the direction of corporations in ways other than tax exemptions. MillerCoors is getting $23 million in "financial incentives and tax breaks," and it was all funded with TIFs, which were set up to help fix "blighted" neighborhoods. TIFs are the second biggest line item on Chicago's budget, and there is absolutely NO public input on the process.

We also don't choose sentences for crimes, and we don't have any decisions over who is prosecuted. I'd much rather see an Enron exec get 30-40 years for the amount of damage they've done to the country than a drug dealer who affected a much smaller area and amount of lives.
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Brendan
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« Reply #8 on: August 13, 2008, 12:52:31 PM »

Quote from: pr0ner on August 13, 2008, 04:47:11 AM

Your subject line is extremist and misleading.  The vast majority of businesses not paying corporate income taxes (75% of them) are small or medium businesses (the article clearly cites 25% as big business).

Actually, if you, y'know, read the actual report, you'd see that there's about 1.3 million businesses paying no taxes, and 0.28% of those are "large" US-owned businesses.  The statistic is actually that 25% of large businesses avoid paying taxes (3,565 of 14,132), not that 25% of non-tax-paying companies are large businesses.  The US-based ones average $300,000,000 in average gross receipts.  So, $300,000,000 in, and $0 out.  Further, another 1,755 large businesses (averaging $114,000,000 in gross receipts) pay between $1 and $100,000.  And guess what?  Another 3,367 large businesses pay between 100k and 1 million - their gross receipts average $157,000,000.

That seems reasonable to you?  That 62% of these companies, averaging around $200,000,000 a year, pay less than a million dollars in taxes on average?  Do you you think we're losing more revenue from the million businesses averaging 1 million a year, or the 3500 businesses making 300 million a year?  Only 2% of all US-based companies (large and otherwise) pay more than 100k in taxes.

The GAO says nothing about the "individual tax code" claim, so that's unverifiable until you, or someone else who cares, provides some data.
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Brendan
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« Reply #9 on: August 13, 2008, 12:55:47 PM »

Quote from: Eduardo X on August 13, 2008, 12:37:53 PM

There are no politicians who seem to be against corporate clout.

It turns out that it's pretty hard to get politicians to work against the system that elects them.
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cheeba
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« Reply #10 on: August 13, 2008, 12:58:40 PM »

If we made business pay more taxes and the money went to our government would the money be better spent? What would be the reaction of those businesses? Do you think they would create new jobs or not outsource as a result?

Ending corporate welfare is one thing. Complaining about generic "big business" is just mental porn for democrats and socialists.
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« Reply #11 on: August 13, 2008, 03:08:22 PM »

Quote from: pr0ner on August 13, 2008, 04:47:11 AM


Your subject line is extremist and misleading.  The vast majority of businesses not paying corporate income taxes (75% of them) are small or medium businesses (the article clearly cites 25% as big business).  The article also clearly states that half (HALF!) of all business income is taxed through individual tax codes!


The OP lumps S Corps, C Corps, and LLCs all together under "corporations." My corporation (Kraken Enterprises) earned a small profit last year. By law, an S Corp's profits must be distributed to its shareholders (me). The shareholder (me) pays income tax on the Schedule K income. So yeah, Kraken Enterprises did not pay a dime of income tax...but I paid every penny that was due. In fact, since it was my first profit I was unfamiliar with the law, and let the company retain the earnings -- so I paid income tax on income that I never even got.

This personal look at corporate tax law might interest you. Or it might not.

My company does pay nearly $1000 a year in government fees simply for the privilege of existing. Even small S Corps are not getting off scot-free.

Anyway, if the majority of C Corps aren't paying taxes, you've got a complaint. S Corps and LLCs were designed specifically to eliminate double income taxation (once at the corporate level, and once at the shareholder level).
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pr0ner
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« Reply #12 on: August 13, 2008, 03:13:37 PM »

Quote from: Brendan on August 13, 2008, 12:52:31 PM

Quote from: pr0ner on August 13, 2008, 04:47:11 AM

Your subject line is extremist and misleading.  The vast majority of businesses not paying corporate income taxes (75% of them) are small or medium businesses (the article clearly cites 25% as big business).

Actually, if you, y'know, read the actual report, you'd see that there's about 1.3 million businesses paying no taxes, and 0.28% of those are "large" US-owned businesses.  The statistic is actually that 25% of large businesses avoid paying taxes (3,565 of 14,132), not that 25% of non-tax-paying companies are large businesses.  The US-based ones average $300,000,000 in average gross receipts.  So, $300,000,000 in, and $0 out.  Further, another 1,755 large businesses (averaging $114,000,000 in gross receipts) pay between $1 and $100,000.  And guess what?  Another 3,367 large businesses pay between 100k and 1 million - their gross receipts average $157,000,000.

That seems reasonable to you?  That 62% of these companies, averaging around $200,000,000 a year, pay less than a million dollars in taxes on average?  Do you you think we're losing more revenue from the million businesses averaging 1 million a year, or the 3500 businesses making 300 million a year?  Only 2% of all US-based companies (large and otherwise) pay more than 100k in taxes.

The GAO says nothing about the "individual tax code" claim, so that's unverifiable until you, or someone else who cares, provides some data.

I was citing Blackadar's "oh the noes, the sky is falling" article.  Why aren't you going after him for using an article with bad data?
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Brendan
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« Reply #13 on: August 13, 2008, 03:22:02 PM »

Blackadar's not responsible for the AP's misreading of the stats; besides, the premise is still correct.  Large corporations (foreign and domestic) use a bundle of tricks to avoid their tax burden.  $300,000,000 a year in income, and $0 in taxes.  Unbelievable.
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Brendan
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« Reply #14 on: August 13, 2008, 03:36:38 PM »

Quote from: Ironrod on August 13, 2008, 03:08:22 PM

Anyway, if the majority of C Corps aren't paying taxes, you've got a complaint. S Corps and LLCs were designed specifically to eliminate double income taxation (once at the corporate level, and once at the shareholder level).

S corporations (except under rare circumstances) don't pay federal income taxes, which you can see in table 2 of the report - 99.8% of S corps (3,674,551 in total), paid no federal income tax.  Given the restrictions on declaring yourself an S corp, I think we can reasonably expect that the "large" businesses, which are defined by the GAO as having $250,000,000 in assets and/or gross receipts of $50,000,000, are going to be C corps.

Ironrod, there's some tips you can adopt from the report if you move to C corp status and establish a foreign parent corporation... slywink

Quote
Tax liabilities may also be reduced through transfer pricing abuse. Any company that has a related company, such as a subsidiary with which it transacts business, needs to establish transfer prices for those intercompany transactions. The transfer price should be the “arm’s length price,” i.e., the price that would be charged if the transaction occurred between unrelated companies. Section 482 of the Internal Revenue Code provides IRS authority to allocate income among related companies if IRS determines that the transfer prices used by the taxpayer were inappropriate. How transfer prices are set affects the distribution of profits and ultimately the taxable income of the companies. The following is an example of abusive cross-border transfer pricing. A foreign parent corporation with a subsidiary operating in the United States charges the subsidiary excessive prices for goods and services rendered (for example, $1,000 instead of the going rate of $600). This raises the subsidiary’s expenses (by $400), lowers its profits (by $400), and effectively shifts that income ($400) outside of the United States. At a 35-percent U.S. corporate income tax rate, the subsidiary will pay $140 less in U.S. taxes than it would if the $400 in profits were attributed to it.
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Moliere
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« Reply #15 on: August 13, 2008, 04:20:02 PM »

Quote from: Brendan on August 13, 2008, 03:22:02 PM

Blackadar's not responsible for the AP's misreading of the stats; besides, the premise is still correct.  Large corporations (foreign and domestic) use a bundle of tricks to avoid their tax burden.  $300,000,000 a year in income, and $0 in taxes.  Unbelievable.

I like how a company's actions that follows the law to maximize its profit and return value to their shareholders and customers is considered "tricks".
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« Reply #16 on: August 13, 2008, 04:49:29 PM »

I didn't claim they were illegal, though clearly they are in some cases, like in the transfer pricing example.  Creative accounting falls into the "tricks" category.  So, what's your beef?  I believe that corporations - which are clearly intended by congress to be taxed, given the basic corporate tax rate of 35% - should be paying taxes to the federal government, just like us individuals.  According to the GAO, 2/3rds of all US corporations paid $0 in tax over a seven year period from 1998 to 2005.  In 2005 alone, those 25% of large companies that paid no taxes had a combined revenue of $1,100,000,000 dollars.  That's $1.1 trillion.

Given your previous citations of various Reason articles, I assume you're a libertarian (or similar); presumably you do believe that the federal government has an obligation to provide certain services (national defense?  hurricane relief?).  How should the federal government be funded?  Should we not correct the tax code so that the 70% of foreign companies doing business here in the US pay at least some tax?
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Pyperkub
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« Reply #17 on: August 13, 2008, 05:00:27 PM »

Quote from: Brendan on August 13, 2008, 12:55:47 PM

Quote from: Eduardo X on August 13, 2008, 12:37:53 PM

There are no politicians who seem to be against corporate clout.

It turns out that it's pretty hard to get politicians to work against the system that elects them.

When talking to a friend of mine who is Chief of Staff for a CA State Senator, they argued that this is one of the drawbacks to term limits.  The only experienced legislators with clout in the capitol are lobbyists. 
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« Reply #18 on: August 13, 2008, 06:18:31 PM »

Quote from: Brendan on August 13, 2008, 04:49:29 PM

In 2005 alone, those 25% of large companies that paid no taxes had a combined revenue of $1,100,000,000 dollars.  That's $1.1 trillion.

That's nice.  Do you realize that taxes are calculated on income and not revenue?  All of the data that you've posted has concerned gross revenue vs. taxes paid.  Your interpretation of the data in the report is misleading and wrong. 

From the actual report:
Quote
Why GAO Did This Study
Concerns about transfer pricing abuse have led researchers to compare the tax liabilities of foreign- and U.S.-controlled corporations. (Transfer prices are the prices related companies charge on intercompany transactions.) However, such comparisons are complicated because other factors may explain the differences in reported tax liabilities. In three prior reports, GAO found differences in the percentages of foreign-controlled and U.S.-controlled corporations reporting no tax liability.
GAO was asked to update the previous reports by comparing:
(1) the tax liabilities of foreign-controlled domestic corporations (FCDC) and U.S.-controlled corporations (USCC)–including those reporting zero tax liabilities for 1998 through 2005 (the latest available data) and (2) characteristics of FCDCs and USCCs such as age, size, and industry. GAO analyzed data from the Internal Revenue Service’s Statistics of Income samples of corporate tax returns.
GAO does not make any recommendations in this report. In commenting on a draft of this report, IRS provided comments on technical issues, which we incorporated into this report where appropriate.

The revenue data that is reported here is done simply to catagorize the companies by size.  This revenue data is not meant to be used for any other purpose.  The fact that you are attempting to draw a connection between the aggregate revenue statistics and tax liability shows that you don't understand accounting and you understand tax accounting even less.
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Brendan
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« Reply #19 on: August 13, 2008, 06:27:52 PM »

Quote from: RLMullen on August 13, 2008, 06:18:31 PM

Quote from: Brendan on August 13, 2008, 04:49:29 PM

In 2005 alone, those 25% of large companies that paid no taxes had a combined revenue of $1,100,000,000 dollars.  That's $1.1 trillion.

That's nice.  Do you realize that taxes are calculated on income and not revenue?  All of the data that you've posted has concerned gross revenue vs. taxes paid.  Your interpretation of the data in the report is misleading and wrong. 

Of course it's calculated on income - the accounting techniques used are typically about reducing income without actually, y'know "reducing" it, like the aforementioned transfer trick.  Are you actually suggesting that you think that those 25% of large companies with $1.1 trillion dollars in revenue are actually all losing money or, at best, breaking even?  That their expenses evenly match their revenues?
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« Reply #20 on: August 13, 2008, 07:08:22 PM »

Quote from: Brendan on August 13, 2008, 06:27:52 PM

Quote from: RLMullen on August 13, 2008, 06:18:31 PM

Quote from: Brendan on August 13, 2008, 04:49:29 PM

In 2005 alone, those 25% of large companies that paid no taxes had a combined revenue of $1,100,000,000 dollars.  That's $1.1 trillion.

That's nice.  Do you realize that taxes are calculated on income and not revenue?  All of the data that you've posted has concerned gross revenue vs. taxes paid.  Your interpretation of the data in the report is misleading and wrong. 

Of course it's calculated on income - the accounting techniques used are typically about reducing income without actually, y'know "reducing" it, like the aforementioned transfer trick.  Are you actually suggesting that you think that those 25% of large companies with $1.1 trillion dollars in revenue are actually all losing money or, at best, breaking even?  That their expenses evenly match their revenues?

If you know that income tax is calculated on income why the hell are you quoting aggregate revenue statistics for an ambiguous time period and then trying to draw a connection to an even more ambiguous "ZOMG $0 in taxes"?!?  Are you deliberately trying to mislead the discussion using incorrect interpretation of data... data that wasn't even compiled for the reason that you used it?  Do you think we should make policy decisions based on your interpretation of this data?

To answer your question: Yes, it is quite plausible for $1.1 trillion of gross revenue to produce no income or a loss, and yes, it is plausible that this $1.1 trillion in revenue was earned by 25% of large companies.  The problem I have with your analysis and with your question in general is that you aren't identifying which $1.1 trillion, nor the time period for earning said revenue, nor which specific companies earned that revenue.  It makes a big difference.  For instance, if you were to investigate the tax filing for corporations in the years following a large recession, you would see lower than expected tax receipts due to prior year losses (assuming the company lost money during the recession... most do) being carried forward to offset current year income.  It would be wrong for you to draw a conclusion based on this one year and then call it a nominal case that applies to all time periods and all corporations.  Likewise it is wrong to attempt to cull summary data from a GAO report created for one purpose, in an attempt to support a claim for which the data was never intended.

If you really want to see interesting numbers to give you false outrage, you should compare 10K filings vs. tax returns for a given company in a given time period.
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« Reply #21 on: August 13, 2008, 07:40:05 PM »

What are you talking about?  The time period here isn't ambiguous; the only thing that's ambiguous is whether or not these companies are legimitately breaking even or losing money relative to their revenues.  The leap of faith that I'm making is that some portion of those 25% of large companies are using their accounting practices to reduce their revenues in order to reduce their tax liability, whether through transfer pricing abuse, tax credits, or whatever.  I don't believe that 60% of American companies, bringing in $2.5 trillion dollars, are truly "breaking even", and I would like congress to reevaluate the tax credit situation (particularly the domestic production deduction as applied to oil companies).

I also don't understand your red herring strategy about how the "data...wasn't even compiled for the reason" that I'm providing it.  The report was compiled at the request of Senators Levin and Dorgan in order to compare the tax burdens of foreign-owned companies with US-based companies.  The data is still accurate for the purposes of looking solely at the tax burden of US-based companies.  The thing the report explicitly avoids is ferreting out how much transfer price abuse there is.  They say a direct analysis is difficult because "price data are often unavailable and determining the price that would be charged between unrelated parties can be difficult," but the IRS is investigating many international companies.

Ultimately, if I ever get audited, I hope you're in charge of it.

----

addendum:

The report reads:

"The overwhelming majority, about 79 to 80 percent, of both large FCDCs and USCCs that reported zero tax liability in 2005, established it on line 28 where they reported zero taxable income before net operating losses.  This means that their reported current-year deducations more than offset the positive current-year total income reported on line 11.  The two most commonly used deductions, as a percentage of the value of all deductions claimed, were "other deductions" and the deduction for salaries and wages."

Other deductions includes "travel, meals, and entertainment expenses, dividends paid in cash on stock held by employee stock ownership plans, insurance premiums, and legal and professional fees."

Consequently, it's not even operating losses that's getting the vast majority of them to zero tax liability - it's deductions.
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« Reply #22 on: August 14, 2008, 03:30:59 PM »

Quote from: Brendan on August 13, 2008, 04:49:29 PM

I didn't claim they were illegal, though clearly they are in some cases, like in the transfer pricing example.  Creative accounting falls into the "tricks" category.  So, what's your beef?
My beef is your use of words like "tricky" and "creative accounting" in referring to companies that are following the law. As if using every available deduction and "trick" to minimize their tax liability was a bad thing. Are you using creative accounting to write-off the home mortgage interest? For shame! That money could be better used by the government.

Quote from: Brendan on August 13, 2008, 04:49:29 PM

Given your previous citations of various Reason articles, I assume you're a libertarian (or similar); presumably you do believe that the federal government has an obligation to provide certain services (national defense?  hurricane relief?).  How should the federal government be funded?  Should we not correct the tax code so that the 70% of foreign companies doing business here in the US pay at least some tax?
Hurricane relief? Why is the taxpayer paying for programs like National Flood Insurance Program that encourage people to keep rebuilding their homes in dangerous areas? Not only are more lives being lost, but we have to keep footing the bill when, surprise surprise, another flood hit and wiped out all the same homes we just paid for 3 years ago.

National defense with an emphasis on defense versus this trillion dollar boondoggle of a war.

There you go, two Reason article references just to further solidify my being branded a libertarian.  icon_wink

There are better ways to fund a limited Constitutional sized government without raping every individual and corporation that happens to do business in this country. In my libertarian fantasy world 3/4 of government would be wiped out. Income tax on individuals and corporations, capital gains tax, inheritance tax, etc. would all be eliminated. Fees, fines and other non-coercive methods could be used to fund this minimal government.
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« Reply #23 on: August 14, 2008, 03:56:05 PM »

Quote from: Moliere on August 14, 2008, 03:30:59 PM

Quote from: Brendan on August 13, 2008, 04:49:29 PM

I didn't claim they were illegal, though clearly they are in some cases, like in the transfer pricing example.  Creative accounting falls into the "tricks" category.  So, what's your beef?
My beef is your use of words like "tricky" and "creative accounting" in referring to companies that are following the law. As if using every available deduction and "trick" to minimize their tax liability was a bad thing. Are you using creative accounting to write-off the home mortgage interest? For shame! That money could be better used by the government.

I'm not naive - I know that corporations wish to maximize profits, and will use any means available to do so.  So, yes, of course they'll take every tax credit and deduction they can.  That's why our legislators need to ensure that the credits and deductions are defined narrowly enough to actually go to the purposes they intend (e.g. the domestic production deduction, the SUV loophole, etc).  The creativity comes when someone says "Hey, lawyers, you can write off 100% of your new H2 because your 6000lb monstrosity qualifies as a service vehicle."  Not illegal, but also not right, given the clear intent of congress to provide a deduction for actual work trucks.

Quote from: Moliere
There you go, two Reason article references just to further solidify my being branded a libertarian.  icon_wink

There are better ways to fund a limited Constitutional sized government without raping every individual and corporation that happens to do business in this country. In my libertarian fantasy world 3/4 of government would be wiped out. Income tax on individuals and corporations, capital gains tax, inheritance tax, etc. would all be eliminated. Fees, fines and other non-coercive methods could be used to fund this minimal government.

I can respect actual libertarians; I read Reason fairly often, and the bloggers/posters there are internally consistent with their worldview (unlike the instapundits and some of the "libertarians" we see around here).  I just don't agree with the general premise that government is inefficient/unnecessary.  On civil liberties, I'm right there.

Oh, but aren't fines a coercive method? slywink
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« Reply #24 on: August 14, 2008, 05:49:13 PM »

Quote from: Brendan on August 14, 2008, 03:56:05 PM

The creativity comes when someone says "Hey, lawyers, you can write off 100% of your new H2 because your 6000lb monstrosity qualifies as a service vehicle."  Not illegal, but also not right, given the clear intent of congress to provide a deduction for actual work trucks.

Like buying a new gaming rig and writing it off as a tax deduction because my wife at the time was a real estate agent.  ninja
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« Reply #25 on: August 14, 2008, 05:56:43 PM »

2k vs 200k is a big deal though. They may have more instances of column A that bring its impact up, but the administration to try to catch said instances would be like naming grains of sand on a beach.

Mountains? They all have names.
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« Reply #26 on: August 15, 2008, 12:18:25 AM »

Quote from: Moliere on August 14, 2008, 03:30:59 PM

Quote from: Brendan on August 13, 2008, 04:49:29 PM

I didn't claim they were illegal, though clearly they are in some cases, like in the transfer pricing example.  Creative accounting falls into the "tricks" category.  So, what's your beef?
My beef is your use of words like "tricky" and "creative accounting" in referring to companies that are following the law. As if using every available deduction and "trick" to minimize their tax liability was a bad thing. Are you using creative accounting to write-off the home mortgage interest? For shame! That money could be better used by the government.

Quote from: Brendan on August 13, 2008, 04:49:29 PM

Given your previous citations of various Reason articles, I assume you're a libertarian (or similar); presumably you do believe that the federal government has an obligation to provide certain services (national defense?  hurricane relief?).  How should the federal government be funded?  Should we not correct the tax code so that the 70% of foreign companies doing business here in the US pay at least some tax?

Hurricane relief? Why is the taxpayer paying for programs like National Flood Insurance Program that encourage people to keep rebuilding their homes in dangerous areas? Not only are more lives being lost, but we have to keep footing the bill when, surprise surprise, another flood hit and wiped out all the same homes we just paid for 3 years ago.

National defense with an emphasis on defense versus this trillion dollar boondoggle of a war.

There you go, two Reason article references just to further solidify my being branded a libertarian.  icon_wink

There are better ways to fund a limited Constitutional sized government without raping every individual and corporation that happens to do business in this country. In my libertarian fantasy world 3/4 of government would be wiped out. Income tax on individuals and corporations, capital gains tax, inheritance tax, etc. would all be eliminated. Fees, fines and other non-coercive methods could be used to fund this minimal government.

Everything here you say would be ideal, and I would love to see the same thing happen.   Although I think you are being overly generous to the federal government in saying only 3/4 of what they do should go away.   So much of what they do is just money being thrown away and wasted as government by its very nature cannot do anything in a money efficient manor.   But far too many people are addicted to the class warfare, soak the rich attitudes and all the other liberal nonsense that is most of government these days for any of this to change easily.
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« Reply #27 on: August 15, 2008, 03:39:55 AM »

Quote from: Brendan on August 13, 2008, 07:40:05 PM

What are you talking about?  The time period here isn't ambiguous; the only thing that's ambiguous is whether or not these companies are legimitately breaking even or losing money relative to their revenues.  The leap of faith that I'm making is that some portion of those 25% of large companies are using their accounting practices to reduce their revenues in order to reduce their tax liability, whether through transfer pricing abuse, tax credits, or whatever.  I don't believe that 60% of American companies, bringing in $2.5 trillion dollars, are truly "breaking even", and I would like congress to reevaluate the tax credit situation (particularly the domestic production deduction as applied to oil companies).

I also don't understand your red herring strategy about how the "data...wasn't even compiled for the reason" that I'm providing it.  The report was compiled at the request of Senators Levin and Dorgan in order to compare the tax burdens of foreign-owned companies with US-based companies.  The data is still accurate for the purposes of looking solely at the tax burden of US-based companies.  The thing the report explicitly avoids is ferreting out how much transfer price abuse there is.  They say a direct analysis is difficult because "price data are often unavailable and determining the price that would be charged between unrelated parties can be difficult," but the IRS is investigating many international companies.

Ultimately, if I ever get audited, I hope you're in charge of it.

----

addendum:

The report reads:

"The overwhelming majority, about 79 to 80 percent, of both large FCDCs and USCCs that reported zero tax liability in 2005, established it on line 28 where they reported zero taxable income before net operating losses.  This means that their reported current-year deducations more than offset the positive current-year total income reported on line 11.  The two most commonly used deductions, as a percentage of the value of all deductions claimed, were "other deductions" and the deduction for salaries and wages."

Other deductions includes "travel, meals, and entertainment expenses, dividends paid in cash on stock held by employee stock ownership plans, insurance premiums, and legal and professional fees."

Consequently, it's not even operating losses that's getting the vast majority of them to zero tax liability - it's deductions.

You seriously think corporations should be taxed on money used to pay salaries?
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« Reply #28 on: August 15, 2008, 11:56:52 AM »

Quote from: Geezer on August 15, 2008, 03:39:55 AM

You seriously think corporations should be taxed on money used to pay salaries?

Where did I say that?
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« Reply #29 on: August 15, 2008, 12:36:56 PM »

Quote from: Brendan on August 15, 2008, 11:56:52 AM

Quote from: Geezer on August 15, 2008, 03:39:55 AM

You seriously think corporations should be taxed on money used to pay salaries?

Where did I say that?

Hmm.. maybe you didn't mean it the way I read it, but I understood from your previous post that you took some exception to the allowances given corporations for deductions, as you specifically cited salary/wage deductions along with entertainment/travel deductions.
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« Reply #30 on: August 15, 2008, 12:56:41 PM »

Ah; you're misinterpreting what I wrote.  RLMullen had opined that it was possible for the companies paying no taxes to have had prior year losses that offset their revenues.  I quoted the section of the report that shows that 80% of those companies (in 2005) offset their income by deductions, not by operating losses.  When I "specifically cited" the types of deductions, I was just quoting the entirety of the section from the report.

Earlier, I said "That's why our legislators need to ensure that the credits and deductions are defined narrowly enough to actually go to the purposes they intend (e.g. the domestic production deduction, the SUV loophole, etc)" and even earlier "I don't believe that 60% of American companies, bringing in $2.5 trillion dollars, are truly 'breaking even', and I would like congress to reevaluate the tax credit situation (particularly the domestic production deduction as applied to oil companies)."  I don't believe that the deduction for salaries and wages should be changed.
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« Reply #31 on: August 15, 2008, 01:14:11 PM »

I don't think most people understand how they avoid taxes (legally).  If they did, they'd be outraged.

Case-in-point: the Federal Historic Rehabilitation Tax Credit.

This program grants tax credits - 20% of renovation expenses - to any building that's historic, in a registered historic district or as deemed by the Interior Department.  If the building was built before 1936 you get another 10% and many of the above restrictions get much looser.  Sounds good, right?  After all, we can protect our history and heritage and improve run down areas!  

Let's see how this really works:

First of all, if you have friends in local government that can apply pressure to the Dept of Interior or clout within the Interior Dept, it's easy to get virtually any building that's more than 35 years old declared "historic".  Heck, you can get your comrads in the City Government to declare a district historic.  And the "expenses" that get lumped into the renovations are absurd - there's nobody looking over the books, so administrative expenses like telephone, admin staff and even executive salaries often become Costs of Construction on the books for these projects.  Often the "costs" are so inflated that 20% really becomes 30%.  Then there's the other 10%, which is supposed to apply to non-residential uses only.  However, it's often claimed for the entire property, even when the whole thing is being turned into condos.  Nobody's checking, so why not?

So these companies often are getting 40% or better back in tax credits for building renovations that really aren't special or historic.  They're old warehouses being turned into condos...and the projects are virtually no-lose situations.  However, many of the construction firms can't really use all of those tax credits.  So they're wasted, right?

Nope.  They form a LLC with an investor group (at a 1% share) because they're allowed to sell the tax credits.  So investors buy them and sell them to the other members of the LLC at around 60%.  Who are the other members?  Wealthy corporations and individuals, who purchase these tax credits to buy down their own tax due to Uncle Sam.  

Who wins?  The developer wins - he got major tax credits in the order of 40% of the real cost of the project, making the development a no-lose situation.  The City Government wins in some small way because a building has been renovated.  The rich win because they bought down their tax liability at 60%.  

Who loses?  You.  This is where your tax dollars go - DIRECTLY back in the pockets of businesses.  Because these credits can be resold (and they're resold in large blocks so only the rich can get them), others avoided paying taxes at $.60 on the dollar.  Who makes up that shortfall?  You.

There's no BS in anything above.  This is the way it works.  Period.

This is one of hundreds of ways big businesses avoid paying taxes legally.  Much like reincorporating in the Cayman Islands, or hiring illegals to avoid payroll taxes, or so forth...never mind the outright accounting fraud.  This country is run for big business, by big business.  
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« Reply #32 on: August 17, 2008, 03:11:37 PM »

Quote from: Brendan on August 15, 2008, 12:56:41 PM

Ah; you're misinterpreting what I wrote.  RLMullen had opined that it was possible for the companies paying no taxes to have had prior year losses that offset their revenues.  I quoted the section of the report that shows that 80% of those companies (in 2005) offset their income by deductions, not by operating losses.  When I "specifically cited" the types of deductions, I was just quoting the entirety of the section from the report.

Earlier, I said "That's why our legislators need to ensure that the credits and deductions are defined narrowly enough to actually go to the purposes they intend (e.g. the domestic production deduction, the SUV loophole, etc)" and even earlier "I don't believe that 60% of American companies, bringing in $2.5 trillion dollars, are truly 'breaking even', and I would like congress to reevaluate the tax credit situation (particularly the domestic production deduction as applied to oil companies)."  I don't believe that the deduction for salaries and wages should be changed.

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« Reply #33 on: August 17, 2008, 03:18:28 PM »

Quote from: Blackadar on August 15, 2008, 01:14:11 PM

I don't think most people understand how they avoid taxes (legally).  If they did, they'd be outraged.

Case-in-point: the Federal Historic Rehabilitation Tax Credit.

This program grants tax credits - 20% of renovation expenses - to any building that's historic, in a registered historic district or as deemed by the Interior Department.  If the building was built before 1936 you get another 10% and many of the above restrictions get much looser.  Sounds good, right?  After all, we can protect our history and heritage and improve run down areas! 

Let's see how this really works:

First of all, if you have friends in local government that can apply pressure to the Dept of Interior or clout within the Interior Dept, it's easy to get virtually any building that's more than 35 years old declared "historic".  Heck, you can get your comrads in the City Government to declare a district historic.  And the "expenses" that get lumped into the renovations are absurd - there's nobody looking over the books, so administrative expenses like telephone, admin staff and even executive salaries often become Costs of Construction on the books for these projects.  Often the "costs" are so inflated that 20% really becomes 30%.  Then there's the other 10%, which is supposed to apply to non-residential uses only.  However, it's often claimed for the entire property, even when the whole thing is being turned into condos.  Nobody's checking, so why not?

So these companies often are getting 40% or better back in tax credits for building renovations that really aren't special or historic.  They're old warehouses being turned into condos...and the projects are virtually no-lose situations.  However, many of the construction firms can't really use all of those tax credits.  So they're wasted, right?

Nope.  They form a LLC with an investor group (at a 1% share) because they're allowed to sell the tax credits.  So investors buy them and sell them to the other members of the LLC at around 60%.  Who are the other members?  Wealthy corporations and individuals, who purchase these tax credits to buy down their own tax due to Uncle Sam. 

Who wins?  The developer wins - he got major tax credits in the order of 40% of the real cost of the project, making the development a no-lose situation.  The City Government wins in some small way because a building has been renovated.  The rich win because they bought down their tax liability at 60%. 

Who loses?  You.  This is where your tax dollars go - DIRECTLY back in the pockets of businesses.  Because these credits can be resold (and they're resold in large blocks so only the rich can get them), others avoided paying taxes at $.60 on the dollar.  Who makes up that shortfall?  You.

There's no BS in anything above.  This is the way it works.  Period.

This is one of hundreds of ways big businesses avoid paying taxes legally.  Much like reincorporating in the Cayman Islands, or hiring illegals to avoid payroll taxes, or so forth...never mind the outright accounting fraud.  This country is run for big business, by big business. 

Those tax credits you're taking about - the ones that get sold.  Is the income derived from selling them taxable?
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« Reply #34 on: August 18, 2008, 02:47:08 AM »

Quote from: Geezer on August 17, 2008, 03:18:28 PM

Those tax credits you're taking about - the ones that get sold.  Is the income derived from selling them taxable?

Yes, but remember a tax credit is a $1 for $1 reduction in taxes - it's much different than a tax deduction.  So the income on those is taxable, but since tax is only a percentage of of income, the credits are far superior to any form of real income.

Take the most extreme example - $1,000,000 in tax credits for a company that made a little or no profit.  Virtually all $1,000,000 in credits would be purchased by those who need to reduce their tax liability the most - those who are being taxed at the max 35% rate.  This is far more common that you think - many construction firms in this business run multiple entities for precisely this reason.

Company 1 does the work, but it's a cost loaded front - high executive salaries and equipment purchases are made from this company to draw down the tax liability.  Therefore, the credits go virtually unused for Company 1.  However, Company 2 (owned by the same group, perhaps doing some modest residential work) is a partner of Company 1 and they take most or all of the credits.  They turn them around and sell them to their 1% LLC group.  So say they make $1,000,000 in credits.  Company 2 sells those to other members of the LLC at $750,000, giving Company 2 some tax liability - perhaps 20% for example = $150,000 in taxes owed.  But those credits cost the taxpayer the full $1,000,000, because that's the amount that the rest of LLC can draw down their tax liability.  Who picks up the slack?  You do.

Again, there are 100s of legal tax dodges like these out there, not to mention the illegal ones.  That's why the share of corporate tax revenues as part of all tax revenues has dropped from 30% in the 1950s to under 7% today.  It's dropped from 5-6% of GDP to 1.2%.  The shift has been to payroll taxes - i.e. YOUR MONEY - which was less than 10% in the 1950s and is over 40% of all tax collections today.  Hell, most people don't understand that it's the middle class that pays the bulk of those, too.  Ever wonder why taxes like FICA (6.2% for the first $102,500 in income), SUI (varies by state, usually .8% for the first $7,000) and FUTA (.8% for the first $7,000) are capped?  It's so the wealthy don't pay any more than anyone else - even though the average CEO pay has increased from 24x the average worker in 1965 to 42x in 1982 to about 350x today.  Since payroll taxes - whether paid by the employer or employee - effectively reduce your overall compensation, these taxes are the very definition of a regressive tax policy.
« Last Edit: August 18, 2008, 02:50:52 AM by Blackadar » Logged

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