While recently standing at the check-out line at a supermarket, the woman ahead of me turned around to me and made a negative comment about a woman paying for her items with food stamps. She said-these people are just being freeloaders, aren’t they? She was totally shocked when I responded that no-it’s big business getting away with corporate welfare who are the freeloaders in our society. The right wing faction has apparently been successful in its mantra that the poor and disadvantaged are bilking our system.
7
Never forget that rich people write the tax code. Why exactly would they want to give up their advantage?
Democrats and Republicans are elected by rich people and I do not see that changing. Rich people will always be in control of the government and thus the tax code.
Give the rich people some credit. They ain't exactly stupid you know.
Democrats and Republicans are elected by rich people and I do not see that changing. Rich people will always be in control of the government and thus the tax code.
Give the rich people some credit. They ain't exactly stupid you know.
4
If you feel that your tax burden is too low, you are all free to send an extra check to the IRS. I didnt think so.
1
Thank you for this article
I hope that this will change in the next four years when we have a Democrat in the White House and a Democratic majority in both houses. I pray that HRC will follow up with what she has declared to be her tax policy. Otherwise it will be time for a revolution.
One of the reasons we have big government is that business isn't hiring enough. Whether said or unsaid without business hiring, government hiring goes up to provide meaningful employment instead of welfare. Businesses are now sitting on a pile of cash, recording healthy profits, and are still not hiring while whining about tax rates and big government that they are helping to create. I'm in favor of treating these corporations as if they're foreign for the privilege of doing business in these United States. Let them find better markets if they don't like it. No job creation - record high taxes please.
3
When Mr. Leonhardt pays more in taxes than he is legally obligated to pay, then he can suggest the same for other parties.
1
Beyond him or herself I don't think the average person or household much cares what the other guy is paying.
We really don't get a lot after the military is funded and the politicians palms are, albeit legally, greased
It is simply capitalism's mushroom farm working as planned and at its' best.
We really don't get a lot after the military is funded and the politicians palms are, albeit legally, greased
It is simply capitalism's mushroom farm working as planned and at its' best.
1
This article and Trump's campaign show everyone how real SOCIALISM works for the upper 0.1% (get the government to bail you out) and how DARWINIAN SOCIALISM (devil take the hindmost) works for the lower 99.9%
2
With apologies to Ronald Reagan, wherever he may be, the scariest words in the English language are, "Hello, I'm from corporate America and I'm here to help you."
1
Corporate America got the tax code it paid for.
1
The effective federal tax rate for corporations at 34% is a sham cover story... After applied deductions and perfunctory accounting "hocus pocus" [all perfectly legal mind you] it turns out to be around 14%. Certainly far less than the 34% everyone keeps screaming about...
2
We have been pretending our country is law abiding and corruption free, however day by day we are learning our leaders and business elite are the biggest crooks and thugs plundering our country and creating economic hazards on poor working class citizens. No wonder the American Dream is reserved for American crooks and thugs who pay no taxes.
I would like to see the tax bills of Corporate lawyers who earn a better than average living helping these gypsies pay so little. Or do they also get away with paying minimal. Yes, it's all legal I understand, but shouldn't be gamed for certain players only.
1
Bezos and Zuckerberg are amongst the richest Americans. But I would be rich too if I didn't pay any taxes.
1
All perfectly legal so, what do legislators do to (at best close (at worse) reduce the loop holes?
No prize for the correct answer, its nothing.
No prize for the correct answer, its nothing.
This data should be widely publicized -- and front page news. Shame the President and Congress into doing something about it.
First, it's tax EVAISON, IF HUMANS DID IT, IT WOULD BE TAX EVAISON, I'm sick to death with allegedly American companies sucking up,taxpayer dollars in grants,mgicernment contracts and other benefits and then hiding their income overseas.
There is no way a multinational making billions should be paying a lower tax rate than me,mor gos sake.
The sad truth is that the alleged progressive in the race will do nothing. What she plans to do is squeeze the middle class and continue to allow the bank, big Pharma, the military industrial security complex to drain our treasury and evade taxes. She has no interest in turning off the donation spigot from corporations, billionaires or lobbyists including those who represents et foreign interest like the Saudis and the Chinese.
It's time to put corporations back in their place and make sure HUMAN Rights are at the top of the priority list!
There is no way a multinational making billions should be paying a lower tax rate than me,mor gos sake.
The sad truth is that the alleged progressive in the race will do nothing. What she plans to do is squeeze the middle class and continue to allow the bank, big Pharma, the military industrial security complex to drain our treasury and evade taxes. She has no interest in turning off the donation spigot from corporations, billionaires or lobbyists including those who represents et foreign interest like the Saudis and the Chinese.
It's time to put corporations back in their place and make sure HUMAN Rights are at the top of the priority list!
1
I hope Ron Wyden is successful in tax reform. He is a Republican and should be supported across the aisle. While I usually vote Democratic, I will vote for him because we need to encourage moderate Republicans.
Tax avoidance and regulations that stifle competition, I'm not talking about real environmental, worker or public health and safety, are damaging this country. People feel government policies are stacked against them in favor of a few wealthy and powerful. The surgeon who pays 35% in federal taxes is looking at billionaires who pay nothing. NOTHING
I hope Hillary has the influence to convince her wealthy, powerful friends that there is mud and manure on their shoes. It's stinking and not fertilizing a healthy crop. Communism may not be lurking as it was in the 30s when FDR began the New Deal; but Donald Trump should be a wake-up call of crazy populism that can send us all up the proverbial creek.
Tax avoidance and regulations that stifle competition, I'm not talking about real environmental, worker or public health and safety, are damaging this country. People feel government policies are stacked against them in favor of a few wealthy and powerful. The surgeon who pays 35% in federal taxes is looking at billionaires who pay nothing. NOTHING
I hope Hillary has the influence to convince her wealthy, powerful friends that there is mud and manure on their shoes. It's stinking and not fertilizing a healthy crop. Communism may not be lurking as it was in the 30s when FDR began the New Deal; but Donald Trump should be a wake-up call of crazy populism that can send us all up the proverbial creek.
Tax simplicity in the form of low rates and few, if any, deductions is the only way to achieve across the board fairness.
We need a VAT
Until we get a congress that is willing to step on contributors toes (Republican and Democrat alike) we'll have to settle for loopholes big enough to slip a corporation through.
Regrettably I don't see that happening soon.
Regrettably I don't see that happening soon.
1
Every person with a half a brain has known that the super rich get away with murder regarding taxes.
The writer of this article suggests that reducing some of the loopholes corporations get away with might be something Clinton might do when she ascends to the Whitehouse.
I wouldn't hold my breath. I think most allegedly liberal democrats are phonies; they all get their money from big corporations and banks. Bernie Sanders was real. Finegold of Wisconsin it also true and good. But Hillary! Haven't you read the wikileaks revelations. She has not denied the accuracy of the Podesta emails and they are devastating, but most of the media is downplaying the incriminating data in the documents because they are partial to Hillary. Just as they were partial to Hillary over Sanders, just as they never listened to a thing Dennis Kuccinich had to say, just as they sabotaged Dean's campaign in 2004 and gave us Kerry who ran a weak, sniveling campaigned destined to lose.
The writer of this article suggests that reducing some of the loopholes corporations get away with might be something Clinton might do when she ascends to the Whitehouse.
I wouldn't hold my breath. I think most allegedly liberal democrats are phonies; they all get their money from big corporations and banks. Bernie Sanders was real. Finegold of Wisconsin it also true and good. But Hillary! Haven't you read the wikileaks revelations. She has not denied the accuracy of the Podesta emails and they are devastating, but most of the media is downplaying the incriminating data in the documents because they are partial to Hillary. Just as they were partial to Hillary over Sanders, just as they never listened to a thing Dennis Kuccinich had to say, just as they sabotaged Dean's campaign in 2004 and gave us Kerry who ran a weak, sniveling campaigned destined to lose.
Every company that claims it needs tax cuts to hire more workers and create jobs should be required by law to prove they did in fact hire more workers. The so-called job creators are nothing but liars. They pocket the money and live high on the hog while the vast majority of society suffers.
Do you know who in government cares? NOBODY.
Do you know who in government cares? NOBODY.
1
Yes. Let's make a simpler tax code rather than systemic parasitic monstrosity that currently burdens our economy and society. Please.
Deactivate Facebook Now!
Reason...Facebook 3.2% tax rate covering federal, state.local and foreign taxes...2007 through 2015.
Reason...Facebook 3.2% tax rate covering federal, state.local and foreign taxes...2007 through 2015.
When a company that size moves its headquarters to another country in order to avoid taxation, why don't we remove their patent protections? If they're not going to support their own national society, why should we protect them?
1
While we might hope to establish a fairer system, until the house and senate are Democratic, no Republican is going to support any tax increase proposed by a Democratic president. That is just a fact.
The DJT tax debacle has shown the absurdity of the tax code. Show a massive loss in one year, and use this for the next twenty to offset tax payments. How absurd - just because it is perfectly "legal," does not mean it is right.
"Sunset" the tax code over five years - start with a clean sheet of paper and work your way up.
The House Ways & Means Committee should be given five years to come up with a new tax code that better represents 2016 and beyond. All lobbyists should be locked out of the meeting room!
"Sunset" the tax code over five years - start with a clean sheet of paper and work your way up.
The House Ways & Means Committee should be given five years to come up with a new tax code that better represents 2016 and beyond. All lobbyists should be locked out of the meeting room!
It is rather ironic the author has suddenly had this revelation about corporate tax avoidance, yet, nowhere does he make reference at all to the fact that, right from the outset of the primaries, this was one of Bernie Sanders keynote issues, let alone one he has talked about his entire career in public office.
"The billions of dollars in taxes being avoided by G.E., Coca-Cola and others is money that can’t be used to lift living standards for ordinary families: It can’t be used to reduce their taxes and can’t pay for schools, medical research or clean energy."
Hilarious. And herein lies the basic difference between the left and the right. So, GE and Coca Cola should pay more taxes instead of hiring more people and doing more research (with the taxes they didn't pay) because... the government is better at doing this?
Why hire a worker when you can pay money to the government, which can use that money to pay a person not to work? Brilliant.
Why do product development when you can pay more taxes to the government which can then dole out money to whichever industry donates the most to... government. Sign me up!
Hilarious. And herein lies the basic difference between the left and the right. So, GE and Coca Cola should pay more taxes instead of hiring more people and doing more research (with the taxes they didn't pay) because... the government is better at doing this?
Why hire a worker when you can pay money to the government, which can use that money to pay a person not to work? Brilliant.
Why do product development when you can pay more taxes to the government which can then dole out money to whichever industry donates the most to... government. Sign me up!
1
No taxation of US citizens living, working and paying tax abroad.
Hillary donated 95% of her cheritable contributions to the Clinton Foundation.
On the business shows, it is always mentioned that personal spending accounts for around 70% of GDP, but, lo and behold, when it comes to taxes, the companies make out like bandits, not the individuals, except of course, for Mr. Trump......................................
We need to raise taxes on the super-rich until it is impossible for any individual or family to buy more than one in-state politician. Public flogging would cure the impulse to Koch the books.
1
Although some companies are better tax avoiders than others, the average of the S&P 500, 26.9 percent, gives you a better sense of the big tax picture. Whether that is too high or too low is one question begging for an answer, but another question is how to level the tax playing field so that we don't have such opportunities for tax disparities among different kinds of companies. This will be an excellent opportunity for Ms. Clinton to get something done right out of the box, because it really is something of a bipartisan issue, and it will suit her wonkish skill set. Recall that Reagan did a very important tax overhaul in 1986 that got rid of a lot of real estate tax shelter gamesmanship and was one of his best achievements on the domestic front. Clinton could do something similar.
2
Congress should implement an Alternative Minimum Corporate Tax, similar to the personal AMT that prevents deductions from completely wiping out tax obligations. At a minimum, companies should pay taxes every year that reflect the benefits they derive from the government and the markets they enjoy here. It's unfair that some profitable companies pay little or no taxes because of accounting maneuvers.
This author and most liberals do not realize that corporate taxes are a cost of doing business, the taxes paid mostly result in lower wages for the workers and higher prices for consumers.
As usual, taxpayers that benefit from complying with the rules stand accused of being anti social. On top of this, we’re told taxpayers are responsible for framing the evil rules.
Corporations pay about 11% of their income in taxes. Individuals pay about 8%. That means corporations pay more per dollar earned than individuals. Individuals, it seems, are the real slackers.
Who in this country should pay tax to support our military? So, companies should be free? I thought companies were also protected by our military even when their subsidiaries are located in foreign lands. When we send military to these other countries it is said that we are "protecting American interests" -- well, my friends, that would be those foreign subs located there that we are protecting.
1
I wonder if the author has any inclination to explore how to fix it. His sentence "Companies make millions of dollars from tax avoidance" is telling. While I concur that the status quo is unacceptable his failure to accept that the companies made money doing their job and the tax laws "let them keep more of it" disqualifies him from producing an unbiased solution.
Tax avoiding corporations fully benefit from US infrastructure and protection from US laws, but they don't carry their share of the tax burden.
The American middle class dutifully pays its taxes and keeps the country running while big corporations behave like parasites.
The GOP has been the main defender of this outrageous form of corporate welfare. The only way this can change is by voting those Senators and Congressmen out of office who have resisted well overdue tax reform. It is that simple.
The American middle class dutifully pays its taxes and keeps the country running while big corporations behave like parasites.
The GOP has been the main defender of this outrageous form of corporate welfare. The only way this can change is by voting those Senators and Congressmen out of office who have resisted well overdue tax reform. It is that simple.
2
I find the Walmart percentage suspect (31.2%), unless they are claiming the employers matching contribution to FICA (Social Security) and Medicaid is a "Tax".
It just is not in accord with their tendency to extort exemptions from local real estate taxes & etc.
Inquiring minds want to know how this data set was derived.
Around here, the comfortable retirees only care about lowering their own taxes. Schools, Infrastructure, let someone else pay for them.
It just is not in accord with their tendency to extort exemptions from local real estate taxes & etc.
Inquiring minds want to know how this data set was derived.
Around here, the comfortable retirees only care about lowering their own taxes. Schools, Infrastructure, let someone else pay for them.
2
It's no wonder the state of Washington is suing itself to fund education, more than four of the lowest paying companies are in the state. Civil society requires that companies pay for the privilege of doing business.
1
Huge tax breaks for wealthy corporate entities do not benefit the American workers. Democrats have encountered strong opposition when this issue is discussed and taxes are used as a lightning rod especially during elections. This egregious form of exploitation is facilitated primarily by Republican law makers.
2
Way back in junior high I remember learning that corporations were a legal creation. They received limited liability for stockholders, and other advantages, in return for their job creation and good citizenship in the areas where they were located. If they have moved on from their civic duties, why should they continue to receive the advantage of limited liability. Let's allow investors to choose which type of corporation they prefer.
Large worldwide corporations will always move money around to avoid taxes. Maybe we shouldn't tax them at all but tax any money that leaves the corporation as earned income to the recipient, whether it be an executive, hedge fund, mutual fund, etc. No capital gains break, no dividend break, it's all earned income, taxed when it is received at the recipient's tax rate.
If we want to tax shareholders, we should get raise taxes on capital gains and dividends. Corporate taxes, if they were evenly applied, would get passed through to customers (and to some extent, employees) not paid by shareholders. As it is, we are punishing tcompanies that keep their business in the U.S. This is mostly smaller, domestic businesses and we reward the large multinationals who play games.
"Many companies work hard to shroud how much they really pay, sprinkling various figures throughout their complex financial statements. But companies must report one number that provides a good glimpse. It’s called cash taxes paid — the combined amount that a company pays in federal, state, local and even foreign taxes."
OK, that's the numerator of your so-called "tax rate." What's the denominator? The devil is always in these details.
OK, that's the numerator of your so-called "tax rate." What's the denominator? The devil is always in these details.
One wonders where we're headed.
A big share of profits in our economy pass through big corporations and wealthy individuals, who can hide their wealth and earnings in low-tax jurisdictions.
It remains for the rest of us to pay the costs of government, through our sales, property, income, and use taxes.
But with automation, outsourcing, and the like, the corporations making all the money don't want, and don't need to hire Americans.
So where are we going to come up with the money to pay those taxes?
A big share of profits in our economy pass through big corporations and wealthy individuals, who can hide their wealth and earnings in low-tax jurisdictions.
It remains for the rest of us to pay the costs of government, through our sales, property, income, and use taxes.
But with automation, outsourcing, and the like, the corporations making all the money don't want, and don't need to hire Americans.
So where are we going to come up with the money to pay those taxes?
Our tax code was designed around a post WWII economy in which the rest of the world economy was largely decimated and we have a growing and consuming baby boom. Its different now. The biggest problem the government has with the tax code is that it cannot resist the temptation to steer the economy. Question: if Apple cannot consistently produce a blockbuster product such as the Iphone, with the best minds of the tech industry and billions of dollars, and also the privitization of the profits that would be produced from its risk taking (which is what capitalist does), who could sensibly contend that a bureaucracy, in which risk taking is not rewarded (to quote JFK, success has many fathers and failure is a (fatherless child)) could select winners and losers, predict future products and forecast yet to be conceived of products. The Tax Code is the elephant man of our Congress. BF Skinner said you cannot live in a world without control, but you can sometimes select the controlling variables. Basic economics tell us that people are satisfaction maximizers; only a fool is suprised that individuals and business follow their self interest.
I never thought I'd say this but I've lived long enough to conclude that zero taxes for corporations just might be great for America. Currently taxed corps spend gobs of money in unproductive effort, like hiring tax lawyers and accountants to find ways to avoid taxes, or moving production overseas, or lobbying politicians for one-off breaks that truly distort and corrode our politics and our economy. Most corporations are so-called Chapter S or pass through entities anyway that pay no taxes, so the current structure merely incentivizes global entities to move jobs offshore. Zeroing out corporate taxes for all would end that, and of course it ought to come at a price-- no subsidies, tax credits or corporate welfare of any kind. No access to politics via a constitutional amendment that would prohibit receiving campaign donations from any non-living "person" directly or indirectly, thereby effectively rendering Citizens United a dead letter. And naturally, taxes for executives, investors and even employees would need to be more progressive, that is to say higher for the highest paid to make up for lost tax revenue, but we should be doing that regardless. And the fact is, given existing loopholes, corporate tax is never more than 9% to 11% of the federal government's receipts. With the right bargain, zero tax would encourage repatriation of investment in America, create jobs, and end much of the pay to play politics corroding our country.
1
You include foreign taxes into the mix in your chart of tax rates paid.
This highlights the unique nature of the US tax code - the taxation of global income while crediting foreign taxes paid.
It should be pointed out that any amount at all, over and above what is paid in foreign tax, that is paid to the US government on that same foreign income is money that no other government tries to collect.
The tax code has been taken hostage by pay for play interests. The only way out is vast simplification, perhaps using Singapore or Hong Kong as examples where the only task is raising revenue and not social and financial engineering.
This highlights the unique nature of the US tax code - the taxation of global income while crediting foreign taxes paid.
It should be pointed out that any amount at all, over and above what is paid in foreign tax, that is paid to the US government on that same foreign income is money that no other government tries to collect.
The tax code has been taken hostage by pay for play interests. The only way out is vast simplification, perhaps using Singapore or Hong Kong as examples where the only task is raising revenue and not social and financial engineering.
1
Leonhardt's table, documenting percent of federal, state, local and foreign taxes paid (as a percentage of exactly what? Income? Profits?) paid by various corporations, understates the case. And his cover photo, of a large GE logo at its Fairfield, CT headquarters, shows why.
GE recently decided to relocate its headquarters and 800 jobs to Boston, MA. State and Federal tax breaks, crucial to luring GE to Boston rather than to New York, amounted to roughly $150 million. Divide that by 800 jobs to get roughly $200,000 per job. Or divide it by roughly 20 years to get $7.5 million per year. Either way, that amount is not reflected in Leonardt's table.
Note that this is several years after GE, with much fanfare, publicly stated that it would abandon tax farming (complicated financial deals designed primarily to reduce taxes) as its primary source of revenue, and go back to building industrial products.
This may do much for Boston's booming Seaport district. It will probably push up the price of Boston housing, already among the country's highest, even further. It probably won't do much for the more than 50% of Boston residents who are non-white and/or poor, nor for its problem-ridden public schools.
A significant part of the tax breaks are in property taxes, shifting more of this burden onto the owners of the decreasing portion of Boston land that is still taxable (50% is government, education, or medical, and thus non-taxable).
Upcoming: Research and other tax breaks.
GE recently decided to relocate its headquarters and 800 jobs to Boston, MA. State and Federal tax breaks, crucial to luring GE to Boston rather than to New York, amounted to roughly $150 million. Divide that by 800 jobs to get roughly $200,000 per job. Or divide it by roughly 20 years to get $7.5 million per year. Either way, that amount is not reflected in Leonardt's table.
Note that this is several years after GE, with much fanfare, publicly stated that it would abandon tax farming (complicated financial deals designed primarily to reduce taxes) as its primary source of revenue, and go back to building industrial products.
This may do much for Boston's booming Seaport district. It will probably push up the price of Boston housing, already among the country's highest, even further. It probably won't do much for the more than 50% of Boston residents who are non-white and/or poor, nor for its problem-ridden public schools.
A significant part of the tax breaks are in property taxes, shifting more of this burden onto the owners of the decreasing portion of Boston land that is still taxable (50% is government, education, or medical, and thus non-taxable).
Upcoming: Research and other tax breaks.
1
The CEOs of many of these companies who complain about the high corporate tax rate they conveniently manage to avoid also demand the social-safety net be reduced or eliminated because, gosh darn it, we just can't afford to support these pikers. Conservatives also love to point to the $20 trillion debt and say it's not a revenue problem but a spending problem. I'd love to test that theory. But I doubt Congress has the intestinal fortitude.
It's not just that the companies avoid paying taxes, it's that they reward their c-suite executives with over the top exorbitant salaries and other compensation for doing so. That's called skimming, taking taxpayer provided subsidies and diverting into their own pockets, while reducing worker compensation, eroding shareholder value and conspiring against unions with other companies and politicians.
All legislation pertaining to taxation (including changes and amendments to such legislation) should include the names of the representatives responsible for the wording and changes/amendments to the legislation. The ownership of the legislation and changes should be made available to public as part of a freedom of information request.
This suggestion should be considered as a step towards campaign finance reform as well as tax reform.
This suggestion should be considered as a step towards campaign finance reform as well as tax reform.
1
The part that bothers me the most is that our military protects many of these private corporate interests overseas. Yet these are the same corporations that don't provide a tax dime to pay for any of that major, very expensive protection. The lowly working person who pays taxes does though. And what do we get out of any of it? Cheaper bananas?
Public tax supported turned into privatized security armies available, at no expense! Brilliant! And these companies don't even have to be based in the US anymore!
Past dictators and kings would've loved that deal. Free armies! Big ones too!
Public tax supported turned into privatized security armies available, at no expense! Brilliant! And these companies don't even have to be based in the US anymore!
Past dictators and kings would've loved that deal. Free armies! Big ones too!
2
This article is misleading.
When a company pays lower taxes, its profits go up. When it's profits go up, its stock price rises. When a shareholder sells the stock for a profit, the stockholder pays taxes.
If a company pays one million dollars more in taxes, it books one million dollars less in profits, and its stock price reflects a company that makes a million dollars less than if it hadn't paid those taxes - and its shareholders pay less taxes when they sell.
This example is overly simplistic - but the system is more complex than Leonhardt presents it. Just because one part of the chain doesn't pay taxes doesn't mean that no taxes are paid.
Amazon pays less in taxes because it is famously not profitable. The stockholders of Amazon, however, have paid a lot of taxes if they've sold...because the share price has risen in the expectation that it will one day make a lot of money.
Tax breaks aren't just a product of financial finagling by companies. Low tax, low cost states like Nevada use tax policy to attract business from high cost, high tax states like New York. Texas has built a vibrant high tech economy by attracting business that would have gone to Massachusetts or New York forty years ago. Detroit has lost jobs to Tennessee, South Carolina and Nevada as well as to Mexico. Why? Lower costs, including taxes.
When a company pays lower taxes, its profits go up. When it's profits go up, its stock price rises. When a shareholder sells the stock for a profit, the stockholder pays taxes.
If a company pays one million dollars more in taxes, it books one million dollars less in profits, and its stock price reflects a company that makes a million dollars less than if it hadn't paid those taxes - and its shareholders pay less taxes when they sell.
This example is overly simplistic - but the system is more complex than Leonhardt presents it. Just because one part of the chain doesn't pay taxes doesn't mean that no taxes are paid.
Amazon pays less in taxes because it is famously not profitable. The stockholders of Amazon, however, have paid a lot of taxes if they've sold...because the share price has risen in the expectation that it will one day make a lot of money.
Tax breaks aren't just a product of financial finagling by companies. Low tax, low cost states like Nevada use tax policy to attract business from high cost, high tax states like New York. Texas has built a vibrant high tech economy by attracting business that would have gone to Massachusetts or New York forty years ago. Detroit has lost jobs to Tennessee, South Carolina and Nevada as well as to Mexico. Why? Lower costs, including taxes.
1
If one company can avoid paying significant taxes and another can't, that is a truly important competitive advantage. More money in the corporate treasury means more capacity to win against competitors. That's a big deal.
During the earliest days of Internet based sales, it made sense to allow the new tech start-ups some room to experiment and grow. It doesn't make sense any more to allow Amazon to drive traditional stores out of business or force them to cut back on space, employees, etc. Amazon looks to be eating the retail world alive, just as Walmart was able to do by moving into small towns, knocking over long standing retailers.
We have trillions of dollars in under funded infrastructure maintenance and repair. The longer the wait is to put highways, bridges, tunnels and so forth up to standard, the more it costs. Waiting is expensive. There should be no way for a corporation to avoid paying all taxes, period.
During the earliest days of Internet based sales, it made sense to allow the new tech start-ups some room to experiment and grow. It doesn't make sense any more to allow Amazon to drive traditional stores out of business or force them to cut back on space, employees, etc. Amazon looks to be eating the retail world alive, just as Walmart was able to do by moving into small towns, knocking over long standing retailers.
We have trillions of dollars in under funded infrastructure maintenance and repair. The longer the wait is to put highways, bridges, tunnels and so forth up to standard, the more it costs. Waiting is expensive. There should be no way for a corporation to avoid paying all taxes, period.
3
The article says that the wealthy tend to pay the taxes of the corporations as they are usually the shareholders. I disagree. Corporate taxes are paid by all of us in small increments as a percentage of the purchase price we pay for the corporation's products or services as certainly their products are priced in the marketplace to include the cost of taxes. As citizens we have a right to assume that our small contribution will be paid to our government as it should be to support the government services we all depend on. We do not expect that that portion of the purchase price is to be hidden or manipulated or otherwise not make it into our common treasury
Corporations should be chartered to create wealth in the form of wages for employees, equity and dividends for stockholders, and possibly even investments that build community and environmental wealth. It is antithetical to such a charter that they sit on piles of cash.
The federal corporate tax code should reinforce such a charter by taxing corporate wealth, rather than yearly profits. If the profits from one year are plowed back into business investments, dividends, and wages the following year--then that is exactly what we want corporations to do: push the money back to people. But if profits from one year lie fallow the next, they should be taxed. And they should continued to be taxed every year that they lie fallow.
Of course, businesses on occasion may want to save up over multiple years for a particularly large investment. They can, of course, simply borrow with a commercial lender or by floating a bond offering. They would have the choice of paying the wealth tax as they build up their arsenal over several years or borrowing. What is nice about this is that it gives everyone a balance equation. If the federal tax rate is too high relative to the cost of borrowing money, the government will see a decrease in tax revenue. This market discipline mechanism should keep the conservatives happy, while at the same time incentivizing corporations to plow profits back into the economy which would increase liquidity, economic flow, and growth.
The federal corporate tax code should reinforce such a charter by taxing corporate wealth, rather than yearly profits. If the profits from one year are plowed back into business investments, dividends, and wages the following year--then that is exactly what we want corporations to do: push the money back to people. But if profits from one year lie fallow the next, they should be taxed. And they should continued to be taxed every year that they lie fallow.
Of course, businesses on occasion may want to save up over multiple years for a particularly large investment. They can, of course, simply borrow with a commercial lender or by floating a bond offering. They would have the choice of paying the wealth tax as they build up their arsenal over several years or borrowing. What is nice about this is that it gives everyone a balance equation. If the federal tax rate is too high relative to the cost of borrowing money, the government will see a decrease in tax revenue. This market discipline mechanism should keep the conservatives happy, while at the same time incentivizing corporations to plow profits back into the economy which would increase liquidity, economic flow, and growth.
1
The loop holes need to be closed but the corporate tax rate also needs to be decreased. Lowering the corporate tax rate is probably not a popular concept but the US needs to be competitive so that money and jobs are not flowing out of the country. Paying a higher corporate tax rate means that US products become more expensive and less competitive with foreign products. Everyone should be paying a fair and equal but competitive rate.
The idea of tax reform is that an equitable rate would be paid by all. Some deductions would be limited or eliminated. Say the rate is 15-20%. Those currently paying less would have to contribute more. Those holding profits over seas would be more likely to repatriate the funds and invest domestically. Those currently paying more would get a break. Make it fair and competitive. It can be done. There is a lot of distortion and noise from both sides. Really, when talking about large corporations, who is paying? Not the CEO or upper management. It is the customers, higher prices, and the shareholders, lower profits/dividends. And, no, not all share holders are "rich". Shares of these companies are held by public and private pension funds, individuals saving for retirement, retirees, and millions of small investors.
I am a proponent of a flat tax for individuals and corporations without loopholes, write-offs or tax-breaks.
I pay taxes as we all do or should to provide security through the armed forces, federal, state and local police. I pay taxes to drive on paved roads with lights, to research vaccines for diseases such as Ebola, to educate our children, to protecting our water, air and soil and to ensure we enjoy safe food to eat. All of this cost money and employs specialists to maintain and improve our quality of life.
When Trump brags about his legal tax-avoidant strategies, it suggests to me that he does not want to support our military, infrastructure or safety. We could have used his taxes income dollars to help fund our police with better gear.
Am I the chump for paying taxes? Seems Trump thinks I am.
What about Facebook......actually their business model is to use all our personal information to make money. So, I guess they don't really produce much and hence feel the need to pay their fair share.
I pay taxes as we all do or should to provide security through the armed forces, federal, state and local police. I pay taxes to drive on paved roads with lights, to research vaccines for diseases such as Ebola, to educate our children, to protecting our water, air and soil and to ensure we enjoy safe food to eat. All of this cost money and employs specialists to maintain and improve our quality of life.
When Trump brags about his legal tax-avoidant strategies, it suggests to me that he does not want to support our military, infrastructure or safety. We could have used his taxes income dollars to help fund our police with better gear.
Am I the chump for paying taxes? Seems Trump thinks I am.
What about Facebook......actually their business model is to use all our personal information to make money. So, I guess they don't really produce much and hence feel the need to pay their fair share.
Thanks so much for this information. I'm emailing your article to myself.
I am just a tax paying citizen and rely on investigative reporters to learn how our government doesn't work. But there are politicians, government regulators and offices that have certainly long been privy to this information and then some.
So I wonder, among all the Dems that want me to contribute money so they can get/keep the jobs of their dreams, who has been working for fairness in taxes?
Don't be fooled by corporate arguments? I haven't even seen the oligarchs challenged by attempts to overhaul the corporate tax code. Change is coming? HA! According to leaked bits of Hillary's Wall Street speeches, she told the CEO's not to worry about banking regulations. Never mind her public voice; it's her private voice that counts. And while I give Obama due respect, in his first days in office, he named Wall Street executives to his Cabinet and kept others as close advisors. And Clinton, that other Dem President, got rid of Glass Steagall.
Signs of hope? I wish!
I am just a tax paying citizen and rely on investigative reporters to learn how our government doesn't work. But there are politicians, government regulators and offices that have certainly long been privy to this information and then some.
So I wonder, among all the Dems that want me to contribute money so they can get/keep the jobs of their dreams, who has been working for fairness in taxes?
Don't be fooled by corporate arguments? I haven't even seen the oligarchs challenged by attempts to overhaul the corporate tax code. Change is coming? HA! According to leaked bits of Hillary's Wall Street speeches, she told the CEO's not to worry about banking regulations. Never mind her public voice; it's her private voice that counts. And while I give Obama due respect, in his first days in office, he named Wall Street executives to his Cabinet and kept others as close advisors. And Clinton, that other Dem President, got rid of Glass Steagall.
Signs of hope? I wish!
While the tax code does indeed need reform, especially corporate taxation, the devil is in the details. Every little change will be fought with oceans of lobbying money and campaign contributions. Perhaps a way to jump start the process would be to institute an "alternative minimum tax" on corporations, much the same way as one exists for individuals. This tax would set a lower rate than the official corporate tax rate -- let's say 20%. That way we could leave the current loopholes and deductions intact, but if a company enjoys so many deductions that their effective rate is lower than 20%, they must pay the Alternative Minimum Tax of 20%. In essence we would be setting a floor that corporate taxes could not go below. The corporate AMT could be written to ignore offshore tax havens. This would not help the small business owners who are stuck paying the maximum now, but it would address large corporations which have so many offsets and deductions they can pay effective rates of less than 20%. There is room to quibble about what the corporate AMT should be -- 20%? 15%? etc. but it would be a relatively easy PR campaign to wage, to tell the American people "You have to pay a certain minimum tax on your income -- why don't big corporations?"
Corporate tax avoidance does need to be linked to the larger issue of economic stagflation. It should also be linked to policies that will encourage corporations to repatriate their foreign profits. Right now, billions are idling offshore and that also results in stagflation. If the economy is to recover, corporate profits must return home to be invested here. The Fed's monetary policy is at the end of its rope. Even President Obama acknowledged this today. The biggest obstacle to repatriation is that Congress can't agree how much tax, if any, to charge corps. Right now, it's too high because U.S. corps have already paid foreign taxes. Without congressional consensus on fiscal policy we'll continue to face stagnation and worse. Anyone who understands how crucial fiscal policy is to to our economy should be screaming at our candidates to explain how they'll get Congress to fix this problem.
Are not all corporate taxes simply passed on to consumers through higher costs of goods and services? Add in the immense costs of tax compliance and we have a system that ends up forcing companies to, among other things, pay their employees as little as possible. As so many here have said, the system is broken. An intriguing alternative would be to replace all federal corporate and individual taxes, including the Social Security payroll tax, with a simple sales (consumption) tax. That may sound crazy, but the bill has been written (H.R.25), and waits to gain traction. If this bill were to pass, our immensely wasteful compliance costs would be virtually eliminated, the IRS would become a tiny vestige of its current self, our politicians would no longer be hounded by corporate lobbyists trying to gain favorable tax treatment, and most of all, companies would be free to focus on their real work, creating well-paid jobs and making valuable products in an open and competitive free market.
Ever since St. Ronnie Republicans have claimed that cutting taxes and regulations would spark a boon so large that it would create huge excess, which of course would "trickle down" to everyone else. Well, they were half-right - or they only half-lied - it created a huge excess in wealth for Corporate America and their investors, but "amazingly" they could find no "excess" to share with the workers who contributed to this boon.
But it's not just about raising corporate taxes and closing loopholes, it's about undoing the incentives that were put in place to encourage short term profit-taking, and offshoring, etc. At the same time we can actually use lower rates as an incentive for companies to invest here in America, and creating jobs that pay a living wage, along with re-instituting company training of workers. There is no "silver bullet", but this would go a long way towards fixing what's wrong with the economy.
But it's not just about raising corporate taxes and closing loopholes, it's about undoing the incentives that were put in place to encourage short term profit-taking, and offshoring, etc. At the same time we can actually use lower rates as an incentive for companies to invest here in America, and creating jobs that pay a living wage, along with re-instituting company training of workers. There is no "silver bullet", but this would go a long way towards fixing what's wrong with the economy.
The 99.9% has always been, is and will always be subsidizing every tax and subsidy loophole for every business and industry from Big Ag and Big Pharma to Real Estate (Trump) and Wall Street and everything in between, since the federal tax was implemented. And we always will. And, we even bailed them out for the our last great recession. It's good to be the King! We no longer live in the democracy our forefathers founded. We live in a plutocratic oligarchy, and they are the "kings" and we are their serfs.
1
OT, but anyone who thinks Trump is a successful business, rather than a guy who ruins everything but his reality TV and licensing deals, should look at this:
"Trump did just fine for himself. Even as his company’s stock price was collapsing and annual losses were piling up, filings with the Securities and Exchange Commission show that during his years as chairman, more than $60 million poured from the public company into Trump’s pockets.
"This is the dirty secret behind Trump’s allegedly miraculous financial recovery. What he told the public was a fable: that he had fought his way back with perseverance and skill. In truth, he did it by snatching huge fistfuls of cash from a company that was wiping out the savings of millions of people."
"The scam worked, again and again. .... Building after building, failure after failure, hundreds of millions of dollars lost."
"Trump’s career has been much of the same kind of scam. He demands applause and annihilates those who refuse to give it. He preens about successes he obtained only by destroying the wealth, careers and reputations of other people. He takes credit for the victories of others and denies any blame for his many failures. In his impulsive pursuit of self-aggrandizement, his victims are legion."
"And now he vows to do to America what he did to them."
"Trump did just fine for himself. Even as his company’s stock price was collapsing and annual losses were piling up, filings with the Securities and Exchange Commission show that during his years as chairman, more than $60 million poured from the public company into Trump’s pockets.
"This is the dirty secret behind Trump’s allegedly miraculous financial recovery. What he told the public was a fable: that he had fought his way back with perseverance and skill. In truth, he did it by snatching huge fistfuls of cash from a company that was wiping out the savings of millions of people."
"The scam worked, again and again. .... Building after building, failure after failure, hundreds of millions of dollars lost."
"Trump’s career has been much of the same kind of scam. He demands applause and annihilates those who refuse to give it. He preens about successes he obtained only by destroying the wealth, careers and reputations of other people. He takes credit for the victories of others and denies any blame for his many failures. In his impulsive pursuit of self-aggrandizement, his victims are legion."
"And now he vows to do to America what he did to them."
4
Proposing that the system is broken, inequitable, unfair, and corrosive, even with this substantial data, is an easy re-statement of what many have said, and delivering this sermon in the NYT is preaching to a choir.
But what are the constructive, equitable, and fair proposals for correcting the situation that don't hinder business, hobble the economy, and reduce U.S. competitiveness?
Write that column Mr. Leonhardt.
But what are the constructive, equitable, and fair proposals for correcting the situation that don't hinder business, hobble the economy, and reduce U.S. competitiveness?
Write that column Mr. Leonhardt.
5
My Facebook feed just had a post from a young cousin complaining about Wal-Mart's sick time policy with a fight-for-15 hashtag. She is, of course, an evangelical who is Republican, and simply does not understand the cognitive dissonance. But as the Republican presidential candidate stated "I love the uneducated."
9
Bill Clinton was President when Trump claimed his 1995 tax loss. Clinton passed massive tax increases but left big business alone.
Hillary was a US Senator. When did she ever propose closing these tax loop holes?
The US, under Obama, has been hemorrhaging money for 8 years. Not even a smidgen of an attempt to close any of these loop holes.
Correlate the S&P 500 with the Clinton Foundation donor list. Coca-Cola and many others have already bought Hillary. It's a smart business investment.
You're deluding yourself and your readers if you expect us to believe any of this will change under a Democrat administration. Hillary will continue the corrupt legacy of her husband and Obama in selling out the American people in order to receive big corporate dollars.
Hillary was a US Senator. When did she ever propose closing these tax loop holes?
The US, under Obama, has been hemorrhaging money for 8 years. Not even a smidgen of an attempt to close any of these loop holes.
Correlate the S&P 500 with the Clinton Foundation donor list. Coca-Cola and many others have already bought Hillary. It's a smart business investment.
You're deluding yourself and your readers if you expect us to believe any of this will change under a Democrat administration. Hillary will continue the corrupt legacy of her husband and Obama in selling out the American people in order to receive big corporate dollars.
16
Seeing as how it's Congress that passes actual laws - the tax code included - maybe you should also hold Republicans responsible for the fact that the US has been "hemorrhaging money for 8 years." They've been in control for the last six of those years.
The House of Representatives controls tax law. The Senate votes after the House proposes and passes tax laws. The President can either sign or veto; the President can propose new tax policies, but the Executive cannot force the House to pass those proposals. You are deluding yourself if you think Trump will do anything to help you or any taxpayers. Clinton will try.
1
I'm sick to death of the business community and their Republican shills crying poormouth about US business taxation when they do everything in their power to avoid paying fair taxes. The US business tax rate may sound high, but when no one ever pays it, it is a ridiculous phantom number, fit only as a basis for political posturing.
Even if we adopted Donald Trump's 15% flat business tax, these companies would still use tax avoidance strategies to avoid paying anything close to their fair share of taxes to support the infrastructure (roads, utilities, finance, even defense) that supports their operations. The idea that lowering the business tax would somehow magically make the corporate world pay even close to what they should is a complete fantasy.
For the corporate community any tax higher than 0% is too much.
The contrast between the brick and mortar businesses and lobby-enriched industries like the oil industry and real-estate should make everyone sit up and take notice. The grocery business, for example, operates on a razor thin margin, and many are close to bankruptcy all the time. Rather than screaming for lower taxes for already pampered businesses, we should be screaming for tax equity--and certainly for legislation that would make Apple and their ilk pay their fair share.
Even if we adopted Donald Trump's 15% flat business tax, these companies would still use tax avoidance strategies to avoid paying anything close to their fair share of taxes to support the infrastructure (roads, utilities, finance, even defense) that supports their operations. The idea that lowering the business tax would somehow magically make the corporate world pay even close to what they should is a complete fantasy.
For the corporate community any tax higher than 0% is too much.
The contrast between the brick and mortar businesses and lobby-enriched industries like the oil industry and real-estate should make everyone sit up and take notice. The grocery business, for example, operates on a razor thin margin, and many are close to bankruptcy all the time. Rather than screaming for lower taxes for already pampered businesses, we should be screaming for tax equity--and certainly for legislation that would make Apple and their ilk pay their fair share.
24
"'m sick to death of the business community and their Republican shills crying poormouth about US business taxation when they do everything in their power to avoid paying fair taxes."
• I'm tired of career politicians from both parties apparently for sale to the highest bidder.
• I'm tired of people who use phrases like "fair share", "income inequality" and "living wage" without ever bothering to quantify any of them.
• I'm tired of every special interest under the sun looking for a handout, carve-out, subsidy or exemption. That goes for businesses as well as individuals.
• The sugar industry does not need protection.
• Farmers don't need subsidies.
• Oil companies don't need incentives provided with taxpayer money, and neither do solar and wind power companies.
• Employees with health care plans should be taxed as if it were income.
• Employers should not be mandated to provided health care in the first place.
The list goes on...
• I'm tired of career politicians from both parties apparently for sale to the highest bidder.
• I'm tired of people who use phrases like "fair share", "income inequality" and "living wage" without ever bothering to quantify any of them.
• I'm tired of every special interest under the sun looking for a handout, carve-out, subsidy or exemption. That goes for businesses as well as individuals.
• The sugar industry does not need protection.
• Farmers don't need subsidies.
• Oil companies don't need incentives provided with taxpayer money, and neither do solar and wind power companies.
• Employees with health care plans should be taxed as if it were income.
• Employers should not be mandated to provided health care in the first place.
The list goes on...
There are some interesting bits here and yes i agree that there are loopholes that many companies exploit. The author does point out that retailers don't have as many opportunities to exploit those loopholes. though in Amazon's defense, they make a significant amount of money on their non-retailer activities (AWS, for example) that lets them take the same benefits of a company like Google as compared to their brick and mortar brethren. They are actually more of a technology company than a retailer. I'm also curious as to whether sales tax collected is part of that numbers (it wasn't until partway through the period evaluated that Amazon started having to remit sales tax in many states regardless of presence). What is shocking (to me at least) is to see Amazon not somewhere between Apple and Target, but actually to the left of both... There clearly is a substantial benefit in the tax code for companies that can shift profits overseas.
2
At this point corporate tax rates are so messed up with loop holes and special rates that the only hope is to start over with a non partisan commission whose purpose should be to set a goal of a universal rate of 25% across the board tax rate. Inversions need to be eliminated, and a benefit for US employees should be enacted as the only tax advantage available to corporate America.
6
Whether Trump wins or Clinton wins - you can be sure that neither of those lying clowns will introduce any meaningful Corporate tax reform. I have a bridge to sell Leonhardt if he really believes someone as beholden to donors, special interests, and corrupt plutocrats as Hillary Clinton is will be able to make effective and fair tax reform.
11
Free enterprise is a myth.
6
There is a very simple solution. Tax ownership and income. Do not tax corporate profits. Tax the individual owners of the corporations through a tax on the yearly value of their capital (shares) and tax the dividends as income. Allow the corporation to make as much money as possible.
One of two things will happen, the value of the company will increase through share price or it will pay high dividends or a combination. If we tax corporate property ownership as we tax land and home property ownership, the wealthiest will pay their appropriate portion of taxes based on the value of their shares and their income from dividends. The corporation will strive not to efficiently avoid taxes but to optimize profits. This will produce the highest share price and dividend and resulting taxes.
We do this on land and home ownership, why not capital ownership? It hasn’t happened because the ownership class would be most heavily burdened. Americans without large capital positions would be least affected. Exceptions could be made for retirement accounts up to a certain reasonable value.
End the distortion of double taxation of corporate profits, dividend, and capital gains. Tax individual’s actual wealth.
Worried about foreign ownership avoidance? Tax the foreign owned shares of U.S. corporations. Tax the dividends prior to being sent overseas. This would actually induce many corporations to locate here because their profits would not be taxed, only the dividends and shareholders.
One of two things will happen, the value of the company will increase through share price or it will pay high dividends or a combination. If we tax corporate property ownership as we tax land and home property ownership, the wealthiest will pay their appropriate portion of taxes based on the value of their shares and their income from dividends. The corporation will strive not to efficiently avoid taxes but to optimize profits. This will produce the highest share price and dividend and resulting taxes.
We do this on land and home ownership, why not capital ownership? It hasn’t happened because the ownership class would be most heavily burdened. Americans without large capital positions would be least affected. Exceptions could be made for retirement accounts up to a certain reasonable value.
End the distortion of double taxation of corporate profits, dividend, and capital gains. Tax individual’s actual wealth.
Worried about foreign ownership avoidance? Tax the foreign owned shares of U.S. corporations. Tax the dividends prior to being sent overseas. This would actually induce many corporations to locate here because their profits would not be taxed, only the dividends and shareholders.
6
A few additional thoughts. Corporate managers have a fiduciary duty not to pay higher taxes than required by law. If they did they would break a fiduciary trust. Also, in the final analysis corporate taxes are all paid by individuals, most often these are individuals who have paid into pension funds or are saving for college or for other good reason. This article seems to assume there is a free lunch somewhere. You have to dig much deeper than this.
2
Citizens United was the decision drafted and forced in the Supreme Court by Scalia. That decision went back to an old typo error published in a Superior Court decision which incorrectly identified a corporation as an "individual". Scalia knew about that error and used it to define a corporation as an individual in Citizens United. That decision allowed corporations to donate in elections as "individuals", unleashing millions of dollars for candidates bought by those corporations. That decision will stand until Congress enacts legislation to repeal it, or a petition is signed by millions of citizens across the country. Neither is likely, unless we get a new Congress elected from Districts which are not gerrymandered. 2020 is the earliest date for a new census and a chance for a new Congress.
You better believe it is a free lunch. Corporations that strip earnings pay next to nothing and the fact that the parent company is in Ireland for example means that all of the dividends paid out are considered "foreign dividends." So those dividends are NOT taxed in the US if the parent withheld taxes from the dividends, call foreign tax credits. The US does NOT tax this twice but instead the domestic taxpayer is allowed a credit to offset foreign withholding which is far lower than our rates for that individual. In short, our country loses the company's taxes as well as all of the dividend recipients.
Mr. Leonhardt and Readers:
For additional historical perspective, consider:
(Please verify the following data points.)
An older website states that "the share that corporate tax revenues comprise of total federal tax revenues ... has collapsed, falling from an average of 28 percent of federal revenues in the 1950s and 21 percent in the 1960s to an average of about 10 percent since the 1980s."
Other more recent examples of the relative importance of this federal revenue source include: In 2015, according to the IRS instructions for form 1040, corporate income taxes were 9% of total federal income of $3.021 trillion; or $272 billion. In 2009, coincident with the Great Recession, corporate income taxes shrank to 4% of total federal income. With the ensuing recovery, in 2010 6% of federal revenues were from corporate income taxes, and in 2013, 8% of federal revenues were traced to corporate income taxes per form 1040. And, this 8% of federal revenues via corporate income tax collections composed about $222 billion of total 2013 federal revenues of $2.775 trillion.
[JJL Tues, Oct 18, 2016 3:54 p.m.]
For additional historical perspective, consider:
(Please verify the following data points.)
An older website states that "the share that corporate tax revenues comprise of total federal tax revenues ... has collapsed, falling from an average of 28 percent of federal revenues in the 1950s and 21 percent in the 1960s to an average of about 10 percent since the 1980s."
Other more recent examples of the relative importance of this federal revenue source include: In 2015, according to the IRS instructions for form 1040, corporate income taxes were 9% of total federal income of $3.021 trillion; or $272 billion. In 2009, coincident with the Great Recession, corporate income taxes shrank to 4% of total federal income. With the ensuing recovery, in 2010 6% of federal revenues were from corporate income taxes, and in 2013, 8% of federal revenues were traced to corporate income taxes per form 1040. And, this 8% of federal revenues via corporate income tax collections composed about $222 billion of total 2013 federal revenues of $2.775 trillion.
[JJL Tues, Oct 18, 2016 3:54 p.m.]
3
An equally relevant set of numbers to disclose would be the fees that businesses pay to lobbying, accounting, legal and consulting firms to keep their tax code preferences flowing. We'd also like to know how many billions of dollars businesses and their executives contribute to politicians committed to preserving and enhancing tax preferences. Much of the political payola results from heavy management pressure on executives and other highly paid employees to contribute their "fair share" to super PACs. Failure to contribute spells doom to any hope of advancement in the corporate power structure.
7
The Internal Revenue Code needs to be completely gutted with something else in its place. Instead of talk by both parties something needs to be done.
5
There often are good reasons to give tax breaks;.e.g. if you want to encourage certain kind of spending or investment it can be a useful tool.
I have a feeling that the vast majority are not done for any reason but to reward someone with an effective lobbyist. That is not a good reason for me.
I have a feeling that the vast majority are not done for any reason but to reward someone with an effective lobbyist. That is not a good reason for me.
10
If all corporations and individuals willingly paid their fair share then taxes could be reduced for everyone. Instead tax breaks and loopholes abound courtesy of lobbyists and special interest.
For me, it comes down to campaign finance reform. If our current quid pro quo system that politicians employ were somehow eliminated, our elected representatives would not be inclined to grant these loopholes and sweetheart tax breaks for large dollar donors. In the end, the constant need to fund raise by elected officials and their servitude to special interest are the real culprits.
Also... corporations that use tax inversions should penalized and boycotted for being un-American.
For me, it comes down to campaign finance reform. If our current quid pro quo system that politicians employ were somehow eliminated, our elected representatives would not be inclined to grant these loopholes and sweetheart tax breaks for large dollar donors. In the end, the constant need to fund raise by elected officials and their servitude to special interest are the real culprits.
Also... corporations that use tax inversions should penalized and boycotted for being un-American.
15
It would be a rare reader of this article or even a commenter that is willing to pay more taxes than required and certainly not seek the lowest price for the goods and services the want a certain quality level. Why should we blame or castigate a corporation that uses tax law to their advantage legally? We elect Representatives and Senators to legislate such tax laws that are presumably ser to give maximum advantage to our economy. If it turns out that the tax laws need adjustment we have a vote to change our representation that has failed us. I do want to warn the voters though that taxes have always been an enigma to solve fairly.
6
We all should pay a fair tax for the privilege of living in a legal system and an economic system that is, with all its faults, one of the best in the world. No one, CEO or inherited billionaire should get to grow fat on the proceeds of the economic system while others sit in parking lots all night to get teeth or glasses if they can. Too many are paying 18% to 30% and living like kings while others are dying from lack of money for medicines or medical treatment. Greed is not an intelligent guide to dividing up the financial rewards of the country. There would seem to be some regard given to need as well as greed.
18
What's wrong with those companies paying 35% ?
4
Why not 99%
Indeed, why not nuke companies' head offices and principal places of business?
Let's bomb corporate America back to the stone age. After all, all those foreign companies that pay much lower taxes (12% in Ireland) would like nothing better than to buy us free lunches.
Indeed, why not nuke companies' head offices and principal places of business?
Let's bomb corporate America back to the stone age. After all, all those foreign companies that pay much lower taxes (12% in Ireland) would like nothing better than to buy us free lunches.
3
The laws are kind of a joke, aren't they. Is that why the rich are laughing all the way to the bank? Now everything makes sense.
10
We could look at interstate highway 95 and say, "Just look at all the cars it owns! It must be rich! Let us tax it."
But the highway is not rich, it is not a person and it does not own the cars. It is merely a conduit for the cars.
In the same way a corporation is not a person, and should not be taxed.
Tax the rich PERSONS by all means, and more than we do now.
But the highway is not rich, it is not a person and it does not own the cars. It is merely a conduit for the cars.
In the same way a corporation is not a person, and should not be taxed.
Tax the rich PERSONS by all means, and more than we do now.
4
Aruna:
Bingo. Corporations aren't wealthy -- they are wealth. They are someone's (their shareholders') wealth.
In the US we tax a company's profits twice -- first by the corporate income tax and then when profits are distributed as dividends. How crazy is that?
Let's abolish the corporate income tax and impute the company's profits to the shareholders (their share of the profits) for tax purposes. That would be far fairer.
Bingo. Corporations aren't wealthy -- they are wealth. They are someone's (their shareholders') wealth.
In the US we tax a company's profits twice -- first by the corporate income tax and then when profits are distributed as dividends. How crazy is that?
Let's abolish the corporate income tax and impute the company's profits to the shareholders (their share of the profits) for tax purposes. That would be far fairer.
4
Ah yes. We definitely need to send more money to the Feds rather than letting the corporations, their employees (who receive salaries) and shareholders (who receive dividends) make spending decisions. Everyone knows the Feds know best how to spend your money.
Mr. Leonhart proposes that economic stagnation is due to the fact that more tax dollars aren't flowing into the Fed coffers is the purest of baloney.
Mr. Leonhart proposes that economic stagnation is due to the fact that more tax dollars aren't flowing into the Fed coffers is the purest of baloney.
6
Ah, Richard, I'm sure you know you are parroting the most used, least logical right wing meme about taxes, don't you? You are saying employees and shareholders know best how to support the armed forces, build and maintain the infrastructure, make and enforce health, safety and environmental rules, guide our nation as leaders of the Free World? Sure they do. Right after they upgrade their smart phones.
11
So Richard, where is all that money for military protection and our rotted infrastructure going to come from? Why should companies not pay their share on earnings just like I do? And this baloney about the company is owned by the shareholders is bull. A corporation is an entirely separate entity in the US and is considered a person in fact.
Don't bet on it, David!
Clinton and her followers including Podesta are favorites of Walmart. It isn't surprising you come out against Amazon, because they are the arch-rival of Walmart.
This situation will NOT improve under Hillary.
I'm angry that Biden went on national TV to claim that Trump's avoidance of taxes had any meaning in this election. It was bogus and disingenuous.
You all know this. This theater is so far gone that few people say anything meaningful anymore.
All I can say is that people should not believe that Hillary is on the good side. I assure everyone, she's not!
Clinton and her followers including Podesta are favorites of Walmart. It isn't surprising you come out against Amazon, because they are the arch-rival of Walmart.
This situation will NOT improve under Hillary.
I'm angry that Biden went on national TV to claim that Trump's avoidance of taxes had any meaning in this election. It was bogus and disingenuous.
You all know this. This theater is so far gone that few people say anything meaningful anymore.
All I can say is that people should not believe that Hillary is on the good side. I assure everyone, she's not!
6
Well, I'm so glad I have your assurance on that. o.O
and democrats want me to pay "my fair share." i pay 55% in total tax.
8
That's because the corporations pay less. If you want paved roads, fire, police depts., an armed forces, social security and medicare, then someone has to make up the difference and that is YOU!
But as you note briefly a corporation is nothing but an aggregation of shareholders, and the shareholders are paying capital gains when they sell stock and are taxed on dividends as well.
2
It's not just big corporations :-) !
Quickly: What does the Donald and Hillary have in common ?
Tax avoidance
" Trump and Clinton share Delaware tax 'loophole' address with 285,000 firms"
"1209 North Orange Street in Wilmington is a nondescript two-storey building yet is home to Apple, American Airlines, Walmart and presidential candidates. "
Leave it to the British to dig it out.
https://www.theguardian.com/business/2016/apr/25/delaware-tax-loophole-1...
Eight days after stepping down as secretary of state in 2013, Hillary Clinton set up ZFS Holdings at CTC’s offices at 1209 North Orange Street in Wilmington , Delaware.
Quickly: What does the Donald and Hillary have in common ?
Tax avoidance
" Trump and Clinton share Delaware tax 'loophole' address with 285,000 firms"
"1209 North Orange Street in Wilmington is a nondescript two-storey building yet is home to Apple, American Airlines, Walmart and presidential candidates. "
Leave it to the British to dig it out.
https://www.theguardian.com/business/2016/apr/25/delaware-tax-loophole-1...
Eight days after stepping down as secretary of state in 2013, Hillary Clinton set up ZFS Holdings at CTC’s offices at 1209 North Orange Street in Wilmington , Delaware.
10
What would happen to the numbers, if we through out the corporate tax code, and mandated a flat 20% on all companies, and no loop holes.
Could we legally do this, or would we have to let existing contracts and deals expire?
The beauty of this idea, is the flat company tax could be adjusted up or down.
Could we legally do this, or would we have to let existing contracts and deals expire?
The beauty of this idea, is the flat company tax could be adjusted up or down.
Why is there an alternative minimum tax for individuals, albeit imperfect because among other things it is not indexed, but not one for corporations?
Also, carried interest is a bad and unfair idea.
Also, carried interest is a bad and unfair idea.
2
If you do business in one country, then you should be subject to that country's tax laws and pay actual taxes in that country. It should not matter one wit where your headquarters may be.
The problem of course is that America's tax code ( as it is written now ) allows this. The figures that are involved are enormous and represent the entire GDP of most nations ( combined )
The loss to Americans in the form of social and infrastructure spending is even more incomprehensible.
The problem of course is that America's tax code ( as it is written now ) allows this. The figures that are involved are enormous and represent the entire GDP of most nations ( combined )
The loss to Americans in the form of social and infrastructure spending is even more incomprehensible.
6
ALL law-abiding companies -- US, Irish, whatever -- pay taxes at 35% less deductions on the profit they make in the US.
The problem is that the US government also wants to tax the profits US companies make in Ireland.
The problem is that the US government also wants to tax the profits US companies make in Ireland.
1
There might be more infrastructure spending if the democrats would drop their demands that it all be done by prevailing wage union workers who then kickback most of their union dues to the democrats. The GOP would be crazy to support more infrastructure spending when it would mean more union kickbacks to the democrats.
1
Companies pay Social Security, unemployment, and workers' compensation taxes. I'm guessing they are not factored into this analysis.
4
Hard to decide whether to say "yawn" or "yikes".
Yawn because this is just one more populist social drumbeat for taking a more for the economy and handing it over the bureaucracy.
Yikes because this is just one more assault on wage earners and taxpayers who are always the ultimate victims of increased government takings.
Bill Clinton famously said he'd gladly pay 2 bucks more for a pizza if it would raise benefits and wages for the pizzeria workers. What he famously elected to ignore is what a 2 buck a pizza price increase would do to sales, and margins.
We are going to learn the hard way how increasing taxes increases prices and decreases wages while growing bureaucracy and the entitlement mentality.
When the job belongs to you and not the company, when you no longer keep your job by virtue of what you contribute but by virtue of entitlement rules, you may find "your job" taking a permanent foreign address.
Yawn because this is just one more populist social drumbeat for taking a more for the economy and handing it over the bureaucracy.
Yikes because this is just one more assault on wage earners and taxpayers who are always the ultimate victims of increased government takings.
Bill Clinton famously said he'd gladly pay 2 bucks more for a pizza if it would raise benefits and wages for the pizzeria workers. What he famously elected to ignore is what a 2 buck a pizza price increase would do to sales, and margins.
We are going to learn the hard way how increasing taxes increases prices and decreases wages while growing bureaucracy and the entitlement mentality.
When the job belongs to you and not the company, when you no longer keep your job by virtue of what you contribute but by virtue of entitlement rules, you may find "your job" taking a permanent foreign address.
2
If Abu Dhabi pays you $1 million per speech, I am sure you can afford to pay $2 more for a pizza!
1
Hi David,
You provided a clear analysis of the situation. Adding additional clarity, these companies have not permanently avoided US federal taxes. They have only deferred their tax bill based on current tax law in place. When they transfer the $$ back from their foreign subsidiaries to the US parent, they pay US federal tax less foreign taxes paid.
The US has a very aggressive corporate tax system in place right now. A key issue centers on will Congress change the cur
You provided a clear analysis of the situation. Adding additional clarity, these companies have not permanently avoided US federal taxes. They have only deferred their tax bill based on current tax law in place. When they transfer the $$ back from their foreign subsidiaries to the US parent, they pay US federal tax less foreign taxes paid.
The US has a very aggressive corporate tax system in place right now. A key issue centers on will Congress change the cur
2
And what do ALL these named companies have in common, hmm? That's right. They funnel graft in the form of "campaign contributions" to the democratic party, the party that has written these tax laws riddled with loopholes when in majority status, and the party that has thrown wrenches into the gears when reform is discussed, while in their minority stautus. When the ostriches elect the clinton crime family once again, the gravy train for the connected and he corrupted will continue on as before, but of course it will be all so mysterious to the left why things haven't changed one iota. Must be the fault of foreign hackers, eh?
5
Time for all corporations to pay their fair share of taxes. Washington State is held in a threat that Boeing, Amazon, Microsoft , etc. will leave if we don't give them tax breaks and whatever else they demand. this is insane that rich corporations who use the roads, airports, and other facilities and resources developed and maintained by government don't pay fairly for them.
7
If those roads, airports, and other facilities and resources developed and maintained by government are worth the tax they have to pay, they will stick around.
The only reason they would consider leaving is that you want to charge them more in taxes than, say, South Carolina does for facilities that are as good.
Don't be greedy.
The only reason they would consider leaving is that you want to charge them more in taxes than, say, South Carolina does for facilities that are as good.
Don't be greedy.
1
One measure of corporate success is return on investment (ROR) and payback period (the time it takes to payback the investment). A simple way to look at ROR is that a project is like a bank and ROR is the interest rate the project will earn. A particular project is judged by its return on investment compared to other competing projects. All these measures are after tax. Thus the lower tax paid the more likely a project will be approved and thus create jobs. Unfortunately, these days and for a variety of reasons: corporations are hoarding cash, using its cash to buy other companies, buy back its own stock to increase its share price, investing overseas creating jobs there. Modifying tax policy to achieve particular results must be accomplished by other measures (like tariffs}. Finally, the projects that carry the highest ROR are buying politicians, a couple hundred thousand dollars can return millions.
2
If it's legal, don't complain or criticize. If you don't like it, change the tax laws. But changing the laws may have consequences in how business and investments are managed - perhaps not good for the establishment economy.
6
Funny how this only comes up because Donald Trump, a businessman, seems to not pay his fair share of taxes simply by following our tax code. If the law makers would stop giving in to businesses and lobbyists and make companies pay their fair share, this country would be so much better off. Did Hillary Clinton warn all the audience members in those corporate speeches she gave that she was going to make sure they paid their fair share? I think not.
11
How would we be better off? Are you implying that there is a correlation between spending and outcome?
Congress wrote the tax code. If we don't want companies to follow the law, why do we have the law?
5
Get real.
The average person cares about as much about the tax code as about Paraguay Division II soccer or the chemistry of boron.
Meanwhile, those special interest who have a stake will fight for their loopholes to their dying breath.
Tax reform.
Not. Going. To. Happen.
The average person cares about as much about the tax code as about Paraguay Division II soccer or the chemistry of boron.
Meanwhile, those special interest who have a stake will fight for their loopholes to their dying breath.
Tax reform.
Not. Going. To. Happen.
8
It's so sad that none of this tax avoidance is surprising.
4
Beach dog:
I am sure you are not as simple as you sound.
The only surprise is your surprise. So long as there are taxes, people will legally arrange their affairs so that they don't have to write a bigger tax check than the law requires.
I am sure you are not as simple as you sound.
The only surprise is your surprise. So long as there are taxes, people will legally arrange their affairs so that they don't have to write a bigger tax check than the law requires.
I would be willing to make the following trade: zero out corporate tax rates, but also amend the constitution to prevent corporations from participating in our electoral politics. No meetings with legislators. No political advertising. Etc.
4
What we need is a Value Added Withholding Tax (VAWT) of, say, 16%.
Companies domiciled abroad pay federal income tax only when and if they bring their profits back home. This is even a better incentive to offshoring production than low labor costs overseas or in Mexico.
With a VAWT Wal-Mart (for example) would withhold 16% tax every time they sell a product item in the US. When they file their income tax return every quarter any excess withheld would be returned to them.
American-based companies would not pay any additional taxes.
American companies based abroad would start paying taxes again, which could be used for infrastructure repair, displaced worker retraining, etc.
Companies domiciled abroad pay federal income tax only when and if they bring their profits back home. This is even a better incentive to offshoring production than low labor costs overseas or in Mexico.
With a VAWT Wal-Mart (for example) would withhold 16% tax every time they sell a product item in the US. When they file their income tax return every quarter any excess withheld would be returned to them.
American-based companies would not pay any additional taxes.
American companies based abroad would start paying taxes again, which could be used for infrastructure repair, displaced worker retraining, etc.
3
Of the S&P 500 companies, 40% of their revenues come from overseas.
In this election, neither major candidate honestly stands for the working American man and woman, no matter what rhetoric is used to gain votes. This newspaper did its very best to silence and undermine the one candidate who promised to focus legislative attention on the corrupt banking system, Wall Street criminal behavior, and completely unjust tax codes. We are now given the privilege to choose between a raving sociopath and the darling of the 1% and Plutocracy. No wonder so many voter are completely disgusted by this election cycle.
3
Thanks to Mr. Leonhardt & NYT's Op/Ed page editor for putting this piece up. This is about the fourth time in as many weeks that someone has brought the issue to this page.
My sense of it is that this issue of tax avoidance is getting more traction everyday. And not just because of the election. I certainly hope it does. It is central to the long term recovery of the economy and our personal prosperity.
I am increasingly coming round to the idea that the whole sticking mess is so complex that we need to dump the whole code and start over. Far fetched in today's political atmosphere but doable if pieces like this and politicians like Sanders and Warren keep getting more and more attention.
And of course the sitting President would have to make it a priority and I'm hopeful that Hillary has already tacitly committed to that course of action once in office.
But like all major changes in American policy it will take all of us to help provide the lift. Would that it will be so.
My sense of it is that this issue of tax avoidance is getting more traction everyday. And not just because of the election. I certainly hope it does. It is central to the long term recovery of the economy and our personal prosperity.
I am increasingly coming round to the idea that the whole sticking mess is so complex that we need to dump the whole code and start over. Far fetched in today's political atmosphere but doable if pieces like this and politicians like Sanders and Warren keep getting more and more attention.
And of course the sitting President would have to make it a priority and I'm hopeful that Hillary has already tacitly committed to that course of action once in office.
But like all major changes in American policy it will take all of us to help provide the lift. Would that it will be so.
Federal corporate tax should be levied on a gross revenue basis. Any product or service sold in the US, by a domestic or international company, should incur a 3% tax, regardless of profitability. There should be no deductions, loopholes or credits. It should be filed and paid quarterly, no exceptions.
If you combine this low tax rate with the fact that cities and states compete to attract companies by offering all sorts of incentives, from cheap real estate, cheap rentals, to subsidized roads and infrastructure around their sites you realize that citizens are burdened with a lot more than meets the eye.
Many of these companies pay little taxes here because only the tip of the iceberg is nationalized in the USA. Apple for instance barely pays any taxes worldwide because they are or pretend to be in Ireland. They have $280 billion parked in banks probably in Chinese banks. Now think what those Chinese banks are doing with all that cash...maybe they are lending it to Chinese companies to buy real estate in New York, San Francisco, Vancouver, etc. Once more making life harder for middle class people who can't compete with all those investors.
Many of these companies pay little taxes here because only the tip of the iceberg is nationalized in the USA. Apple for instance barely pays any taxes worldwide because they are or pretend to be in Ireland. They have $280 billion parked in banks probably in Chinese banks. Now think what those Chinese banks are doing with all that cash...maybe they are lending it to Chinese companies to buy real estate in New York, San Francisco, Vancouver, etc. Once more making life harder for middle class people who can't compete with all those investors.
3
What everyone here is proposing is an ethical solution to what; in all honesty, should be looked at in terms of morality. You can or may be able to create what appears to be an equitable solution through legislation; however, it will always be a loosely bound abstraction and subject to manipulations. The past has shown us that the abstractions that arise through financial finagling are subject to catastrophic events. Remember 2008. The need to go simpler is obvious. We are all in this together and none get off the planet alive.
1
One other point to consider, who really benefits the most from our over the top defense spending? I don't think we are in imminent danger of serious aggression from foreign powers. Our defense spending goes primarily to protect the interests of multinational corporations by maintaining a certain worldwide stability and status quo. These same corporations that are paying absurdly low real tax rates are being subsidized by wage earners whose taxes go to support the military-industrial complex.
2
Companies are not persons which is why Citizens United was wrong.
But for the same reason, to say that some company is rich and tax it more is also wrong.
After all, the State of New York has plenty of revenue. Why should the state not have to pay federal taxes?
Because, apart from legalities, New York state is only a conduit which takes money from taxpayers and provides services to citizens. If the feds tax it, then it will have to provide fewer services to New Yorkers.
In the same way, it could be that an elderly widow owns some IBM stocks from which she supplements her social security income. If you tax IBM, the widow will have less money to supplement her income.
But what about the rich people who own IBM stocks? Sure, tax THEM, and remove the distinction between capital gains and ordinary income.
Rich persons should pay more, but corporations are not persons.
But for the same reason, to say that some company is rich and tax it more is also wrong.
After all, the State of New York has plenty of revenue. Why should the state not have to pay federal taxes?
Because, apart from legalities, New York state is only a conduit which takes money from taxpayers and provides services to citizens. If the feds tax it, then it will have to provide fewer services to New Yorkers.
In the same way, it could be that an elderly widow owns some IBM stocks from which she supplements her social security income. If you tax IBM, the widow will have less money to supplement her income.
But what about the rich people who own IBM stocks? Sure, tax THEM, and remove the distinction between capital gains and ordinary income.
Rich persons should pay more, but corporations are not persons.
3
Leonhardt's economic naivete is stunning. Tax breaks are part of federal fiscal policy; our lawmakers have enshrined incentives into the tax system as a conscious choice. Some of these incentives are wildly popular (mortgage interest deductions, charitable deductions), others less so (oil depletion allowances, accelerated depreciation) but all were enacted to satisfy public needs.
You can make a case for dismantling some of these incentives --that is part of the legislative process -- but you can't make a case against entities that take advantage of them. They are doing exactly what the legislature intended.
It seems that Leonhardt was going after low-hanging fruit. Instead he seems to have shot himself in the foot.
You can make a case for dismantling some of these incentives --that is part of the legislative process -- but you can't make a case against entities that take advantage of them. They are doing exactly what the legislature intended.
It seems that Leonhardt was going after low-hanging fruit. Instead he seems to have shot himself in the foot.
3
There is another part of the tax story that largely goes unreported because it is somewhat complicated to explain:
Most large corporations take high deductions and pay as little in taxes as they can get away with during their regular annual filing. IRS reviews the taxes in audit cycles that can lag many years after filing.
The audits mostly result in IRS claiming several millions in back taxes. Of course, the corporation will argue and challenge the assessment of IRS auditors. Often, the matter may end up in court.
The end game, more often than not, results in high level settlement between IRS and the corporation big-wigs. If the corporation is large and powerful, the interest on back taxes may be forgiven. The actual tax they end up paying can be a fraction of what IRS claimed in the first place.
Bottom line: Larger the corporation with multi-national presence implies more complex tax laws. More complex tax laws imply many loop holes. Many loop holes imply much less taxes. Larger corporation also implies higher leverage in upper echelons of the government. Higher leverage implies huge amount saved in settlement and much less taxes actually paid to the government.
Unfortunate but true.
Most large corporations take high deductions and pay as little in taxes as they can get away with during their regular annual filing. IRS reviews the taxes in audit cycles that can lag many years after filing.
The audits mostly result in IRS claiming several millions in back taxes. Of course, the corporation will argue and challenge the assessment of IRS auditors. Often, the matter may end up in court.
The end game, more often than not, results in high level settlement between IRS and the corporation big-wigs. If the corporation is large and powerful, the interest on back taxes may be forgiven. The actual tax they end up paying can be a fraction of what IRS claimed in the first place.
Bottom line: Larger the corporation with multi-national presence implies more complex tax laws. More complex tax laws imply many loop holes. Many loop holes imply much less taxes. Larger corporation also implies higher leverage in upper echelons of the government. Higher leverage implies huge amount saved in settlement and much less taxes actually paid to the government.
Unfortunate but true.
1
"Don’t be fooled."
Fooled into thinking that either of our "political parties" are prepared to do something about corporate tax dodging, that is.
Both "parties" have acted to shift an unfair share of the tax burden to working people. Real political parties would have defended the working class and maintained the equitable balance between the haves and have-nots that existed in the 1950s.
These millionaires clubs that pass for political parties in the US will never bite the hand that feeds them - they'll just keep licking the hand, instead.
Even if the Dems are serious about this, why should the increased revenue from corporate sources be earmarked for infrastructure only? What about the social programs that both parties have been defunding?
Fooled into thinking that either of our "political parties" are prepared to do something about corporate tax dodging, that is.
Both "parties" have acted to shift an unfair share of the tax burden to working people. Real political parties would have defended the working class and maintained the equitable balance between the haves and have-nots that existed in the 1950s.
These millionaires clubs that pass for political parties in the US will never bite the hand that feeds them - they'll just keep licking the hand, instead.
Even if the Dems are serious about this, why should the increased revenue from corporate sources be earmarked for infrastructure only? What about the social programs that both parties have been defunding?
4
fc123 NYC:
What is often lost in this focus is that there are many companies and individuals who DO pay at the full marginal tax rates -- which everyone agrees are absurdly high. if P&G pay $0, someone else is paying 35 corp rate. If Trump pays $0, someone else is paying the 43.9% Fed income tax rate.
===========================
The 43.9% is incorrect - 39.6 + 3.8 = 43.4; however, you will rarely see that tax rate apply. Dividends and capital gain are going to be no more than a top rate of 23.8% (think: Buffet and Romney). There is no such thing as taxable interest in this country any more which would be taxed at ordinary rates and could be as high as 43.4% (notice I said could be). Most taxpayers in that high of a bracket would have tax-exempt interest rather than taxable.
Generally, two other income categories come to mind as potentially hitting the 43.9% ceiling - royalties and rental real estate. First, royalties are offset with 15% deducted right off the top even though a taxpayer would receive the full amount of royalty in cash (notwithstanding investments expenses and various severance tax). Rental income would be decreased by depreciation (a favorable "phantom" deduction) even though the property is leveraged and a taxpayer has virtually nothing at-risk because it was purchased with non-recourse debt. This is the Trump variety of taxes paid.
That pretty much leaves the working folks and their earned income would not be taxed higher than 39.6%.
What is often lost in this focus is that there are many companies and individuals who DO pay at the full marginal tax rates -- which everyone agrees are absurdly high. if P&G pay $0, someone else is paying 35 corp rate. If Trump pays $0, someone else is paying the 43.9% Fed income tax rate.
===========================
The 43.9% is incorrect - 39.6 + 3.8 = 43.4; however, you will rarely see that tax rate apply. Dividends and capital gain are going to be no more than a top rate of 23.8% (think: Buffet and Romney). There is no such thing as taxable interest in this country any more which would be taxed at ordinary rates and could be as high as 43.4% (notice I said could be). Most taxpayers in that high of a bracket would have tax-exempt interest rather than taxable.
Generally, two other income categories come to mind as potentially hitting the 43.9% ceiling - royalties and rental real estate. First, royalties are offset with 15% deducted right off the top even though a taxpayer would receive the full amount of royalty in cash (notwithstanding investments expenses and various severance tax). Rental income would be decreased by depreciation (a favorable "phantom" deduction) even though the property is leveraged and a taxpayer has virtually nothing at-risk because it was purchased with non-recourse debt. This is the Trump variety of taxes paid.
That pretty much leaves the working folks and their earned income would not be taxed higher than 39.6%.
1
First, corporate taxes are paid by the consumer in the form of higher prices, employees in the form of lower wages,and shareholders -- derided as "well off" by the author, but including huge holdings by pension funds, etc. The solution to corporate tax avoidance is to eliminate corporate taxes. (I will bet a six pack that PG & E gets huge "green energy" credits.) Instantly, all the Rube Goldberg schemes, dubious governmental attempts at economic manipulation and social engineering, become moot. Large numbers of lawyers and accountants need to find honest work. And the economy booms as businesses concentrate on business rather than trying to game the system.
The problem with Wyden and the Dems is that when they use the Leftspeak word "reform", it doesn't mean what it does in English. To him, it means "increase", as in "tax increase". The easiest reform is an Exacto knife: simply remove all the pages dealing with corporate income.
Government spending NEVER "creates jobs"; never has, never will. And the Dems have been staunchly opposing "infrastructure" projects, like the various pipelines, which actually would. Borrowing and spending less would be a huge boon to the economy, as Bill Clinton demonstrated in the late 1990s.
Time to return to Bill Bradley's personal tax rates and Bill Clinton's spending levels. Couple that with repeal of corporate and death taxes, and watch the economy hum.
The problem with Wyden and the Dems is that when they use the Leftspeak word "reform", it doesn't mean what it does in English. To him, it means "increase", as in "tax increase". The easiest reform is an Exacto knife: simply remove all the pages dealing with corporate income.
Government spending NEVER "creates jobs"; never has, never will. And the Dems have been staunchly opposing "infrastructure" projects, like the various pipelines, which actually would. Borrowing and spending less would be a huge boon to the economy, as Bill Clinton demonstrated in the late 1990s.
Time to return to Bill Bradley's personal tax rates and Bill Clinton's spending levels. Couple that with repeal of corporate and death taxes, and watch the economy hum.
2
Government spending certainly created jobs during the Great Depression, and got the economy back on track as a result. Fast-forward to 2016, with the relative low tax rates on the highest-income brackets and several rounds of tax cuts that have benefited them over the past 15 years, we now have the largest wealth and income gap nearly in all of American history. I can't imagine how big the gap would become if we completely eliminated all corporate taxes.
I doubt that tax breaks in the name of creating jobs can rarely, if every, recoup the state's investment. I have yet to hear of one example where someone concretely proved that the offset of a company's taxes was matched or exceeded by the combined taxable revenue/reduction of unemployment benefits from the newly employed men and women.
1
Why not tax businesses based on sales and/or transactions deemed to be sales, instead of income? Sort of a national sales tax paid by the sellers. Then we could come up with some type of (not easily manipulated) tax credit for domestic employment, creating an incentive for companies to create new jobs or bring jobs back to the US.
2
Yes, yes, yes, Mr. Leonhardt! Thank you so much for the clear chart and explanation.
Every American should look at the chart and ignore the endless drumbeat of "don't tax the job creators," which comes from Amazon, Facebook, Google et al. The situation is totally unfair to other business, not just taxpaying citizens.
If those new companies create lots of jobs, great! Their newly-hired employees still need schools, roads, health care, a strong military, clean environment, and other public goods and services---just like the employees of long-established companies.
It's high time for the American public to push for tax fairness. Even if some folks are opposed to government spending, they've got to realize that tax fairness is in the interest of capitalism: the owners/laborers in one industry should not be subsidizing another. That's the government picking winners and losers!
Every American should look at the chart and ignore the endless drumbeat of "don't tax the job creators," which comes from Amazon, Facebook, Google et al. The situation is totally unfair to other business, not just taxpaying citizens.
If those new companies create lots of jobs, great! Their newly-hired employees still need schools, roads, health care, a strong military, clean environment, and other public goods and services---just like the employees of long-established companies.
It's high time for the American public to push for tax fairness. Even if some folks are opposed to government spending, they've got to realize that tax fairness is in the interest of capitalism: the owners/laborers in one industry should not be subsidizing another. That's the government picking winners and losers!
3
An article as incoherent as the tax code. There are two completely independent issues. One is the structure of the code which is assinine with a high rate and loopholes. The second is the amount raised.
So the block is that Democrat's won't support reforming the structure unless they can squeeze a tax increase out of it. Republican's won't support a tax increase.
I also love the author's claim that we need higher taxes to pay more for clean energy. But criticizes PG&E's negative tax rate which is attributable to clean energy tax credits. Nice cognitive dissonance.
So the block is that Democrat's won't support reforming the structure unless they can squeeze a tax increase out of it. Republican's won't support a tax increase.
I also love the author's claim that we need higher taxes to pay more for clean energy. But criticizes PG&E's negative tax rate which is attributable to clean energy tax credits. Nice cognitive dissonance.
6
I love it!
Corporation simply follow the tax rules Congress wrote - a Congress perpetually in search of campaign contributions.
2
Why don't we just call them what they are: bribes.
If a new President Clinton within her first 100 days in office doesn't introduce legislation to change the current disgraceful tax system, which is shamefully tilted toward the wealthy and the large corporations, the voting public will know instantly that they've been had (again).
9
did you not read any of her WikiLeaks released speeches? considering what she said why do you think she would even consider it? This is especially the case considering that her husband, in terms of economic policy, was further to the right than Republicans of old (I.e, Eisenhower)? Or reversal of Glassman-Steagal act (something that Democrats had favored almost unanimously since it was passed after the depression)?
2
What do you mean "if"?
1
The author fails to mention how Boeing "sells" each plane overseas the moment it flies past 250 miles off the US mainland in order to avoid paying taxes. Now combine that with Ex-Import Bank Financing and you can see why many of our trade partners feel the playing field is uneven. Or how individuals are taxed on income worldwide regardless of whether the income returns to the US. How many billions does the Oil & Gas Industry get in tax subsidies?
2
I find this analysis to be misleading. These are all global businesses. Should they pay US tax on non-US earnings? Why is the US tax system "broken" if it does not tax foreign earnings? There is plenty of information in the financial statements to reveal how much US taxes are paid on US income yet the author has either chosen to ignore it or is ignorant on the facts. The current provision for US federal and state are reported in tax footnotes for all these companies as well as the amount of pretax income generated within the US. The current provision is essentially the amount of taxes to be reported on the tax returns plus the tax that will ultimately be paid upon settlement of audits. I pulled the last three years data for Amazon, Alphabet, Apple and Facebook and the results reveal just how misleading this article actually is. Three year average domestic tax rates for Amazon = 27.5%, Alphabet = 33.17%, Apple = 51.77%, Facebook = 59.97%.
I agree that the corporate tax system is in need of reform and modernization but the data don't point to a "broken system." Let's not throw gasoline on the fire with misleading data but rather take an informed approach to policymaking.
I agree that the corporate tax system is in need of reform and modernization but the data don't point to a "broken system." Let's not throw gasoline on the fire with misleading data but rather take an informed approach to policymaking.
3
Contrary to popular belief, corporate taxes are not taxes just on the wealthy. Large corporations generally have large profits. Coca Cola had $3 billion in profits in a recent quarter. If all those profits were in the US -- which they are not -- a 35% corporate tax would produce $1 billion in tax revenues. The tax expense would likely be allocated by Coke across the balance sheet. They would cut profits and fat cat salaries, but they would also cut jobs, worker benefits and production. So the effects of the tax would be to shrink corporate operations. This effect is a mixed bag -- both fat cats and ordinary people are harmed, and there is no telling in what proportion.
Denmark has low corporate taxes, a flourishing economy because of all the businesses there, high individual taxes on the wealthy, and a social welfare network that gives them one of the lowest wealth gaps in the world. What that tells us is that taxing the wealthy rather than corporations is the best route to income equality out there.
Denmark has low corporate taxes, a flourishing economy because of all the businesses there, high individual taxes on the wealthy, and a social welfare network that gives them one of the lowest wealth gaps in the world. What that tells us is that taxing the wealthy rather than corporations is the best route to income equality out there.
1
the problem is that the wealthy have many of the same tax attorneys that these corporations do. Ask Trump and Romney.
Huge amounts of Big Company money is being dumped into Oregon's race to defeat a rise on corporate taxes here. Ironic that the right, who complains about "personal responsibility" thinks that companies should have no responsibilities to the society that enables their existence.
1
Let's not forget that Goldman Sachs, JPM Chase, and ALL the Wall Street banks do NOT pay taxes. And their CEOs do NOT pay taxes on their multi-million dollar salaries and bonuses. Lloyd Blankfein, Jamie Dimon, George Soros, and all the others, pay NO TAXES. But they will ALWAYS NEVER PAY TAXES because they contribute heavily to the campaigns of the Democrats who created the tax laws that enable the avoidance of taxes.
7
It's good to know that Republicans would never do such things.
4
so the Republicans have had no role in the creation of those same tax laws. If anything , they have supported and sponsored them much more than democrats.
2
Yoda, not true about the Republicans. Yes, they had something to do with creating those tax laws, but the ideas behind those laws were created by Democrats, who wholeheartedly support and encourage them.
1
What has always amazed me is the average "taxation is confiscation" type who will completely defend these abuses, either unaware or unconcerned that their own taxes (and those of their peers) are required to make up the shortages.
Moreover, each and every one of these companies have relied (and will continue to rely) on publicly financed roads, water, airports, sewer, defense of shipping lanes, judicial system, etc. to stay in business.
While President Obama may have been spoken "off the cuff" when he used the term, "you didn't build it" many years ago when referring to private business development, he was spot on that various levels of government have paved the way and laid the groundwork for these corps to grow and thrive.
Moreover, each and every one of these companies have relied (and will continue to rely) on publicly financed roads, water, airports, sewer, defense of shipping lanes, judicial system, etc. to stay in business.
While President Obama may have been spoken "off the cuff" when he used the term, "you didn't build it" many years ago when referring to private business development, he was spot on that various levels of government have paved the way and laid the groundwork for these corps to grow and thrive.
6
Why is this a surprise? The tax code is approximately 72,000 pages of special interest tax breaks.
3
Just get rid of the tax on profits and be done with it. It's too easy, apparently, to get around if you can afford an army of corporate lawyers and tax professionals and because CEOs, lobbyists and business groups will always write the tax code in their favor either directly, or by financing the election campaigns of our Congressmembers. There are many ways to replace the revenue from the corporate tax and the aim should be to reduce the growing income and wealth inequality between Main Street and Wall Street.
1
The key to making this all happen is to vote Democratic DOWN-BALLOT. A Democratic Prsident with the same old Republican Cogress will just be at least 4 more years of the same old gridlock.
2
but with a de facto REpublican like Clinton we will have a Republican congress and executive at the same time.
3
When the alternative is doing something counterproductive, I'll take gridlock.
3
For the record, the ability to use capital losses as an offset against future capital gains taxes is available to any American. Millions of Americans learned this when the dotcom stock market bubble burst. We are not "shirkers". Of course any rational person would rather have $900 million in the bank today versus having a $900 million tax credit to be used to offset future tax liabilities. I have not heard one media outlet contest the legitimacy of the actual loss that Trump's business took. A big risk resulted in a big loss which became a big tax credit. Also, lumping Trump's tax "strategy" in with those of large multinational corporations is like comparing apples and pumpkins. Honestly this writer demonstrated throughout the article that he is out of his league when trying to discuss business or taxes. Stick to random mud slinging like Blow and Bruni.
6
Time is money. Since corporations are simply pieces of paper which shield stockholders from liability, they have no time. They must rent time from people.
Strictly speaking from basic economics then corporations should not pay any taxes. But this would put most lobbyists out of business, it won't happen. But the concept would bring a whole lot of companies home to roost.
Strictly speaking from basic economics then corporations should not pay any taxes. But this would put most lobbyists out of business, it won't happen. But the concept would bring a whole lot of companies home to roost.
2
More reason to dislike Facebook. I'd be interested to see exactly how it is that they manage to get away with paying only 3.8% in taxes. That's absurdly low.
3
We collect such a small percentage of our federal tax revenue from corporate taxes we should eliminate them all together. The corporations waste tremendous amounts of time trying to evade and avoid paying taxes. They also corrupt our political process with their campaign donations trying to buy favor. We would be much further ahead to let all business profits flow through tax free to owners and employees who would then pay taxes on those same monies at their own individual tax rates.
1
or we can simplify corporate taxes and just have a value added tax. It would reduce administrative overhead and increase collections. It will be regressive though.
William Jefferson Clinton, addressing this issue, said on Sunday a.m. news a few weeks ago that taxes needed to be reduced to be competitive with other countries.
4
Wrong! Companies will never be happy until they pay no tax at all and if Clintons scheme seems the answer, who then picks up the difference? One guess!
Here is another aspect of corporate taxes that receives little mention: The impact on consumers and, in particular, the disproportionate impact on low and middle class consumers.
The price consumers pay for everything they buy is intended by the sellers to cover all their expenses--including taxes--and still return a desirable profit. This profit is often advertised in quarterly and annual earnings press releases as a percent of sales, so "desirable" means a desirable percent of sales is the target.
When costs go up because some tax loophole is eliminated or expires, the profit goes up, too, even if the percent of sales does not go up, and consumers pay both the tax increase and the profit increase.
This tax increase, then, is both regressive because it falls more harshly on low and middle income consumers, and higher than it would have been had it been imposed directly on the consumers because it includes that profit increment.
The only way to eliminate this profit increment is to impose taxes directly on consumers, eg, by sales taxes, payroll taxes, personal income taxes; not indirectly, eg, by excise taxes, corporate income taxes, business fees.
But notice that consumers still pay regressive taxes, such as sales taxes, even without the profit increment. On balance, I think it's worth taxing corporations despite the way they pass the tax cost plus profit increment along to consumers.
The price consumers pay for everything they buy is intended by the sellers to cover all their expenses--including taxes--and still return a desirable profit. This profit is often advertised in quarterly and annual earnings press releases as a percent of sales, so "desirable" means a desirable percent of sales is the target.
When costs go up because some tax loophole is eliminated or expires, the profit goes up, too, even if the percent of sales does not go up, and consumers pay both the tax increase and the profit increase.
This tax increase, then, is both regressive because it falls more harshly on low and middle income consumers, and higher than it would have been had it been imposed directly on the consumers because it includes that profit increment.
The only way to eliminate this profit increment is to impose taxes directly on consumers, eg, by sales taxes, payroll taxes, personal income taxes; not indirectly, eg, by excise taxes, corporate income taxes, business fees.
But notice that consumers still pay regressive taxes, such as sales taxes, even without the profit increment. On balance, I think it's worth taxing corporations despite the way they pass the tax cost plus profit increment along to consumers.
1
With the proliferarion tax "resolution" companies going around, it certainly does seem that the IRS goes to considerable lengths to extract every nickel from ordinary tax payers. So how is it possible that the big ticket earners seem to get a free pass from this onerous enforcement strategy? Seems both pound and penny foolish.
Could be those tax-loss carry-forwards Trump used.
Before complaining, maybe a little more "meat on this bone" to explain why the differences.
How much do Foundations like the Clinton Foundation pay in taxes?
Before complaining, maybe a little more "meat on this bone" to explain why the differences.
How much do Foundations like the Clinton Foundation pay in taxes?
1
While there isn't enough space in the comments section to explain why, part of the discussion shouldn't just be about modifying the corporate tax code but also whether there should be any corporate tax code as well. The distortions that it creates are huge just like the examples given in the article. And by getting rid of it, the government doesn't necessarily lose the revenue it currently gets.
1
The chart should have shown US Federal Taxes alone, the picture would be a whole lot stark, way too many corps pay nothing at all or get refunds. If you want to make a point, then make it correctly.
2
This makes the Pepsi vs. come debate a bit easier.
"How does Amazon get away with this?"
Tone deaf staple response : "Well, its up to me as a company manager to minimize costs as much as possible. Do I need an ethical code or do I have to feel empathy towards the average citizen that does not have the same advantages? No, as I am pedagogically bound to maximize shareholder value, and that is all I and my similarly minded investors require."
Tone deaf staple response : "Well, its up to me as a company manager to minimize costs as much as possible. Do I need an ethical code or do I have to feel empathy towards the average citizen that does not have the same advantages? No, as I am pedagogically bound to maximize shareholder value, and that is all I and my similarly minded investors require."
How about the real facts of U. S. Corporate tax evasion:
Key Facts
The corporate share of federal tax revenue has dropped by two-thirds in 60 years — from 32% in 1952 to 10% in 2013.
General Electric, Boeing, Verizon and 23 other profitable Fortune 500 firms paid NO "0" federal income taxes from 2008 to 2012.
288 big and profitable Fortune 500 corporations paid an average effective federal tax rate of just 19.4% from 2008 to 2012.
Profitable corporations paid U.S. income taxes amounting to just 12.6% of worldwide income in 2010.
U.S. corporations dodge $90 billion a year in income taxes by shifting profits to subsidiaries — often no more than post office boxes — in tax havens.
U.S. corporations officially hold $2.1 trillion in profits offshore — much of it in tax havens — that have not yet been taxed here.
Americans for Tax Fairness http://tiny.cc/yns3fy
—————————-
Key Facts
The corporate share of federal tax revenue has dropped by two-thirds in 60 years — from 32% in 1952 to 10% in 2013.
General Electric, Boeing, Verizon and 23 other profitable Fortune 500 firms paid NO "0" federal income taxes from 2008 to 2012.
288 big and profitable Fortune 500 corporations paid an average effective federal tax rate of just 19.4% from 2008 to 2012.
Profitable corporations paid U.S. income taxes amounting to just 12.6% of worldwide income in 2010.
U.S. corporations dodge $90 billion a year in income taxes by shifting profits to subsidiaries — often no more than post office boxes — in tax havens.
U.S. corporations officially hold $2.1 trillion in profits offshore — much of it in tax havens — that have not yet been taxed here.
Americans for Tax Fairness http://tiny.cc/yns3fy
—————————-
"Fixing it should be an early priority for the president. If Hillary wins, it may well be," That's funny. Hillary the queen of fracking and neoliberalism is not likely to do something that helps the people. Her life is all about war and money not people and improved lives of the people. I figure the Times would not print your column if you didin't include a boost for Hillary. She will win. It's a given as she thought from day one. I don't know what is fixed and what is not but didn't you real the leaked emails form wikileaks. She is not pro people but pro business all the way especially if she wants to make the billionaire class by the time she is out of office. Of course businesses need good roads too but now the corporations don't give a hoot about THE PEOPLE because everything is global or neoliberal. So unless we find a way to get rid of neoliberalism we are stuck standing still. The only reason we keep that evil ideology is because it is so good and generous for the rich, Obama, the Clintons etc.
2
Ronald Reagan "fixed" the tax system. He had to fix his fix within months, but he left a simpler code. Congress immediately set about taking donations to unfix the Reagan fixes. A generation later, we're back where we started.
As with everything else, the problem is money in politics. If Hillary can fix that, she'll be among the greatest of presidents.
As with everything else, the problem is money in politics. If Hillary can fix that, she'll be among the greatest of presidents.
Is it correct that having lots of employees in the US creates taxes that can't be avoided? If so then this crazy system also suppresses employment. Unraveling the non-employee tax breaks would make investment in new employees more attractive, yes?
1
The bottom line is: what has been, DOES NOT WORK for the average, hard-working American, or for our failing infrastructure.
1
Here's the predictable outcome, after the lobbyists are successful in inserting their various "midnight clauses" in Senator Wyden's bill:
1. Based on the premise that the tax rate will be lowered -- say, from 35% to 25% or even 20%, if the Republicans get their way -- there will be an agreement to close the more egregious loopholes, and the CBO will declare the legislation, as drafted and approved by the Finance Committee, revenue "neutral" (if the GOP gets its way, or somewhat revenue positive if the Dems prevail.
2. The bill will then go to a GOP controlled House which will put in a few of the Chamber of Commerce and other business lobbying group sponsored "amendments," i.e., retail or industry specific new loopholes.
3. Then the bill will go to the joint Sen-House, behind closed doors - except for lobbyists - conference committee.
4. Further revenue dilution - for the sake of "compromise" will be stuck in at that point.
5. Then the midnight shift will check in just before the final votes to make sure there are enough last minute "amendments" in the "reform" legislation to make sure that things are no worse than they were before for corporations, but with the statutory rate now having been cut back to 20% - 25%.
The approval votes in both houses will take place, Hillary will sign and hand out pens, and the Barons of Wall Street, Main Street, and Silicon Valley will all go out and celebrate by buying a new plane or a yacht with their bonuses.
And the beat goes on.
1. Based on the premise that the tax rate will be lowered -- say, from 35% to 25% or even 20%, if the Republicans get their way -- there will be an agreement to close the more egregious loopholes, and the CBO will declare the legislation, as drafted and approved by the Finance Committee, revenue "neutral" (if the GOP gets its way, or somewhat revenue positive if the Dems prevail.
2. The bill will then go to a GOP controlled House which will put in a few of the Chamber of Commerce and other business lobbying group sponsored "amendments," i.e., retail or industry specific new loopholes.
3. Then the bill will go to the joint Sen-House, behind closed doors - except for lobbyists - conference committee.
4. Further revenue dilution - for the sake of "compromise" will be stuck in at that point.
5. Then the midnight shift will check in just before the final votes to make sure there are enough last minute "amendments" in the "reform" legislation to make sure that things are no worse than they were before for corporations, but with the statutory rate now having been cut back to 20% - 25%.
The approval votes in both houses will take place, Hillary will sign and hand out pens, and the Barons of Wall Street, Main Street, and Silicon Valley will all go out and celebrate by buying a new plane or a yacht with their bonuses.
And the beat goes on.
5
Most egregious,” Forbes notes, is General Electric, which “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.” Big Oil giant Exxon Mobil, which last year reported a record $45.2 billion profit, paid the most taxes of any corporation, but none of it went to the IRS:
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.
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.
1
The report looks at the profits and U.S. federal income taxes of the 288 Fortune 500 companies that have been consistently profitable in each of the five years between 2008 and 2012, excluding companies that experienced even one unprofitable year during this period. Most of these companies were included in our November 2011 report, Corporate Taxpayers and Corporate Tax Dodgers, which looked at the years 2008 through 2010. Our new report is broader, in that it includes companies, such as Facebook, that have entered the Fortune 500 since 2011, and narrower, in that it excludes some companies that were profitable during 2008 to 2010 but lost money in 2011 or 2012.
Some Key Findings:
• As a group, the 288 corporations examined paid an effective federal income tax rate of just 19.4 percent over the five-year period — far less than the statutory 35 percent tax rate.
• Twenty-six of the corporations, including Boeing, General Electric, Priceline.com and Verizon, paid no federal income tax at all over the five year period. A third of the corporations (93) paid an effective tax rate of less than ten percent over that period.
• One hundred and eleven of the 288 companies (39 percent of them) paid zero or less in federal income taxes in at least one year from 2008 to 2012.
• Five companies — Wells Fargo, AT&T, IBM, General Electric, and Verizon — enjoyed over $77 billion in tax breaks during this five-year period.
1
: Between 2008 and 2010, a dozen major US corporations—including General Electric, ExxonMobil, and Verizon—paid a negative tax rate, despite collectively recording $171 billion in pretax US profits, according to an analysis by Citizens for Tax Justice. Taken together, these companies' tax burden was -$2.5 billion, and ten of the companies recorded at least one no-tax year between 2008 and 2010.
Here's more from CTJ:
Not a single one of the companies paid anything close to the 35 percent statutory tax rate. In fact, the "highest tax" company on our list, Exxon Mobil, paid an effective three-year tax rate of only 14.2 percent. That’s 60 percent below the 35 percent rate that companies are supposed to pay. And over the past two years, Exxon Mobil’s net tax on its $9.9 billion in U.S. pretax profits was a minuscule $39 million, an effective tax rate of only 0.4 percent.
Had these 12 companies paid the full 35 percent corporate tax, their federal income taxes over the three years would have totaled $59.9 billion. Instead, they enjoyed so many tax subsidies that they paid $62.4 billion less than that.
Main Streeters need to stop complaining and welcome this opportunity to better serve Wall Street by paying large portions of their taxes. It's an appropriate reward for their sending jobs overseas, hiring illegals - thereby cutting those obscene wages paid Main Street American workers, replacing even more lazy Americans with robots, fracking and causing earthquakes, polluting, rapidly raising prices on pharmaceuticals, and controlling the political process so Americans no longer need worry about it!
3
There is no mention of the fact that all of these companies are American companies whose largest competitors are often foreign multinationals that compete in the United States and pay NO tax. For example, GE's largest competitor is Siemens, a German company. Germany has low corporate tax rates compared to the U.S., and since Siemens is incorporated in Germany, they are not subjected to the U.S. Corporate tax rates the way American companies are, yet they get to sell their products in the U.S. just the same. So, how do multinational American companies compete against foreign multinationals who have hugely lower tax rates and can under cut their American competition on price, and still have complete access to the American market?
3
David Leonhardt offers good analysis with minimal spin.
Tax reform can be the high octane fuel that drives the economy and upward mobility. If we replace the job killing payroll taxes with a 4% VAT (the lowest in the world) and an 8% C corporation tax it accomplishes the following:
• U.S. jobs become somewhat more attractive than outsourcing.
• Global U.S. companies pay a modest 8% on profits and avoid the U.S. VAT on foreign sales. (Investment in U.S. corporations is encouraged).
• Tax expenditures are no longer needed because the rates are so low
• All different types of industries can be taxed in the same way
• Workers get a 7.65% raise in salary (i.e. no payroll tax)
The net reduction in taxes on corporations and workers can be replaced by slightly higher taxes on wealthy individual owners. New technology enables the inverse taxation of wealth and income (and a lower rate blend). Consider the effect of a taxpayer choice of any income tax rate between 8% and 28% paired with a wealth tax rate of 2% decreasing to zero. Each taxpayer would also be able to save up to $500,000 wealth tax free for retirement, health care and education. Cumulative wealth taxes could be used to offset estate and gift taxes (set at 28%) – finally making the Estate Tax fair to all.
Necessary government handouts can be targeted to need (based on both income and specific family wealth data) to significantly lower budgets at both federal and state levels.
Tax reform can be the high octane fuel that drives the economy and upward mobility. If we replace the job killing payroll taxes with a 4% VAT (the lowest in the world) and an 8% C corporation tax it accomplishes the following:
• U.S. jobs become somewhat more attractive than outsourcing.
• Global U.S. companies pay a modest 8% on profits and avoid the U.S. VAT on foreign sales. (Investment in U.S. corporations is encouraged).
• Tax expenditures are no longer needed because the rates are so low
• All different types of industries can be taxed in the same way
• Workers get a 7.65% raise in salary (i.e. no payroll tax)
The net reduction in taxes on corporations and workers can be replaced by slightly higher taxes on wealthy individual owners. New technology enables the inverse taxation of wealth and income (and a lower rate blend). Consider the effect of a taxpayer choice of any income tax rate between 8% and 28% paired with a wealth tax rate of 2% decreasing to zero. Each taxpayer would also be able to save up to $500,000 wealth tax free for retirement, health care and education. Cumulative wealth taxes could be used to offset estate and gift taxes (set at 28%) – finally making the Estate Tax fair to all.
Necessary government handouts can be targeted to need (based on both income and specific family wealth data) to significantly lower budgets at both federal and state levels.
1
Based on your chart, Walmart is a better corporate citizen than Amazon. It could be solved with a simple tax on gross sales.
The problem with that is that different kinds of businesses have different margins of profit. A jeweler or a high-end retailer may have a profit margin of 50% ($100 in sales compared to $50 in costs), while grocery stores typically have a profit margin of only 3% ($100 in sales compared to $97 in costs).
This is disgusting and destructive. It is clearly a result of a bought and sold congress.
1
Bill Clinton ended "welfare as we know it," blighting and in many cases ending lives.
If Hillary can end corporate welfare as we know it, that would be a far better legacy.
If Hillary can end corporate welfare as we know it, that would be a far better legacy.
1
US Businesses probably think that they paid our elected US Senators and US Representatives for all of those Tax Loopholes “fair and square” in accordance with the prevailing INSTITUTIONALIZED federal government “PAY TO PLAY” bribery to acquire such government actions.
Foreign Manufacturers and foreign governments probably think that they paid President Clinton for NAFTA and all of that that other Free Trade Agreement legislation, MFNs, PNTRs for Communist China and that Hughes Aircraft Co. secret US Military Rocket Technology for Communist China “fair and square” in accordance with the prevailing INSTITUTIONALIZED federal government “PAY TO PLAY” bribery procedures (google Chinagate Political) to acquire such government actions.
US Military Equipment Manufacturers and foreign governments such as Saudia Arabia probably think that they paid for all of those Military Equipment export purchase approvals “fair and square” in accordance with the prevailing INSTITUTIONALIZED federal government “PAY TO PLAY” bribery procedures with payments to the "CLINTON FOUNDATION" (google Chinagate Political) to acquire such government actions.
Foreign Manufacturers and foreign governments probably think that they paid President Clinton for NAFTA and all of that that other Free Trade Agreement legislation, MFNs, PNTRs for Communist China and that Hughes Aircraft Co. secret US Military Rocket Technology for Communist China “fair and square” in accordance with the prevailing INSTITUTIONALIZED federal government “PAY TO PLAY” bribery procedures (google Chinagate Political) to acquire such government actions.
US Military Equipment Manufacturers and foreign governments such as Saudia Arabia probably think that they paid for all of those Military Equipment export purchase approvals “fair and square” in accordance with the prevailing INSTITUTIONALIZED federal government “PAY TO PLAY” bribery procedures with payments to the "CLINTON FOUNDATION" (google Chinagate Political) to acquire such government actions.
2
Levy taxes on whatever income a corporation reports in its published financial statements. That way if it wants to reduce taxes by understating income, it'll depress its stock price. If management wants to up its bonuses by reporting robust income, the company will have to pay its taes.
1
During 2014, corporate income taxes amounted to $293 billion, or 8.7% of federal revenues. Look at what we go through to collect that lousy 8.7%. Corporations spend billions on tax avoidance and preparation, the IRS spends billions auditing & collecting. Reform of individual taxes (more progressive rates, fewer loopholes and deductions) could more than replace the taxes paid by corporations.
Abolish the notion that corporations are people, and accept the notion that only individuals pay taxes. That's taxation with representation. At the same time, eliminate the ability of corporations to participate in our politics through contributions and lobbying. That's no representation without taxation.
The result would be a more efficient economy, better allocations of capital, and an end to the corporate tax avoidance games.
Abolish the notion that corporations are people, and accept the notion that only individuals pay taxes. That's taxation with representation. At the same time, eliminate the ability of corporations to participate in our politics through contributions and lobbying. That's no representation without taxation.
The result would be a more efficient economy, better allocations of capital, and an end to the corporate tax avoidance games.
Mr. Leonhardt:
Thank you for writing about an issue thar actually matters. It seems you may prove to to a more than welcome addition to the Times.
Thank you for writing about an issue thar actually matters. It seems you may prove to to a more than welcome addition to the Times.
The next president of the united states is not going to lift one single pinky to change the IRC. Where do you think all of the money to pay for the media onslaught comes from? Oh, right, middle America is chipping in a dollar here and a dollar there. It's the little guys and gals who are buying all that media exposure. Sure, all those little folks in Hollywood, Silicone Valley, Omaha, Wall Street, the Hamptons and Martha's Vineyard.
1
I agree with Wyden, the tax codes are a mess.
What I want to see.
1. Raise the top rate to 50% on personal income.
2. Reduce Corporate tax rates to about 20% or less.
3. Eliminate carry forward interest as a lower tax rate.
4. Eliminate the top cap on Social Security taxes.
5. Any special tax breaks given to businesses locating in cities, counties,
or states should be taxed as income.
6. Limit or allow investment credit for depreciated assets to $500,000.
In addition, there is a lot of work to be done in allowable deduction on tax forms but that is what we pay the legislators the big bucks.
What I want to see.
1. Raise the top rate to 50% on personal income.
2. Reduce Corporate tax rates to about 20% or less.
3. Eliminate carry forward interest as a lower tax rate.
4. Eliminate the top cap on Social Security taxes.
5. Any special tax breaks given to businesses locating in cities, counties,
or states should be taxed as income.
6. Limit or allow investment credit for depreciated assets to $500,000.
In addition, there is a lot of work to be done in allowable deduction on tax forms but that is what we pay the legislators the big bucks.
"We don't pay taxes. Only the little people pay taxes," Leona Helmsley.
1
David Leonhardt consistently brings sunshine into important areas that need change. He explains complex issues simply. I'm just taking this opportunity to celebrate his type of journalism. Thanks, David.
While it may be important to address the issue of companies not paying their "fair share" of taxes, a more pressing and perhaps popular issue would be to address the levels of executive compensation, which if I understand it, they can simply deduct from their tax liability. The most recent example is the preposterous and obscene payout of $130 million to the CEO of Wells Fargo who resigned under pressure over the scandal of fraudulently generated consumer accounts. It seems the 5,000 employees Wells fired had an annual compensation together equal to what this guy got to go away. In one year. Wonder why demand is down in this country?
2
This is one spike in the coffin that will move us toward the elimination of the predatory vampires that have been sucking our blood for centuries.
Why is it so difficult to see that making money of the basic necessities of human existence is besides, being morally repugnant, just stupid.
Why is it so difficult to see that making money of the basic necessities of human existence is besides, being morally repugnant, just stupid.
Some people are saying to boycott these companies that do not pay taxes. It's impossible today. One example is Proctor and Gamble which dominates the household product category. According to Wikipedia, "On August 1, 2014, P&G announced it was streamlining the company, dropping around 100 brands and concentrating on the remaining 65 brands,[4] which produced 95% of the company's profits."
This is the problem caused by Ronald Reagan's gutting of the anti-trust laws that Teddy Roosevelt put into place when he "busted the trusts" because of monopolies. BIG companies eat up their competition. P&G got rid of 100 brands - and all the jobs that went with them. Readers can look into any consumer business and life category - entertainment, communications, energy, autos - ANY - and find the same monopolies. One simply cannot boycott the company because they'll just raise prices somewhere else and dump the product by going bankrupt and stiffing investors/customers. Take a look at the P&G link below and click on "brands" on the right hand side under the corporate profile. It's shocking. It's simply NOT acceptable to allow these behemoths to exist and it's NOT acceptable that they don't pay taxes.
https://en.wikipedia.org/wiki/Procter_%26_Gamble
P.S. Now look up 20th Century Fox or Rupert Murdoch to see how much of the worldwide media he controls. Look up Unilever. Look up Monsanto. They control our lives - and costs.
This is the problem caused by Ronald Reagan's gutting of the anti-trust laws that Teddy Roosevelt put into place when he "busted the trusts" because of monopolies. BIG companies eat up their competition. P&G got rid of 100 brands - and all the jobs that went with them. Readers can look into any consumer business and life category - entertainment, communications, energy, autos - ANY - and find the same monopolies. One simply cannot boycott the company because they'll just raise prices somewhere else and dump the product by going bankrupt and stiffing investors/customers. Take a look at the P&G link below and click on "brands" on the right hand side under the corporate profile. It's shocking. It's simply NOT acceptable to allow these behemoths to exist and it's NOT acceptable that they don't pay taxes.
https://en.wikipedia.org/wiki/Procter_%26_Gamble
P.S. Now look up 20th Century Fox or Rupert Murdoch to see how much of the worldwide media he controls. Look up Unilever. Look up Monsanto. They control our lives - and costs.
2
I'm no Trump lover. Quite the opposite. But this tax issue doesn't hold water. Everyone tries to legally pay as little taxes as possible. Isn't the problem with the tax code, and not with Trump? What am I missing, folks?
16
Did you read the article?
Trump has promised to increase tax breaks for the wealthy, if that's what you're getting at.
Trump has promised to increase tax breaks for the wealthy, if that's what you're getting at.
These companies and billionaires like Donald Trump always use the excuse that what they are doing is legal under U.S. tax law. What they don't say is that it was their own lobbyists, using corporate money, who lobbied Congress to slip these loopholes into our laws in the first place.
1
How does he support his lifestyle with no personal income. Why is it that people like Trump, Ariana Huffington et al get to write off every thing as a business expense? Are Melania's clothes a business expense? Their penthouse in Trump Tower? Their son Barron's school fees, clothes and food? He must have some personal income to pay for these. Why no taxes on that income?
Every year my husband and I get stuck with alternative minimum taxes. He is 88 and I am 76 and we are required to sell minimum of assets from our retirement account every year and pay capital gains. Some how the depreciation on our rental real estate and expenses deductions are limited where Trump's are not. And if we sell real estate at a loss we don't get to deduct that loss. I think we need a new accountant or new tax laws!
Every year my husband and I get stuck with alternative minimum taxes. He is 88 and I am 76 and we are required to sell minimum of assets from our retirement account every year and pay capital gains. Some how the depreciation on our rental real estate and expenses deductions are limited where Trump's are not. And if we sell real estate at a loss we don't get to deduct that loss. I think we need a new accountant or new tax laws!
1
The book, Perfectly Legal, by David Cay Johnston, laid out this and other outrages years ago. Bernie Sanders brought attention to the extent of corporate rigging of the tax system, ownership of legislators, and secret money in our elections, but these issues have received much less attention since the Democratic convention. Why? Because the Republican candidate's constant barrage of lies, ridiculous remarks, nasty ad hominem attacks, angry assertions,threatening promises, and now seditious attempts to undermine the very foundation of our democracy have diverted attention from everything we should be talking about, including the subject of this article. To the extent that the Republican Party has promoted the very same ideas by insinuation, sly suggestion, and outright lies for decades, and to the extent that they have played a starring role in crafting the tax laws that disproportionately benefit their donor base, they do in fact support him and plan to vote for him no matter what they publicly claim; they have an interest in keeping their yaps shut and pretending they're just innocent bystanders. Those hypocrites have suddenly realized that not only their tax laws but their own personal cushy sinecures are at risk, so now it's, "Oh, of course we don't believe the elections are rigged." Yet they still stand by their man, so that, in the awful event that he should by hook or crook become President, they will have it both ways.
3
How about the CEOs and other executives living off the tax-free expense accounts. GEs former CEO Jack Welsh hardly used a dime of his salary on living expenses as shown when he dumped his wife of a 40 year marriage for a younger woman. That 'admired' bum charged his entire lifestyle on tax-free GE. look it up.
12
Another chapter in corporate tax avoidance just happened here in Baltimore where Under Armor got the mayor and the city council to approve a $600 million tax break (also referred to as a tax increment fund or TIF). This money will be used so that Under Armor can build a corporate headquarters, retail, housing and a recreation area in south Baltimore, called Port Covington. It is not clear the amount of low cost housing or the number of jobs Port Covington will bring to Baltimore, as the city council based its approval only on promises made by Under Armor. What is clear is that this tax break for Under Armor will greatly decrease the money that goes to Baltimore City public schools for the next 40 years, because money for schools comes from property taxes. What a mess, and what a sad legacy to the unrest that occurred in this city a year and a half ago.
8
The problem is not with the amount of taxes collected, it is with how that tax revenue is spent. Government at every level will spend every dollar we provide it with and still clamor for more. This spending, however, doesn't always translate into increased outcome, opportunity, or standard of living. Herein lies the problem.
I was born in California in 1968. Its population at that point was 19 million and the state budget was $3.2 billion. Since then, population has doubled to 39 million and the state budget has increased 38X (not including federal transfer payments). So population grew at a 1.5% annual rate and spending grew at an 8% rate. Even if we assume inflation has averaged 5% per year, the state's budget should have grown at 6.5% which would total $67 billion today versus the current $122 billion. Again, ignoring federal transfer payments.
That difference ($53 billion) is the size of Michigan's budget and yet California's K-12 spending per pupil is wedged in between Alabama's and North Carolina's.
Is the quality of life in California THAT much better today than it was 48 years ago?
I was born in California in 1968. Its population at that point was 19 million and the state budget was $3.2 billion. Since then, population has doubled to 39 million and the state budget has increased 38X (not including federal transfer payments). So population grew at a 1.5% annual rate and spending grew at an 8% rate. Even if we assume inflation has averaged 5% per year, the state's budget should have grown at 6.5% which would total $67 billion today versus the current $122 billion. Again, ignoring federal transfer payments.
That difference ($53 billion) is the size of Michigan's budget and yet California's K-12 spending per pupil is wedged in between Alabama's and North Carolina's.
Is the quality of life in California THAT much better today than it was 48 years ago?
1
Just as one example, what would you pay to ensure your water and air is healthy, clean enough for drinking...the trouble with being able to do math is that it's not that simple.
Clean air and water were mandated by law in the 1970s, leaded gas wasn't phased out till 1980s, and many of the nation's water pipes are old and lined with lead. Clean ups and work continue to mitigate old damage and identify and prevent new problems.
The latter is one area of government that didn't exist when you were growing up.
There are many other new areas requiring governmental action, not to mention the decay of the infrastructure paid for before and during your childhood. The growth in population is an extra layer of complexity.
Of course government is flawed, sometimes to the extreme.
But you must pay for roads, bridges, water treatment and delivery systems, airports, building code enforcement, public health services, etc, or you may prefer to live in a 3rd world country without access to such government services, where you pay, but in bribes or lack of confidence in the basic safety of the community.
As a great nation we have a collective good, benefits we all enjoy, and while many prefer to be rugged individualists, I don't see them avoiding clean water and air, paved roads, public hospitals...
Clean air and water were mandated by law in the 1970s, leaded gas wasn't phased out till 1980s, and many of the nation's water pipes are old and lined with lead. Clean ups and work continue to mitigate old damage and identify and prevent new problems.
The latter is one area of government that didn't exist when you were growing up.
There are many other new areas requiring governmental action, not to mention the decay of the infrastructure paid for before and during your childhood. The growth in population is an extra layer of complexity.
Of course government is flawed, sometimes to the extreme.
But you must pay for roads, bridges, water treatment and delivery systems, airports, building code enforcement, public health services, etc, or you may prefer to live in a 3rd world country without access to such government services, where you pay, but in bribes or lack of confidence in the basic safety of the community.
As a great nation we have a collective good, benefits we all enjoy, and while many prefer to be rugged individualists, I don't see them avoiding clean water and air, paved roads, public hospitals...
Amazon has been losing money every year. What profits did they 'only' pay 13% on?
2
And, yet, the public that would seem to be so harmed by such behavior, happily agrees, time after time, to pay for enormous airports, sports stadiums, factories, warehouses or other "job creators" in the hope that it will somehow benefit each of them in one way or another.
Greed and envy. Do as I say, not as I do...
Greed and envy. Do as I say, not as I do...
1
Author Leonhardt's lack of understanding of accounting and highly selective list of companies damages his argument. If we simply abolished the corporate tax and taxed the additional income on the owner's returns we could raise as much money while reducing the influence of lobbyists and the mendacity of politicians.
6
Everybody wants a bigger slice of mom's apple pie. Benefit.
Everybody wants a smaller slice of the national tax pie. Expense.
All to say, "there is no free lunch."
Everybody wants a smaller slice of the national tax pie. Expense.
All to say, "there is no free lunch."
4
Exxon Mobil seems to stand out as being well above the average, at 37.4% - but this number, regularly cited by the corporation, is highly misleading.
The company makes most of its money selling gasoline, which is taxed by Federal, State (in most cases) and sometimes local entities. That tax is incorporated into the price at the pump, collected along with the product price, and forwarded up the chain to be paid as appropriate.
But then Exxon Mobil claims that this is part and parcel of the business taxes they pay! This is dishonest in the extreme - take those taxes out - paid not by the corporation, but merely collected by them on behalf of the Government - and their real corporate tax rate is far, far lower, often even negative.
The company makes most of its money selling gasoline, which is taxed by Federal, State (in most cases) and sometimes local entities. That tax is incorporated into the price at the pump, collected along with the product price, and forwarded up the chain to be paid as appropriate.
But then Exxon Mobil claims that this is part and parcel of the business taxes they pay! This is dishonest in the extreme - take those taxes out - paid not by the corporation, but merely collected by them on behalf of the Government - and their real corporate tax rate is far, far lower, often even negative.
5
Corporate taxes probably should be a lot lower but the dividends and income to the shareholders should be raised to ordinary income, or more.
When tax rates for extreme wealth were themselves extreme most people avoided paying those taxes by reinvesting in their companies and other bits of the Nation.
We had the revenue then to build a solid middle class and an economy the world had never seen before.
I would tax wealth over 1 billion dollars at close to 100% and income over 1 million dollars at close to 90%. Then we would see the Nation humming along once again.
When tax rates for extreme wealth were themselves extreme most people avoided paying those taxes by reinvesting in their companies and other bits of the Nation.
We had the revenue then to build a solid middle class and an economy the world had never seen before.
I would tax wealth over 1 billion dollars at close to 100% and income over 1 million dollars at close to 90%. Then we would see the Nation humming along once again.
5
Whether one pays taxes and how much seems to be a game of dodging that, for someone like Trump (as in everything) he can be a winner or a loser. But the game of it is encouraged by the possibility and the pursuit of the lowest taxes possible. The entire game and it's loopholes has to be eliminated. At an amount over a certain income, there should be no loopholes--they are like heroin to addicts. If you live in the US, if you have property in the US, if you do business here, if you have any bank accounts here, if you have citizenship here and make over a ($1M, $2M, $5M)??? you should have to pay a flat tax. Sorry for the naivete, but the avoidance-game is the problem. You get what you pay for--you want the military, the beautiful landscape, better roads?--pay up.
3
Why dont we do what the rest of the civilized world does, and tax top line sales revenues, instead of taxing the tiny bottom line called profits (as minimized by many, many deductions for EVERYTHING IMAGINABLE!!!) We could even double the tax rate on imports and minimize them for exports, bringing millions of jobs back to America
3
We do have a top line tax - it's called a sales tax, most states have it and it ranges from 3-8%. It also comes directly out of the pocket of the consumer and is labeled as regressive...
2
"his long avoidance of federal income taxes"
We have no idea how long Trump avoided taxes. His loss carry forward would have been used up in a year or three or ten, depending on his taxable income in the following years.
He did not avoid that amount in taxes, he offset that much in taxable income. He would have spread it forward in ways designed to maximize the effective rate to which it was applied, meaning not zero it out but apply it to a high marginal number. The total he likely avoided in taxes was about a third of the amount usually mentioned, the Federal Income Tax rate only on that amount.
The abuse of taxes here was what Trump himself said in the debate was his artificial claim of loss, as an accelerated depreciation allowed as "loss." He did not "lose" that amount, he was allowed to claim an artificial "loss" as nominal depreciation on something that may not have depreciated at all on the real market.
Offset of losses and loss carry forward itself is basic accounting, not an abuse. It is the fake losses he is allowed that is the abuse. That is written into the tax code, and used by everyone with the means to do so. Trump did not write it, and did what everyone else filing on such income also did.
We have no idea how long Trump avoided taxes. His loss carry forward would have been used up in a year or three or ten, depending on his taxable income in the following years.
He did not avoid that amount in taxes, he offset that much in taxable income. He would have spread it forward in ways designed to maximize the effective rate to which it was applied, meaning not zero it out but apply it to a high marginal number. The total he likely avoided in taxes was about a third of the amount usually mentioned, the Federal Income Tax rate only on that amount.
The abuse of taxes here was what Trump himself said in the debate was his artificial claim of loss, as an accelerated depreciation allowed as "loss." He did not "lose" that amount, he was allowed to claim an artificial "loss" as nominal depreciation on something that may not have depreciated at all on the real market.
Offset of losses and loss carry forward itself is basic accounting, not an abuse. It is the fake losses he is allowed that is the abuse. That is written into the tax code, and used by everyone with the means to do so. Trump did not write it, and did what everyone else filing on such income also did.
2
There's only one thing more crooked than the tax code: the people who aim to "fix" it.
To put some of the damage our corrupt corporate tax system inflicts on the country in perspective, consider these three depressing factoids:
> Corporate lobbyists get away with murder. A recent Oxfam report says that each $1 the biggest companies spent on lobbying was associated with $130 in tax breaks and more than $4,000 in federal loans, loan guarantees and bailouts.
> One academic study [Reed College] found that tax dodging by major corporations costs the U.S. Treasury up to $111 billion a year.
> Over all, the share of corporate taxation in federal revenue has declined since 1952 from 32 percent to 11 percent.
No wonder the country's falling apart. This is banana republic territory. Surely we can do better.
> Corporate lobbyists get away with murder. A recent Oxfam report says that each $1 the biggest companies spent on lobbying was associated with $130 in tax breaks and more than $4,000 in federal loans, loan guarantees and bailouts.
> One academic study [Reed College] found that tax dodging by major corporations costs the U.S. Treasury up to $111 billion a year.
> Over all, the share of corporate taxation in federal revenue has declined since 1952 from 32 percent to 11 percent.
No wonder the country's falling apart. This is banana republic territory. Surely we can do better.
3
These corporations in essence run the united states . That is how they avoid paying taxes . The health cabal for instance , in my opinion , told the government what the parameters of the Affordable Care Act would be . Obama had hardly anything to do with the ACA . It was a take it or leave it deal . We have inherited the tax burden that the rich and corporations have deftly avoided by lobbying and hidden clauses in the tax law . Good luck trying to change this travesty . If anything , an attempt at getting these corporations to ante up will magically only increase the tax of the middle class again . The corporations and the wealthy own it !!!!!
2
Too bad one of the most important issues of the day received only a handful of comments. Thanks for writing this important piece. I once worked for a very right-wing company, managed by a very right-wing guy. This business is one the author describes as not easy to relocate, etc. They pay loads of taxes. The officer I referred to once astonished me when he said:" I don't get companies like Apple who so overtly avoid paying taxes. Don't they realize the benefits they take advantage of just by being here?" For a moment I thought he had converted to my side (HA)-- then I realized he was just this--- honest, fair, interested in the common good. My, what a rarity among the oligarchs who rule.
3
"honest, fair, interested in the common good". How do you describe your "side"?
It is hard to believe anyone in the Congress or in business who complains about the tax code. It is complicated because business wants it that way and they pay lobbyists a lot of money to make it so.
5
The cosmetic transfer of profits to low tax countries is a fraud by the big companies and they should be prosecuted. Many of them transfer the so called intellectual properties to Ireland at none-arms-length price; i.e., for a song and then have Ireland subsidary charge other foreign subsidiaries huge licensing fees and thus relocate the profits to Ireland. If these intellectual properties are transferred at arms length prices, Uncle Sam would be able to take his share thru taxes. Thus, this fraud should be stopped and prosecuted.
Furthermore, if we are really capitalist, which means that we should produce stuff which have more value than cost of production, including cost of using infrastructure, national defense, national educations, national government, etc. paid for by previous generations and by the average middle class American. But the big companies are not covering the cost of using the national infrastructure and national defense, because they never pay back for them in taxes. In effect, big companies are stealing from the middle class and generating profits for the executives and share holders at the expense of the middle classes because, sooner or later, these infrastructures have to be rebuilt and then the politicians will raise debt which will be paid for by us and future generations.
One way around this is to insure that these cost are accounted for is to have a use of infrastructures charge like rent.
Furthermore, if we are really capitalist, which means that we should produce stuff which have more value than cost of production, including cost of using infrastructure, national defense, national educations, national government, etc. paid for by previous generations and by the average middle class American. But the big companies are not covering the cost of using the national infrastructure and national defense, because they never pay back for them in taxes. In effect, big companies are stealing from the middle class and generating profits for the executives and share holders at the expense of the middle classes because, sooner or later, these infrastructures have to be rebuilt and then the politicians will raise debt which will be paid for by us and future generations.
One way around this is to insure that these cost are accounted for is to have a use of infrastructures charge like rent.
6
David, while I agree with most of what you say, I don't know why you bother saying it. The .1% and the corporations own the politicians. The politicians control the laws. And if nothing else, this election cycle has proven that the politicians have no intention of changing any aspect of their behavior. So there is absolutely zero hope of any tax law changes that will increase taxes on the super wealthy and corporations by one cent. What is the point in pretending otherwise?
10
I am an American living in Ontario so I have a dog in this fight. I do not understand any of the loopholes that allow an American company to open a sham office in a tax haven country so I propose taxing profits before they leave America. This can be done as a Gross Receipts Tax. Tax every cent in a corporation's revenue at a lower rate than the current 35 percent. Make it a progressive tax so corporations with greater gross receipts pay more in tax. Simple, clean, easy to collect.
3
Overhaul of the corporate tax code has to be done in conjuncture with campaign finance reform otherwise companies with their lobbyists will still pervert the system in order to pay less taxes. Our elected officials have to be free from the money interests that invade our politics today. It is the only way our representatives in Congress will do what is right for us and not for the wealthy and corporate interests.
3
So after all the vilifying of GE by the Times (sending a small mob of protesters to picket the home of Jeff Immelt) turns out the company is ponying up 18% of its gross profit to pay income tax. That's $6.5B paid on $37.5B profit. $6.5 billion more than the Times reported in 2011. People say the system is not fair to the little guy, but it is exactly the little guy who makes up numbers and takes cash under the table to avoid paying taxes. This is common knowledge. Meanwhile, and all the while, compliance is a big deal in big business. Advocate for a better system? Of course. But enough with the selective scapegoating.
2
I think you are purposely misstating the taxes paid by GE. They paid 18% in total taxes - State income taxes, state property taxes, city taxes, foreign taxes and finally, some federal taxes. If examined closely they probable paid, in federal taxes, a lower rate than Warren Buffet's secretary, to use a familiar example.
Let's remind ourselves that corporate profits are either retained or distributed to shareholders. If distributed they are taxed on an individual basis. Simply treating income the same whether earned from one's labor or capital (inflation adjusted) would go a long way to simplifying our tax system and making it more equitable.
5
The basic premise here is that corporate taxes tend to be paid by the wealthy. That is based on the view that their taxes come out of the pockets of shareholders. That is elementary school tax theory.
When you increase corporate taxes, you create an expense that is likely to be allocated in numerous and diverse ways. In addition to cutting the bottom line, the tax debt is likely to cause the corporation to cut its expenses across the board, which likely shrinks the corporation, with all the attendant effects. While big businesses need to follow the rules, we are not at economic loggerheads with them. Shrinking them is not a victory for the average guy. Part of shrinking is fewer jobs. Part of shrinking is less R&D. And, of course, part of shrinking is lower salaries to the fat cats.
Bottom line, the effects of corporate taxation depend on the corporation and can reduce the proceeds for the wealthy but can also harm the average guy. If we want a progressive tax system the best way to assure that is by taxing the wealthy at high rates and closing the loopholes for them. Taxes on the wealthy are all paid by the wealthy. Taxes on corporations are a mixed bag.
When you increase corporate taxes, you create an expense that is likely to be allocated in numerous and diverse ways. In addition to cutting the bottom line, the tax debt is likely to cause the corporation to cut its expenses across the board, which likely shrinks the corporation, with all the attendant effects. While big businesses need to follow the rules, we are not at economic loggerheads with them. Shrinking them is not a victory for the average guy. Part of shrinking is fewer jobs. Part of shrinking is less R&D. And, of course, part of shrinking is lower salaries to the fat cats.
Bottom line, the effects of corporate taxation depend on the corporation and can reduce the proceeds for the wealthy but can also harm the average guy. If we want a progressive tax system the best way to assure that is by taxing the wealthy at high rates and closing the loopholes for them. Taxes on the wealthy are all paid by the wealthy. Taxes on corporations are a mixed bag.
5
As someone who pays an insane amount of taxes each year, I for one, would like to see a flat tax, where EVERYONE pays something. When 40% of Americans pay no Federal income tax, something is indeed wrong. Corporations are not breaking the law. The laws should be changed. But I cannot blame them for tax avoidance if it is legal. I would do the same thing. Don't blame the companies. Blame Washington, DC for creating this mess.
23
Of course the companies can be blamed. They are the ones supporting the legislators who wrote the ta codes. They've gotten exactly what they've paid for, preferential treatment.
57
Anita, I daresay the 40% of Americans not paying taxes are also within their legal rights to do so. Just like the corporations, they are taking advantage of the tax laws. They are so poorly paid (often by these corporations) that they qualify for no federal income tax. So, yes, something is wrong. But it's not just the 40% you cite that stinks. As for not blaming the companies, who pays the lobbyists to descend on DC to create "this mess"? You know.
48
Congress writes the laws they get paid to write. It's not fair to suggest all the giant corporations and super-rich are merely taking advantage of lawful deductions when they are the ones who put those loopholes in the Code.
6
Why didn't you include the list you're referring to? Your statements are groundless without it.
1
"How does Amazon get away with this? A tangle of tax breaks and loopholes, some enacted in the name of creating jobs despite meager evidence that they do."
So...the title of the article is "Big companies that avoid taxes"...????????
Yet they follow the laws enacted by your favorite elected politicians.
Unless someone here can show me how corporations - or the rich - somehow circumvent congress and the white house and make up their own tax codes.
But, the media hype won't let that be the topic because its PC to hate corporations and the "rich".
So...the title of the article is "Big companies that avoid taxes"...????????
Yet they follow the laws enacted by your favorite elected politicians.
Unless someone here can show me how corporations - or the rich - somehow circumvent congress and the white house and make up their own tax codes.
But, the media hype won't let that be the topic because its PC to hate corporations and the "rich".
2
The big companies and the big plutocrats and the big oligarchs have big lobbyists and big money to buy our tiny legislators and executives elected by we the tiny foolish people.
2
The first job is to get money out of politics. Until that day comes, moneyed interests will keep the tax laws on their side.
1
Lower taxes, is the central point of every Republican. Republicans control Congress. The wealthy and corporations pay very little tax.
Next question.
Next question.
1
Anyone who believes that corporate America cares about the health and welfare of the USA is a fool. All they care about is extracting every last cent we the people have. I say the next time there is fire at one of these companies, let it burn. They don't want to pay for police, fire, military, infrastructure. Then they shouldn't get any.
1
"... a new system would somehow destroy jobs" should they have to pay their fair share of taxes. In other words, "somehow" means retaliating against higher taxes by eliminating jobs.
I don't believe it actually would destroy jobs. They already employ the absolute minimum number of employees they can to maximize profits. Who are they going to cut? Like the restaurant owner who claims they will have to cut jobs if they have to pay a living wage - who will wash the dishes, the cooks?
Tax cuts for companies "creates larger profits" not jobs.
I don't believe it actually would destroy jobs. They already employ the absolute minimum number of employees they can to maximize profits. Who are they going to cut? Like the restaurant owner who claims they will have to cut jobs if they have to pay a living wage - who will wash the dishes, the cooks?
Tax cuts for companies "creates larger profits" not jobs.
I must congratulate Mr Leonhardt for such good article.
1
I could have bought into the article if you said that the money that would be collected could be used, at least in part, to pay for homeland security or paying down the national debt. As it stands, it's just more tax and spend politics.
3
It is a global economy. It is not just the USA that suffers from the "reluctance" of the world's corporate "citizens" to pay their fair share. Sometimes it is the world's most impoverished are the most severely impacted.
The Oxfam America pdf. titled Broken at the Top should have made the front page of the NYT. It is short concise and to the point . It does what economic data can do when it is designed to inform instead of obfuscate.
The Oxfam America pdf. titled Broken at the Top should have made the front page of the NYT. It is short concise and to the point . It does what economic data can do when it is designed to inform instead of obfuscate.
3
SEveral good columns in a row. Welcome.
Pathetic.
As long as the right wing nuts control one house of congress there will be no fix to the tax code.
US companies that route US-generated revenues through Ireland or other tax wh@?e countries should be precluded from all political contributions and activity in the US, including lobbying and "legislative guidance."
These companies are getting a free ride, paying little or no US takes while enjoying the protections of our legal system, our infrastructure, state colleges, and basic research that they refuse to pay for.
It's un-American!
These companies are getting a free ride, paying little or no US takes while enjoying the protections of our legal system, our infrastructure, state colleges, and basic research that they refuse to pay for.
It's un-American!
1
Instead of complaining about corporations that follow laws we don't like how about focusing on the law makers. The Democrats had their chance 6 plus years ago when, not only did they have the White House and Congressional majorities, they had the clear highway opened up by the great recession. Why complain about tax laws or too big to fail banks now? Perhaps some soul searching will help avoid similar missed opportunities after the upcoming election.
1
I don't think you know what happened during the Great Recession. It had nothing to do with taxation.
What it did involve was (American) bankers handing out INSANE mortgages to literally everyone and anyone, and then bundling these JUNK mortgages into JUNK securities, disguising them as AAA securities. It was INEVITABLE that people earning $20k a year who had somehow obtained a three million dollar mortgage were going to default. Then, after the inevitable defaults, literally every stock market in the world crashed because people thought they bought SUPER SECURE investments and it turned out they were SUPER HORRIBLE investments.
And most importantly, although you correctly acknowledge that Obama inherited the worst economic climate since the 1930s, you somehow don't understand that the entire world was on the verge of monetary collapse and this is the ONLY issue that mattered at the time. I think Obama had his hands full.
So, in summary: always complain about tax laws, always complain about banks being too big too fail, Obama had his hands full, Obama prevented world economies from collapsing, and you should most definitely focus on more than just lawmakers because lawmakers are LAYMEN who have no idea what's going in these industries.
And I really am trying to figure out what you meant by your comment. Six years ago was 2010. Google tells me the Repubs obtained their majority in 2010. Why is it after 2010 that you think the Democrats could have overhauled your tax code?
What it did involve was (American) bankers handing out INSANE mortgages to literally everyone and anyone, and then bundling these JUNK mortgages into JUNK securities, disguising them as AAA securities. It was INEVITABLE that people earning $20k a year who had somehow obtained a three million dollar mortgage were going to default. Then, after the inevitable defaults, literally every stock market in the world crashed because people thought they bought SUPER SECURE investments and it turned out they were SUPER HORRIBLE investments.
And most importantly, although you correctly acknowledge that Obama inherited the worst economic climate since the 1930s, you somehow don't understand that the entire world was on the verge of monetary collapse and this is the ONLY issue that mattered at the time. I think Obama had his hands full.
So, in summary: always complain about tax laws, always complain about banks being too big too fail, Obama had his hands full, Obama prevented world economies from collapsing, and you should most definitely focus on more than just lawmakers because lawmakers are LAYMEN who have no idea what's going in these industries.
And I really am trying to figure out what you meant by your comment. Six years ago was 2010. Google tells me the Repubs obtained their majority in 2010. Why is it after 2010 that you think the Democrats could have overhauled your tax code?
Shhhhhh. Hillary's supporters in Silicon Valley would rather not have their tax situation scrutinized. If she can make 33,000 emails disappear, just imagine what she could do for their tax bills!
4
It's precisely the GE's of the world, and the Boeings, which most benefit from infrastructure, foreign relations, and military expenditure by the U.S.
3
Federal income tax was instituted to pay for the Civil War, then rescinded. Reenacted to pay for WWI and never rescinded.
Federal income tax is too complex to correct. It should be rescinded.
No income tax means politicians won't be able to do political favors with tax policy or tax law.
Federal income tax is too complex to correct. It should be rescinded.
No income tax means politicians won't be able to do political favors with tax policy or tax law.
1
The constant use of the term "loopholes" misses the point entirely. The word implies misdeeds and unethical behavior, when if in fact, corporations and private individuals legally avoid paying more tax than is required by the byzantine and corrupt tax code. The tax code IS the problem, created by our corrupt politicians and the influence of special interests and their lobbyists. That IS the problem. To fix the mess, and the inequities, the tax code must be scrapped and a new system adopted, which is either based on a flat tax on income, with no deductions or credits, OR, the FAIR TAX which is based on consumption, with allowances for the poor via "pre-bate" payments. Couple this with term limits and real campaign finance reform and we will see prosperity for all and an end to the corrupt Congress which is populated by an entrenched, self-aggrandizing elite political class.
43
@fairtax: Consider this: "The law in its majesty forbids the rich as well as the poor to steal bread and sleep under bridges" -- and allows the poor as well as the rich to deduct bond interest and lobbying expenses, depreciate business property, and use expensive tax lawyers.
1
Well said...I was beginning to think I was the only one commenting about a convoluted tax code.
The fair tax or flat tax will not do away with inequalities, but increase them.
1
Odd how the Clinton Foundation quietly moved from Harlem to share space with Goldman Sachs. Don't look for any far reaching, effective corporate tax changes...
2
Or just nor have a corporate tax rate at all. All of those highly paid attorneys, bankers and accountants will have to redeploy their talent and energy to activities that actually produce something. The objective should be to be smart, competitive and fair. This article misses the mark on these measures. Amazon is winning because they are using PEDs that are legal. Whether you like it or not, if Amazon stops its PED usage, Alibaba or Jet will not. Easy solutions in a complex world are foolhardy and pure gibberish.
As a small business owner, you have no idea how mad this makes me. Whenever I hear candidates running around spewing lies about helping small business owners, I get nauseous. Not only do we pay WAY more in taxes than the big boys, many of us often come to the brink of bankruptcy waiting for the big boys to pay our invoices. I recently watched a fellow small business person go bankrupt after waiting 9 months for GE to pay a very sizable invoice. After 25 years in business, I can honestly say I don't remember one piece of legislature being passed that actually helped me as a small business owner.
168
Remember we are a neoliberal country and it does not care about small businesses but only the huge corporations that get off tax free some years. Apple comes to mind. Hillary has no intention of making it fair. She is the queen of neoliberalism.
1
Amy - I truly feel for you. Since approximately 65% of jobs in this country are created by small businesses, this is ridiculous. That said, I don't understand why there isn't some organized "United Small Business " which, if every small business owner belonged to, would be the most powerful lobby group in Washington.
Exactly. Your example is not the only business that has gone under as big companies take 90 days to pay their invoices. They cut themselves this kind of slack. A small business could never get away with that kind of immoral behavior, but P&G brags about it.
1
The ruling elite rule and are elite?
1
It's interesting that Apple and Samsung are fighting it out before the U.S. Supreme Court: Samsung Electronics Co. v. Apple.
Why is a Korean company and an Irish company sitting before the highest court in the United States? Moreover, who is picking up the tab for these Court proceedings?
Why is a Korean company and an Irish company sitting before the highest court in the United States? Moreover, who is picking up the tab for these Court proceedings?
1
A reminder of exactly why the Clintons will be elected. When your a so called insider, who in the world would upset the model, few benefit from. Apple, Google, Microsoft, GE, to name a few, have a sweet deal. I too if involved, would donate to the Clintons and any of their causes big time. Donating to Bill's foundation which does some good, makes billionaires feel ok. Main street is expected to pay taxes to support those who cannot work for various reasons.
1
The growth of the multinationals parallels the widening of the U.S. imperial military shield over the last 25 years. But as sharp business people, they do not pay for it. Public cost, private profit. When you're talking foreign policy, your talking business.
1
Joseph E Stiglist , Nobel laurate in economics , pointed out that current tax law makes no distinction between, say, investing abroad, speculating in land or building a new factory. A better approach, he said, is to say: “We’ll give you generous deductions if you invest in America." Unquote
"A good case study is Amazon, which pays a rate much lower than its more traditional retail competitors. Between 2007 and last year, the company paid only 13 percent of its profits in taxes."
Huh?
Amazon was well-known for never earning an annual profit until very recently.
Hint: if you don't earn net income you pay zero income tax.
Huh?
Amazon was well-known for never earning an annual profit until very recently.
Hint: if you don't earn net income you pay zero income tax.
1
acule, actually it did earn an annual profit. THe problem was that its profit rarely amounted to more than short term bonds (based on sales). It is mocked in silicon valley for this fact. Plus a small % on amazon's large sales is not peanuts.
"...Companies make millions of dollars from tax avoidance. To defend the status quo, some will devise clever arguments to suggest that a new system would somehow destroy jobs..."
No.
They buy enough Politicians to make sure stay just like they are. It's the Politicians that pretend higher taxes would destroy jobs, as would a $15 minimum wage.
No.
They buy enough Politicians to make sure stay just like they are. It's the Politicians that pretend higher taxes would destroy jobs, as would a $15 minimum wage.
2
So then why have so many left the US for even better tax perks?
Is it a lie to fire Americans?
I think you miss the point that it is all part of the plan to keep wages and employment down that they learn in the Harvard Business School.
Wages and Employment at high levels means people have freedom - no corporate elites want that for 2 reasons - salary shopping or even job nonchalance.
They learnt well at the HBS - keep us serfs struggling and you will do better.
Is it a lie to fire Americans?
I think you miss the point that it is all part of the plan to keep wages and employment down that they learn in the Harvard Business School.
Wages and Employment at high levels means people have freedom - no corporate elites want that for 2 reasons - salary shopping or even job nonchalance.
They learnt well at the HBS - keep us serfs struggling and you will do better.
A rural reader of modest means (combined family income under $35) wishes the wealthy NYT reporter had included the multitude of ways he and his friends also legally avoid paying taxes! Does he deduct his lofty real estate taxes? Are his revenues as an author shielded? Any private school tuition? And is his suburban estate considered a 'farm'? Get Real! Simplify the tax laws so an individual can prepare and understand his own return! Then we can get rid of the entire 'tax' industry!
1
One rather simple solution would be to deny any and all US Gov't funded services, and terminate all US Gov't funded contracts / purchases with global corporations that do not pay a minimum flat percentage of Federal taxes on profits, say 20%, regardless of where their corporate domicile is located. If Apple, Google, Boeing, GE et al want to benefit from the US , they must pay a minmum level of taxes to support this system.
1
I am reading 'Makers and Takers' by Rana Foroohar. I'm not that far in, but just the first few pages are an eye opener into the quagmire of our economy. Foroohar estimates that only about 15 percent of all money in the market actually ends up in the real economy and the rest of it stays within a closed loop of finance. This is how corporations are making their profits these days, with complex financial engineering and tax avoidance. Apple, for example borrowed 17 billion under Jobs' successor, Cook when they had 145 billion in the bank. They borrowed the money because ultra low interest rate loans available only to blue chip companies meant not having to use the money from their coffers, which would require them pay taxes on it, as most of that money is scattered around the world, a lot in offshore banks. This money was not used for R&D or to build a new plant. It was used for stock buy backs to increase dividends and the stock price and create hundreds of millions in "paper wealth" for shareholders.
And Apple is one of many corps that use such financial machinations to horde profits and avoid paying taxes. These companies are not creating jobs. In fact, Apple has been de-investing in R&D since Steve Jobs passed. He was the innovator. What is left behind is a bunch of corporate raiders, reselling the same tech, albeit with a few upgrades, over and over again.
And Apple is one of many corps that use such financial machinations to horde profits and avoid paying taxes. These companies are not creating jobs. In fact, Apple has been de-investing in R&D since Steve Jobs passed. He was the innovator. What is left behind is a bunch of corporate raiders, reselling the same tech, albeit with a few upgrades, over and over again.
3
Thank You, Mr. Leonhardt. You say about the percentages you show, "That’s not just federal taxes. It’s federal, state, local and foreign taxes." Yes, it makes me laugh when BIG corporations say they may not pay federal taxes but they pay state and city taxes. In fact most do not pay at any level.
One of the examples that irritates me most is Washington State Governor
Jay Inslee (D) giving Boeing an $8 BILLION+ tax break shortly after he took office to "save jobs". Those of us who actually pay taxes - even on tips, unemployment money and sometimes social security and always on sales tax - have to pick up the tab for his largess. To make matters worse Boeing moved tens of thousands of high-paying engineering jobs out of state shortly thereafter. I am going to vote for Mr. Inslee because I will not vote for any republican this election but he had better watch his Ps and Qs with his corporate giveaways. Every elected official must. It is not the way to build strong, healthy cities and states and people like me are fed up with it.
One of the examples that irritates me most is Washington State Governor
Jay Inslee (D) giving Boeing an $8 BILLION+ tax break shortly after he took office to "save jobs". Those of us who actually pay taxes - even on tips, unemployment money and sometimes social security and always on sales tax - have to pick up the tab for his largess. To make matters worse Boeing moved tens of thousands of high-paying engineering jobs out of state shortly thereafter. I am going to vote for Mr. Inslee because I will not vote for any republican this election but he had better watch his Ps and Qs with his corporate giveaways. Every elected official must. It is not the way to build strong, healthy cities and states and people like me are fed up with it.
5
Since not just you but many other people in Washington will still vote for him, why would anything change?
Of course it would be great if companies would pay their fair share. But then what would happen to your 401k and other stock investments? Unfortunately we, and when I say "we" I mean everyone in the middle class who has investments, are all complicit in this mess and have a vested interest in the status quo. I wouldn't hold my breath that Hillary will actually lead any reform in this direction either, and it's a foregone conclusion that nothing will get through Congress even if the Senate goes to the Dems.
1
Trump has only shown us that even individuals using LLC's and Real Estate loopholes can lower their tax rate to zero. But then again lets remember that the Supreme Court labeled Corporations to be "individuals" as well so why are we to be surprised they do it as well? It is clear that the US tax system and its enablers (the accounting profession and lawyers) are allowing those with access to personally unearned high income to pay far less than those of us who put in an honest days work.
Sir, you know nothing of what you speak. "Corporate taxes" aren't paid by the "well-off" who "own most of the stock", they are paid by the companies whose stock individuals own. Then those individuals who own the stock pay tax again when the company's earning (already taxed at the corporate level ) are distributed as dividends to them. So the same dollar of earnings is taxed twice and only about 25 cents of that dollar doesn't end up with the tax man if the maximum rates were applied. The sensible thing to do is to eliminate all taxes at the corporate level and tax corporate earnings at the individual level when those earnings are returned to the owners of the company, the shareholders, as dividends.
1
One aspect not mentioned here: taxes are globalized. Many companies, including most of those you mentioned, globalize their operations. Part of their strategy includes not just finding new markets in which to sell and new sources from which to purchase -- that is, trade -- but new hideaways in which they can stash profits at lower rates than if realized at home. We cannot address this alone, a global conversation and ultimately agreement is necessary.
2
40% of S&P 500 company revenues come from overseas.
How robust are these companies really are if they have to rely on so many loopholes, write-offs and shell games?
Taxing gross profits may help make the write-offs and loopholes obsolete.
Finally, encouraging economic growth (by whatever means) won't help the vast majority of people in this country until we eliminate all the policies etc. that have so effectively diverted most of the gains into the pockets of the few.
We have to stop being suckered into being "grateful" for crumbs, while the people pulling all these maneuvers get the whole cake.
Taxing gross profits may help make the write-offs and loopholes obsolete.
Finally, encouraging economic growth (by whatever means) won't help the vast majority of people in this country until we eliminate all the policies etc. that have so effectively diverted most of the gains into the pockets of the few.
We have to stop being suckered into being "grateful" for crumbs, while the people pulling all these maneuvers get the whole cake.
3
Instead of trying to fix the "rotting economic carcass" of a corporate tax code, there is a simple fix: shift the tax base from profits to the EBITDA. That is: earnings before income taxes, depreciation and amortization. Net profits are easy to manipulate and powerful firms can get congress to create numerous special loopholes to lower reported profits particularly depreciation and amortization. At the EBITDA level there are almost no tricks to reduce the number. But the idea is so simple Congress probably won't go for it.
It becomes especially teeth grinding when one realizes many of the tax avoiding mega-corporations get huge slices of their income from the federal government.
End Citizens United, rewrite the tax code unimpeded by the (apparently) irresistible temptation to be bent to the big bucks of contributing lobbies. Make Amerrca fair again.
End Citizens United, rewrite the tax code unimpeded by the (apparently) irresistible temptation to be bent to the big bucks of contributing lobbies. Make Amerrca fair again.
5
As a small business owner, I'm particularly galled that large businesses, who are already awash in money, get all kinds of tax benefits that I'm not allowed to take. We truly do live in two Americas - the little guys who pay taxes while struggling to make ends meet on an increasingly smaller share of the pie and corporations who spend the GDP of medium sized countries to keep from paying taxes while enriching their top executives and squeezing their employees.
If we continue to let this happen, we will get the country we deserve.
If we continue to let this happen, we will get the country we deserve.
4
So what if big corporations pay taxes at a lower rate than the average middle class American. Stop worrying about it. Don't loose any sleep over it.
If the Republicans win the White House and control Congress this situation will get worse.
If the Democrats win the White House and get control of Congress this situation will remain the same.
Neither party is going to solve this problem. Neither party is going to cut all tax rates, including corporate, by two thirds and throw out every tax break and loophole.
Starting with a clean sheet of paper is the only way to fix this. However, just remember who you are counting on to fix the problem. The Republicans and Democrats. One party is too corrupt and the other too gutless to address this.
If the Republicans win the White House and control Congress this situation will get worse.
If the Democrats win the White House and get control of Congress this situation will remain the same.
Neither party is going to solve this problem. Neither party is going to cut all tax rates, including corporate, by two thirds and throw out every tax break and loophole.
Starting with a clean sheet of paper is the only way to fix this. However, just remember who you are counting on to fix the problem. The Republicans and Democrats. One party is too corrupt and the other too gutless to address this.
1
I have read that Boeing avoids taxes by conducting the transfer of a new aircraft to an airline and payment for it out over international waters so that it is not subject to taxation in any country. Obviously this could be done with ships as well. It's another of the loopholes that should be closed.
Despite being a lefty liberal, I favor lowering the corporate tax rate while closing loopholes that the tax shirkers exploit so that they can enjoy the fruits of the American system while letting others pay for it.
Despite being a lefty liberal, I favor lowering the corporate tax rate while closing loopholes that the tax shirkers exploit so that they can enjoy the fruits of the American system while letting others pay for it.
1
So I start by saying that I think corporate America gets off the hook when it comes to paying taxes on every level of government, shifting the burden to smaller entities, small business and individuals. Two things I want to know in this case study. What are the results of all 500 companies?
Secondly, did choosing 2007 as a starting point skew the results? It was the year prior to the Great Recession, so did those losses carry forward in a way that a longer view may not have shown?
Secondly, did choosing 2007 as a starting point skew the results? It was the year prior to the Great Recession, so did those losses carry forward in a way that a longer view may not have shown?
2
Except for periods in the 1950s and 1960s and possibly the 1990s when tax rates on the rich just happened to be high enough to prevent overinvestment, the economy has generally suffered from periodic overinvestment cycles.
It is not just a coincidence that tax cuts for the rich have preceded both the 1929 and 2007 depressions. The Revenue acts of 1926 and 1928 worked exactly as the Republican Congresses that pushed them through promised. The dramatic reductions in taxes on the upper income brackets and estates of the wealthy did indeed result in increased savings and investment. However, overinvestment (by 1929 there were over 600 automobile manufacturing companies in the USA) caused the depression that made the rich, and most everyone else, ultimately much poorer.
Since 1969 there has been a tremendous shift in the tax burdens away from the rich and onto the middle class. Corporate income tax receipts, whose incidence falls entirely on the owners of corporations, were 4% of GDP then and are now less than 1%. During that same period, payroll tax rates as percent of GDP have increased dramatically. The overinvestment problem caused by the reduction in taxes on the wealthy is exacerbated by the increased tax burden on the middle class. While overinvestment creates more factories, housing and shopping centers; higher payroll taxes reduces the purchasing power of middle-class consumers..."
http://seekingalpha.com/article/1543642
It is not just a coincidence that tax cuts for the rich have preceded both the 1929 and 2007 depressions. The Revenue acts of 1926 and 1928 worked exactly as the Republican Congresses that pushed them through promised. The dramatic reductions in taxes on the upper income brackets and estates of the wealthy did indeed result in increased savings and investment. However, overinvestment (by 1929 there were over 600 automobile manufacturing companies in the USA) caused the depression that made the rich, and most everyone else, ultimately much poorer.
Since 1969 there has been a tremendous shift in the tax burdens away from the rich and onto the middle class. Corporate income tax receipts, whose incidence falls entirely on the owners of corporations, were 4% of GDP then and are now less than 1%. During that same period, payroll tax rates as percent of GDP have increased dramatically. The overinvestment problem caused by the reduction in taxes on the wealthy is exacerbated by the increased tax burden on the middle class. While overinvestment creates more factories, housing and shopping centers; higher payroll taxes reduces the purchasing power of middle-class consumers..."
http://seekingalpha.com/article/1543642
1
Our system of corporate taxation is a mess. But let's not be mistaken about why that is. A simple straight-forward tax system, with appreciably lower rates, would deprive the American political class of the power to sell special dispensations to preferred constituencies. The tax preferences about which Mr. Leonhard whines did not grow organically. Each one was carefully crafted by know-nothing politicians attempting to engineer our economy. And like most political creations, the stated goals are never achieved and the unintended consequences overwhelm us.
Mr. Leonhardt, a progressive, wants more taxes to fund more government. But whatever emerges in the name of tax reform will just be another exercise in re-arranging the deck chairs, with our foolish politicians being out-smarted by the tax experts hired by special interests. The only way to truly fix this problem is to stop government from attempting to redistribute wealth and engineer economic outcomes through the tax code. A smaller, less intrusive government could actually have a simpler tax code.
The taxing committees of the US Congress are plumb assignments for a reason. They are the easiest seats from which to garner contributions and other largesse. The people holding those seats and the power they possess is why our tax code is the way it is. No power, no problem.
Mr. Leonhardt, a progressive, wants more taxes to fund more government. But whatever emerges in the name of tax reform will just be another exercise in re-arranging the deck chairs, with our foolish politicians being out-smarted by the tax experts hired by special interests. The only way to truly fix this problem is to stop government from attempting to redistribute wealth and engineer economic outcomes through the tax code. A smaller, less intrusive government could actually have a simpler tax code.
The taxing committees of the US Congress are plumb assignments for a reason. They are the easiest seats from which to garner contributions and other largesse. The people holding those seats and the power they possess is why our tax code is the way it is. No power, no problem.
1
For anyone who reads, the issue discussed here is well known, as well as the reasons for modifying the corporate tax rate to achieve a lower but reliable source of government revenue. What is never discussed in such articles is the magic/bloody gore by which such reform will happen, even were the Democrats to win the White House, Senate and House.
1
The piece says that corporate tax is primarily borne by the well-off. Large public corporations such as those mentioned have significant ownership held by pension funds, endowments, etc. that represent the savings of those with moderate income/wealth.
The profits of these companies accrue equally to all shareholders in proportion to their ownership and the corporate tax falls equivalently hard on the hedge fund's ownership of the company as it does on the pension fund's.
Saying that a corporate tax is fair because it affects the well-off more is like saying a flat income tax is fair because those with high incomes are paying the tax on a larger pool of funds.
This concept is totally fine with me since I'm high income, but the author shows his ignorance by intimating/suggesting that corporate tax is progressive--it's not. If you want a more progressive system, then get rid of the corporate tax and institute higher marginal rates for high-income individuals.
The profits of these companies accrue equally to all shareholders in proportion to their ownership and the corporate tax falls equivalently hard on the hedge fund's ownership of the company as it does on the pension fund's.
Saying that a corporate tax is fair because it affects the well-off more is like saying a flat income tax is fair because those with high incomes are paying the tax on a larger pool of funds.
This concept is totally fine with me since I'm high income, but the author shows his ignorance by intimating/suggesting that corporate tax is progressive--it's not. If you want a more progressive system, then get rid of the corporate tax and institute higher marginal rates for high-income individuals.
2
Corporations aren't people. It is people, the owners, who should be taxed on the income each year. A graduated income tax essentially without deductions.
A standard and honest method of accounting should be required.
All types of income should be considered equal.
Some of the income is earned abroad. That portion of a corporation's income might be taxed by the country in which it is earned. Those tax payments should be the only deduction.
No false front such as a trust or foundation of any sort should be permitted to stand in the way. The owners who have any level of control the corporation, at least 18 years old, must be required to pay tax on all income each year.
A standard and honest method of accounting should be required.
All types of income should be considered equal.
Some of the income is earned abroad. That portion of a corporation's income might be taxed by the country in which it is earned. Those tax payments should be the only deduction.
No false front such as a trust or foundation of any sort should be permitted to stand in the way. The owners who have any level of control the corporation, at least 18 years old, must be required to pay tax on all income each year.
2
Another factually flawed article about taxes by the NYT , nothing unusual these days. To start with, the notion that corporate tax for large multinationals is being paid by the "well heeled" is patently wrong. Consider the example Amazon : 66 % of Amazon shares are owned by so called "institutional investors", that is mutual funds, pension funds and the like. That is, about 2/3 of the company is owned by American retirees and small time investors. And, it is also well known that Amazon, until 2015, never made a profit. So why should it pay taxes at all ? I don't know why the idea that you don't have to pay taxes when you make an economic loss is so alien to journalists. The real issue is that American corporate taxes are to high, the effective federal rate is about 34 % plus state taxes, so generally around 40%. That is almost double of what companies pay in most European jurisdictions. Even in Germany the average rate is 28%. So no wonder that US companies have a tendency to shift profits out of the US just to stay globally competitive. The way to fix that would be to lower the federal corporate rate to say 18% and curb at the same time the ability to shift profits into foreign jurisdictions, which is totally possible, but would require a real tax reform, which will never happen in this country, because the whole tax and revenue discussion has been seized by political pundits who have no clue about taxes.
2
A fundamental question is whether for-profit enterprises should pay taxes ONLY when they are profitable, or should contribute to government revenue needed to pay for national security, infrastructure, personal assistance, education, regulations, etc. whether they are profitable or not. Enterprises consume these government services whether profitable or not, so they should pay whether profitable or not. So I favor a small % tax on enterprise revenues (paid by both for-profit and non-profit organizations) as the fairest way to tax enterprises. This is what State of Washington does. It takes most of the gamesmanship out of profit calculations, including how much profit and where earned. All other taxpayers/citizens shouldn't suffer if an entereprise is mismanaged such that it loses money. Within this basic structure of taxing revenues, not profits, incentives could be offered for socially-desirable behavior, such as sustainability performance, use of domestic suppliers, employee ownership, locations in under-developed areas, etc. It is time to think big while fixing the rotting carcass of the existing system.
2
By the same logic, U.S. citizens that don't have an income should also pay taxes. They use schools, roads, fire, police, government. Why don't 47% of people pay federal income taxes? They use the services too.
2
We own an LLC and pay a tax rate of 35%, the company employees 14 individuals that all earn at least twice the minimal wage and much more that includes Healthcare, 401K, vacation and sick time. What this gives us is a very reliable workforce. When we have a good year so does the Federal Government, what is fair for us should be equally fair for ALL Companies in our Nation.
Congress must but will not fix the tax code (they need to appease the 1%), and the population has drunk the Koolaid, who believe that the 1% create jobs and should be compensated.
Congress must but will not fix the tax code (they need to appease the 1%), and the population has drunk the Koolaid, who believe that the 1% create jobs and should be compensated.
152
Your LLC does not pay a tax rate of 35%, you as the owner does. An LLC is a fully pass through entity, only subject to one level of tax (as opposed to a corporation which pay tax at the corporate level, then the investor again pays tax on dividends and capital gains, albeit at favorable levels).
This is what corporations should be, eliminate the corporate tax, make dividends and capital gains fully taxable at the person income level. Done.
This is what corporations should be, eliminate the corporate tax, make dividends and capital gains fully taxable at the person income level. Done.
2
Thanks for your clarification and vivable solution to the American inane tax code.
Your attitude is a breath of fresh air. Thank you for sharing your very democratic policies. Too bad most Americans are anti democracy which is just about gone.
We've become Greece. The meltdown there was caused by the entire country refusing to pay taxes, a bloated public sector and corruption. Our public sector isn't bloated but we certainly do seem to avoid paying taxes and corruption is in the eye of the beholder. The belief that we can not pay taxes and have good schools, good roads, investments in technology and science is rooted in our collective ignorance and greed. Clinton is going to have an uphill climb to persuade the "job creators" to pony up. I wish her good luck and godspeed.
We do need to think of taxes in a global way. Neither candidate has a deep understanding of the tax system. Its not enough to say " raise more corporate taxes." Both parties agree the corporate rate has to be lowered and the tax code simplified. Some Republicans have called for a consumption tax (Valued Added tax) to replace the income tax. Democrats consider this regressive. However, a small VAT combined with lower income taxes and tax simplification could facilitate tax reform. It would have the extra benefit of increasing overall tax compliance.
Its wrong to compare retailers collecting sales tax with other companies. Sales taxes should be excluded from the comparison. We do need to pass a national sales tax law to eliminate the advantage online sellers have over brick and mortar companies. The "fairness" act failed in its last attempt.
Its wrong to compare retailers collecting sales tax with other companies. Sales taxes should be excluded from the comparison. We do need to pass a national sales tax law to eliminate the advantage online sellers have over brick and mortar companies. The "fairness" act failed in its last attempt.
1
Why didn't the article give the average effective corporate tax rate (cash taxes paid) for ALL of the S&P 500 companies?
My assumption and belief is that the average effective corporate tax rate in the U.S. is far less than 35%. But the article cited only anecdotal evidence about a few large companies such as Amazon and Apple.
One of the most pernicious claims that the Republicans constantly make is that U.S. corporations are the highest taxed in the world when they might be the lowest taxed or among the lowest taxed.
If it's not o.k. to cite anecdotal evidence regarding welfare fraud, or high insurance premiums, as the norm, the same holds true for taxes, doesn't it?
My assumption and belief is that the average effective corporate tax rate in the U.S. is far less than 35%. But the article cited only anecdotal evidence about a few large companies such as Amazon and Apple.
One of the most pernicious claims that the Republicans constantly make is that U.S. corporations are the highest taxed in the world when they might be the lowest taxed or among the lowest taxed.
If it's not o.k. to cite anecdotal evidence regarding welfare fraud, or high insurance premiums, as the norm, the same holds true for taxes, doesn't it?
Yet again the obvious is ignored: taxing companies is itself a fraud. Governments tax companies, not because they must, or because it is just, but because they can. Employing companies as unpaid tax collectors is one of the oldest tricks in the populist book. "Sure, we're not taxing you, we're taxing these companies". Except that taxing company profits affects wages, prices, and returns on investment, all of which impact the ordinary person just as surely as if they were mugged in the street by a passing IRS officer.
I pay more for what I get because the companies I buy from are taxed. I get paid less because the company I work for gets taxed. My pension plan grows more slowly because the companies it invests in get taxed.
It might be more painful living in a world where you pay all taxes yourself instead of by proxy. But it would be more honest.
I pay more for what I get because the companies I buy from are taxed. I get paid less because the company I work for gets taxed. My pension plan grows more slowly because the companies it invests in get taxed.
It might be more painful living in a world where you pay all taxes yourself instead of by proxy. But it would be more honest.
1
There are a myriad of problems with the U.S. tax code. First, we have a worldwide system that is different than almost all other countries. Combined with the high U.S. rate, it encourages companies to keep profits overseas. Next, Congress can't help itself. There are something like a 100 different tax credits in the Code for this industry or that group. What may work is take the worldwide profit and apportion it by sales. If your financial statement shows you made a billion and twenty percent of your sales to the ultimate user are in the U.S., 200 million of U.S. taxable income at an intelligent rate, not the current 35% which is very high by world standards. The focus is wrong in beating on companies. They look at what Congress enacts, and generally comply. We also need to remember that countries use tax policy to create jobs. These countries compete for jobs with low rates. Ireland is an example. So, in our thirst to "punish" companies, we can't miss the big picture of employment.
1
Interestingly, Hilary and The Donald both use some of the same tax avoidance scheme- The Delaware Loophole. The Nation- hardly a Pro Trump publication- details it all here:
https://www.thenation.com/article/when-it-comes-to-taxes-donald-trump-an...
Our tax system is a mess and is getting worse by the day. States and Municipalities are now in a death spiral granting tax waivers to almost every business that proposes coming to town. Some states now even refund the payroll taxes they collect from a companies employees back to the company.
The ambivalence that many Americans have about taxes is that we know the much of what we pay in is wasted. Why is it exactly, that we give Israel Billions when they can afford Universal Healthcare and we supposedly cannot? Why must I pay a hotel tax that subsidizes Professional teams owned by Billionaires that employ millionaires. President Obama wants a Trillion Dollars for a new generation of Nukes that we will never use and Republicans forced the Army to buy tanks they do not need or want. Why does a business person get to go to lunch and write off the steak they ate while a cleaning lady has to buy hers and pay sales taxes?
We are paying the taxes of a Scandinavian Welfare State just without the Welfare State.
https://www.thenation.com/article/when-it-comes-to-taxes-donald-trump-an...
Our tax system is a mess and is getting worse by the day. States and Municipalities are now in a death spiral granting tax waivers to almost every business that proposes coming to town. Some states now even refund the payroll taxes they collect from a companies employees back to the company.
The ambivalence that many Americans have about taxes is that we know the much of what we pay in is wasted. Why is it exactly, that we give Israel Billions when they can afford Universal Healthcare and we supposedly cannot? Why must I pay a hotel tax that subsidizes Professional teams owned by Billionaires that employ millionaires. President Obama wants a Trillion Dollars for a new generation of Nukes that we will never use and Republicans forced the Army to buy tanks they do not need or want. Why does a business person get to go to lunch and write off the steak they ate while a cleaning lady has to buy hers and pay sales taxes?
We are paying the taxes of a Scandinavian Welfare State just without the Welfare State.
2
The real question we face is, is it too late? The premise of this piece is that in a democracy at some point the will of the people is reflected in what our representatives do.
But increasingly for us it's just the opposite. Go to the Gallup polls or Pew Charitable Trust and you will find issue after issue where clear majorities of Americans want action and a congress that ignores them or does the opposite.
Polls show that Americans want corporations to pay their fair share of taxes. The effective rate, that is the actual taxes paid on average by big business is between 12-16%, one of the lowest in the world. But even that's not enough for corporate America. They make record profits yet stash 4 trillion dollars off shore to avoid taxes. Now they claim they might bring it back if we lower that rate to 5%!
So who do our representative really represent? We need to go back to the days of muck raking journalism and name names. Shaming them to do the right thing looks like our last option.
But increasingly for us it's just the opposite. Go to the Gallup polls or Pew Charitable Trust and you will find issue after issue where clear majorities of Americans want action and a congress that ignores them or does the opposite.
Polls show that Americans want corporations to pay their fair share of taxes. The effective rate, that is the actual taxes paid on average by big business is between 12-16%, one of the lowest in the world. But even that's not enough for corporate America. They make record profits yet stash 4 trillion dollars off shore to avoid taxes. Now they claim they might bring it back if we lower that rate to 5%!
So who do our representative really represent? We need to go back to the days of muck raking journalism and name names. Shaming them to do the right thing looks like our last option.
1
"It is “absurd” to argue that most wealth at the top is already highly taxed or that there isn’t much more revenue to be had by raising taxes on the 1 percent, says the economist Joseph E. Stiglitz, winner of the Nobel in economic science, who has written extensively about inequality. “
The top 0.1 percent of American families — each with net assets greater than $20 million — own more than 20 percent of the all the household wealth in the country. In the 1970s, that same sliver of the population controlled 7 percent.
— the top 1 percent includes about 1.13 million households earning an average income of $2.1 million.
Raising their total tax burden to, say, 40 percent would generate about $157 billion in revenue the first year. Increasing it to 45 percent brings in a whopping $276 billion. Even taking account of state and local taxes, the average household in this group would still take home at least $1 million a year.
If the tax increase were limited to just the 115,000 households in the top 0.1 percent, with an average income of $9.4 million, a 40 percent tax rate would produce $55 billion in extra revenue in its first year.
That would more than cover, for example, the estimated $47 billion cost of eliminating undergraduate tuition at all the country’s four-year public colleges and universities, as Senator Bernie Sanders has proposed, or Mrs. Clinton’s cheaper plan for a debt-free college degree, with money left over to help fund universal prekindergarten" Unquote ..
The top 0.1 percent of American families — each with net assets greater than $20 million — own more than 20 percent of the all the household wealth in the country. In the 1970s, that same sliver of the population controlled 7 percent.
— the top 1 percent includes about 1.13 million households earning an average income of $2.1 million.
Raising their total tax burden to, say, 40 percent would generate about $157 billion in revenue the first year. Increasing it to 45 percent brings in a whopping $276 billion. Even taking account of state and local taxes, the average household in this group would still take home at least $1 million a year.
If the tax increase were limited to just the 115,000 households in the top 0.1 percent, with an average income of $9.4 million, a 40 percent tax rate would produce $55 billion in extra revenue in its first year.
That would more than cover, for example, the estimated $47 billion cost of eliminating undergraduate tuition at all the country’s four-year public colleges and universities, as Senator Bernie Sanders has proposed, or Mrs. Clinton’s cheaper plan for a debt-free college degree, with money left over to help fund universal prekindergarten" Unquote ..
So you want 115,000 households to pay for the undergraduate education of the entire country, year-in, year-out? Sounds unsustainable.
2
You are assuming that spending is positively correlated to outcome.
First, the author, and all need to describe the tax they speak of, that being statutory (marginal) and effective tax rate.
Second, any new tax system must end supply side economics that provides statutory tax reductions for the wealthy and business in the name of job creation that not one job has been created, and has only depressed hourly wages and created inequality.
Third the best tax system was during the Eisenhower administration with high statutory tax rates and targeted tax reductions and credits that provide for economic growth as we had under Eisenhower.
So that if one wishes to believe low taxes creates jobs and grows business it is directly linked to a tax credit for that individual or business to document that activity.
Second, any new tax system must end supply side economics that provides statutory tax reductions for the wealthy and business in the name of job creation that not one job has been created, and has only depressed hourly wages and created inequality.
Third the best tax system was during the Eisenhower administration with high statutory tax rates and targeted tax reductions and credits that provide for economic growth as we had under Eisenhower.
So that if one wishes to believe low taxes creates jobs and grows business it is directly linked to a tax credit for that individual or business to document that activity.
Having worked at a large company and having some experience in this area, I think the analysis should have gone one step deeper. If the tax rates paid by these companies were broken out into US federal tax, US state tax, US local tax, and foreign tax, I think you'd find that it's the US federal tax that is the lowest rate. For one thing, all the other taxes are deductible from the US earnings. For another, it's easy to recognize profit in low tax countries through legal structures alone (as the article points out). Third, many companies can take credits for investment, and credits come right off the tax bill as opposed to earnings. I have seen several articles that showed that GE, for example, has a negative federal tax rate.
Companies will show a provisional US tax rate in their quarterly statements, with the footnote that the actual rate won't be known until returns are filed and approved, so it isn't obvious to most that the actual rate will be engineered to 0%.
Please ask your analysts to make this breakout.
Companies will show a provisional US tax rate in their quarterly statements, with the footnote that the actual rate won't be known until returns are filed and approved, so it isn't obvious to most that the actual rate will be engineered to 0%.
Please ask your analysts to make this breakout.
1
As an example to those complaining about low effective corporate tax rates, please note that one reason GE pays such a low rate is because of the tax credits they receive for making wind turbines and Energy Star appliances. Conservatives would love to get rid of these tax credits but they are beloved by liberals.
The better answer is to eliminate corporate income taxes entirely and tax corporate income at the shareholder level. Virtually all economists will tell you that corporations don't pay taxes, only individuals do. In the case of corporate income taxes these are paid by shareholders in the form of lower returns. Why not just make this explicit and tax the shareholders on their share of the corporation's income?
This would have multiple benefits. Taxes would be much harder to avoid. Corporations would stop wasting time and money on reducing taxes and focus instead on their business. It would make the US much more attractive as a place to do business and would totally end inversions. And best of all, lots of corporate lobbyists would be out of work! Who needs someone to lobby for tax favors when there are no taxes.
The better answer is to eliminate corporate income taxes entirely and tax corporate income at the shareholder level. Virtually all economists will tell you that corporations don't pay taxes, only individuals do. In the case of corporate income taxes these are paid by shareholders in the form of lower returns. Why not just make this explicit and tax the shareholders on their share of the corporation's income?
This would have multiple benefits. Taxes would be much harder to avoid. Corporations would stop wasting time and money on reducing taxes and focus instead on their business. It would make the US much more attractive as a place to do business and would totally end inversions. And best of all, lots of corporate lobbyists would be out of work! Who needs someone to lobby for tax favors when there are no taxes.
3
David is absolutely right. There are so many important issues - fundamental for a society to survive - that have not been addressed in the last decade. It is not only disconcerting but scary.
But that is what happens when one of the two political parties decides to poisson the political discourse and refuses to find accommodation with the opposing party. And this is what the Republican Party has been doing with catastrophic results for the nation.
And they will continue to do this with Trump after the election on November 8th unless the Democrats win the Senate and the House. There is no other way to achieve what David Leonhardt is clearly stating.
But that is what happens when one of the two political parties decides to poisson the political discourse and refuses to find accommodation with the opposing party. And this is what the Republican Party has been doing with catastrophic results for the nation.
And they will continue to do this with Trump after the election on November 8th unless the Democrats win the Senate and the House. There is no other way to achieve what David Leonhardt is clearly stating.
1
Corporations are nothing but pass through entities for consumers on one side (who ultimately pay the tax through higher prices) and investors on the other side. Eliminate the corporate tax rate; tax all dividends and capital gains at the personal income tax level without allowing offsetting deductions. Trying to force corporation to up their effective rate will just result in increased prices for consumers.
Eliminating the corporate tax will be wildly unpopular (since I image headlines will read "Zero taxes for corporations!!!"), but its the right move. Corporations will come back to the U.S. and the U.S. will likely have a positive impact to its tax revenue (since the corporations aren't paying the appropriate level of taxes anyway).
Eliminating the corporate tax will be wildly unpopular (since I image headlines will read "Zero taxes for corporations!!!"), but its the right move. Corporations will come back to the U.S. and the U.S. will likely have a positive impact to its tax revenue (since the corporations aren't paying the appropriate level of taxes anyway).
2
In a reformed tax system, what happens to a retired small investor who depends on dividends and capital gains from these big companies? This is a self-interested question, but since there may be others in my situation, it seems politically relevant. And what will the markets (and companies) do while the debate is going on? Whatever happens, there will be pain, so my best hope is that it will be fairly distributed. A fair, reformed system will surely be best in the long run - but my personal run is not as long as it used to be.
2
We need to review the whole concept of corporate taxation. The main function of corporate taxation is to capture externalities excluded from the pricing of corporate goods. The costs of polluting the environment, damaging he infrastructure, using the military to protect overseas operations and markets , etc. Think of corporate taxes as fees for services rendered and damage done to the environment, the education provided to their workers etc. the whole idea is for government taxes to make the real cost of producing goods and services show up in their price.
3
Noone can complain about big corporations polluting unless you quit using electricity and quit driving, and quit flying in private jets.
I have a sneaking suspicion that this outrage would be solved, were our elected officials not required to crawl on their hands and knees and grovel before these same corporate entities to fund their campaigns.
Overturn Citizens United and require public financing for all elections.
The corrupting influence of money in our nation has so distorted every aspect of our legal and legislative framework, that it has become unresponsive and indifferent to the vast majority of the populace. As a result, the majority of the American people have been exploited for decades in order to serve the bottomless greed of corporations and the 1%. It must stop.
VOTE on November 8th. No Republicans.
Overturn Citizens United and require public financing for all elections.
The corrupting influence of money in our nation has so distorted every aspect of our legal and legislative framework, that it has become unresponsive and indifferent to the vast majority of the populace. As a result, the majority of the American people have been exploited for decades in order to serve the bottomless greed of corporations and the 1%. It must stop.
VOTE on November 8th. No Republicans.
6
Why is 13% considered to low? Why should corporations be paying for our government? The Government is represented by the people through their votes. Corporate profits of public companies should go to creating jobs, paying dividend and cap gains that produce taxes from citizens. S corps or small business pay taxes on earnings at the individual rate.
The Reagan tax reform that was bi-partisan lowered rates and got rid of many deductions. Cap gains and dividends were taxed at the same rate as income. Cap gains and dividend taxes were cut on a Bi-partisan basis when Clinton was President and dividend taxes were cut again with President Bush and a Republican Congress.
We need to lower corporate tax rates and get rid of lots of deductions. That would also take a lot of corporate money out of our government. One reason it won't happen. Both Democrat and Republican law makers get money by passing laws that manipulate the tax code. It's not just the crazy high tax rates combined with a huge incentive to manipulate the tax code. It gives big companies an unfair tax advantage over small companies and is a barrier to entry. There is a conspiracy between our lawmakers and big multi-national companies to create monopolies. It works both ways as many of our Congress people and Senators have become life time lawmakers.
The Reagan tax reform that was bi-partisan lowered rates and got rid of many deductions. Cap gains and dividends were taxed at the same rate as income. Cap gains and dividend taxes were cut on a Bi-partisan basis when Clinton was President and dividend taxes were cut again with President Bush and a Republican Congress.
We need to lower corporate tax rates and get rid of lots of deductions. That would also take a lot of corporate money out of our government. One reason it won't happen. Both Democrat and Republican law makers get money by passing laws that manipulate the tax code. It's not just the crazy high tax rates combined with a huge incentive to manipulate the tax code. It gives big companies an unfair tax advantage over small companies and is a barrier to entry. There is a conspiracy between our lawmakers and big multi-national companies to create monopolies. It works both ways as many of our Congress people and Senators have become life time lawmakers.
3
Nope, corporations use many facets of the countries infrastructure. In order to build and maintain it, they must pay their fare share. If not, others have to pick up the difference.
The federal gov't does have a tool at its disposal if it wants to deal with tax-avoidance. It's called monetary seignorage.
The US government can sell bonds to the Federal Reserve, knowing that the interest and principal it pays on those bonds is returned to the US government. Free money, and it buys goods and services for the same price that ordinary tax revenue buys it.
The only downside is that past a certain point the extra money will not just be buying idle labor and idle factories and equipment. When that happens we will have inflation. But for now, don't worry - we're a long way from that.
And if we get there, guess who suffers the effects of inflation the most? The wealthy people who have a lot of cash. For those who are cash-poor, inflationary prices are offset by the rising price of their labor.
The US government can sell bonds to the Federal Reserve, knowing that the interest and principal it pays on those bonds is returned to the US government. Free money, and it buys goods and services for the same price that ordinary tax revenue buys it.
The only downside is that past a certain point the extra money will not just be buying idle labor and idle factories and equipment. When that happens we will have inflation. But for now, don't worry - we're a long way from that.
And if we get there, guess who suffers the effects of inflation the most? The wealthy people who have a lot of cash. For those who are cash-poor, inflationary prices are offset by the rising price of their labor.
1
Perhaps another approach is to recognize that corporations don't really pay taxes at all. Of course, on paper they do, but those taxes are truly paid by 3 other groups: employees (in the form of lower wages/benefits), customers (in the form of higher prices), and shareholders (in the form of reduced dividends). If we eliminated all loopholes, do you think the 'corporation' will just take it in the shorts? Or will they pass it on to others?
The Fair Tax eliminates this charade and still funds the government at current levels. No smoke. No mirrors. No games.
The Fair Tax eliminates this charade and still funds the government at current levels. No smoke. No mirrors. No games.
2
Sorry for the typo. I meant to write that Trump led the lobbying for the loophole he later took such lucrative advantage of in 1991, not 1971.
When I was in college studying Political Science in the late 1960s, I recall that one of our textbooks had a passage from a speech made in the '50s by the CEO of one of the largest corporations in America. He said that a business has four responsibilities:
First, to its workers who make the products and deliver the services that make the company successful.
Second, to the customers who trust that they are buying good quality merchandise and services for a fair and reasonable price.
Third, to the community or communities in which the business is located, since it is usually a critical keystone of the community's economic structure, draws on the community's people & services to exist, & has a responsibility to be a good "corporate citizen."
And, only fourth, to the investors who provide capital, since they are basically gamblers & expect to take out more than they put in anyway. Corporate executives also were in this category, since their own welfare was dependent on satisfying the first three "constituents."
American Vulture Capitalism routinely mistreats its workers, its customers, & its communities whenever it is profitable to do so. It values only the bottom line. And, even then, the investors are often slighted in favor of enriching the corporate executive clique. Is it any wonder that they feel no tax allegiance to the US?
When I was in college studying Political Science in the late 1960s, I recall that one of our textbooks had a passage from a speech made in the '50s by the CEO of one of the largest corporations in America. He said that a business has four responsibilities:
First, to its workers who make the products and deliver the services that make the company successful.
Second, to the customers who trust that they are buying good quality merchandise and services for a fair and reasonable price.
Third, to the community or communities in which the business is located, since it is usually a critical keystone of the community's economic structure, draws on the community's people & services to exist, & has a responsibility to be a good "corporate citizen."
And, only fourth, to the investors who provide capital, since they are basically gamblers & expect to take out more than they put in anyway. Corporate executives also were in this category, since their own welfare was dependent on satisfying the first three "constituents."
American Vulture Capitalism routinely mistreats its workers, its customers, & its communities whenever it is profitable to do so. It values only the bottom line. And, even then, the investors are often slighted in favor of enriching the corporate executive clique. Is it any wonder that they feel no tax allegiance to the US?
3
Dodge v. Ford Motor Company, 1919
If the New York Times were minting money, like say Comcast, I wonder if this opinion piece would have run? We hear or see little about the open scandal that is the tax code from non print media.
I have to think that is because the non print media are profitable corporations. When they do cover corporate taxes, we usually hear them yowling about how the USA nominal top corporate rate is one of the highest in the rich-country club. The fact is, mostly small powerless domestic corporations like the light manufacturers around here pay it. The big internationals hopscotch the globe gathering tax breaks, all without leaving their offices in Manhattan.
My point is, profitable non print media reach a lot more citizens that print media, and they are controlling our national dialogue to their own benefit. The profit motive is corrupting the way we collectively think.
I have to think that is because the non print media are profitable corporations. When they do cover corporate taxes, we usually hear them yowling about how the USA nominal top corporate rate is one of the highest in the rich-country club. The fact is, mostly small powerless domestic corporations like the light manufacturers around here pay it. The big internationals hopscotch the globe gathering tax breaks, all without leaving their offices in Manhattan.
My point is, profitable non print media reach a lot more citizens that print media, and they are controlling our national dialogue to their own benefit. The profit motive is corrupting the way we collectively think.
4
These companies and billionaires like Donald Trump always use the excuse that what they are doing is legal under U.S. tax law. What they don't say is that it was their own lobbyists, using corporate money, who lobbied Congress to slip these loopholes into our laws in the first place. The carry-forward loophole that let Donald Trump to avoid Federal Income Taxes for 18 years after losing over $917 million in 1995 was passed in 1993. Trump himself began lobbying for this regulation in 1971. Now, Forbes is reporting that Trump lost over $808 million just last year alone - giving him another 18 years of free ride. BTW, Forbes says Trump slipped all the way down to tied for 135 on their richest 400 list. If Trump was not lying about being worth $10 billion, he'd be in the top 5.
Frederic Bastiat, a French writer and economist, described what we are seeing today as far back as 1850:
"When plunder becomes a way of life for a group of men living in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it."
Frederic Bastiat, a French writer and economist, described what we are seeing today as far back as 1850:
"When plunder becomes a way of life for a group of men living in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it."
157
Fabulous quote. Add to that the fetish Americans have for the wealthy and their wealth and you have a people too enthralled to object or protest or affect change. How else to explain the Kardashians, Trump, fat-cat Ben Affleck doing ads for Lincoln, mass concern for the well being of Brad and Angelina's children?
1
"Trump himself began lobbying for this regulation in 1971."
Beartooth:
You are going to have to explain this to me -- starting with a citation to some respectable source.
Tax loss carry-forwards are available for individuals as well as corporations (that was Trump's individual tax return).
I suspect they have been around for far longer than 1971.
I don't follow why you think this is all so nefarious. Are you saying that a taxpayer who loses $1 million dollars in one year and makes $1 million the next year should pay taxes on his net gain of $0?
Beartooth:
You are going to have to explain this to me -- starting with a citation to some respectable source.
Tax loss carry-forwards are available for individuals as well as corporations (that was Trump's individual tax return).
I suspect they have been around for far longer than 1971.
I don't follow why you think this is all so nefarious. Are you saying that a taxpayer who loses $1 million dollars in one year and makes $1 million the next year should pay taxes on his net gain of $0?
2
Hey, don't just keep complaining about the system, change it. There a lot of people who don't want to change the system, even Democrats.
1
Perhaps these companies should be put on a list of unpatriotic corporations. If they are citizens, and according to SCOTUS they are, it is their patriotic duty to support America as well as every other country they do business with or in. Their employees and customers are subsidizing their ability to get out of paying their fair share of taxes to the country they work in. We are paying for their lack of support for a better infrastructure, a better health care system, monies for government programs to help those who cannot do it all by themselves.
It's nice to see these companies support zoos, botanical gardens, museums, Bicycle Sundays, and monuments. But that doesn't begin to cover what comprises a life for most of us. We appreciate their sponsorship but what about the roads, the public schools, the utilities, the air we breathe and the water we drink as well as the earth we live on? If I have to pay my fair share why shouldn't they? And if we all share the same planet these companies should not be able to exempt themselves, through loopholes or campaign support, from paying the taxes that keep a country going and providing them with employees and raw material.
It's nice to see these companies support zoos, botanical gardens, museums, Bicycle Sundays, and monuments. But that doesn't begin to cover what comprises a life for most of us. We appreciate their sponsorship but what about the roads, the public schools, the utilities, the air we breathe and the water we drink as well as the earth we live on? If I have to pay my fair share why shouldn't they? And if we all share the same planet these companies should not be able to exempt themselves, through loopholes or campaign support, from paying the taxes that keep a country going and providing them with employees and raw material.
21
Thomas Jefferson cynically warned us all about business people over 200 years ago when he said:
"Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains."
Today it has even gotten worse as multinational corporations, even those that make most of their money in the American market, have no allegiance to the United States - or to ANY country. Their sole allegiance is to their bottom line.
"Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains."
Today it has even gotten worse as multinational corporations, even those that make most of their money in the American market, have no allegiance to the United States - or to ANY country. Their sole allegiance is to their bottom line.
69
We seem to be held, as a nation, in a vise, by international corporations who can make nations battle one another for their presence -- at a steep price. A simpler tax code, lower, but one with less loopholes seems to be what should be created, but is not likely -- because of the threats, and the influence of corporate money on elections. .
10
I agree, Cheryl, and your statement is also true on a state and local level within the US. I would augment your statement to say, "We seem to be held, as a nation, in a vise, by international and domestic corporations who can make nations, states, and cities battle one another for their presence -- at a steep price." I used to work for NCR Corporation which was headquartered in Dayton, Ohio, for over 100 years until Atlanta, Georgia, made them an offer that they apparently could not refuse. Our tax code urgently needs serious reform.
1
Comprehensive tax reform will most likely occur AFTER Congress passes comprehensive campaign finance reform.
When, we the voters, can see who or which company is donating to particular Congressmen, how much is donated, and how much time is spent fund raising, we will see why the tax sausage is made so poorly.
PS To those who think prices for goods and services are higher because of taxes, think what those prices would be if each company had to have its own roads, sewers, elicrtical grid, water supply, courts, police and armies.
When, we the voters, can see who or which company is donating to particular Congressmen, how much is donated, and how much time is spent fund raising, we will see why the tax sausage is made so poorly.
PS To those who think prices for goods and services are higher because of taxes, think what those prices would be if each company had to have its own roads, sewers, elicrtical grid, water supply, courts, police and armies.
26
We need to get creative and redesign the tax code so that avoidance is much harder and authentic grass roots prosperity is easier.
Drump aside, it's apparently much tougher for an individual to avoid paying his or her fair share of taxes than a corporation. Hence, it behooves us to shift the burden of taxation onto to the shoulders of individuals - and use the full power of the state to pursue high net worth tax evasion.
To begin with, we should eliminate any distinction between ordinary income and investment income, introduce an additional bracket or two of marginal rates for high net worth individuals, dramatically lower corporate rates on companies that are based in America, and employ exclusively naturalized American workers being paid a living wage (these will be, by definition, small businesses, not YUGE ones) - with strict provisions disallowing the kind of loopholes that have allowed high net worth individuals to evade taxes by exploiting a corporate structure in the past - and make it the policy of the people of the United States that there will be no future tax repatriation holidays.
If Congress refuses to restore the economic vitality of America, by completely overhauling our tax code, and then reinvesting the proceeds from that tax harvest in America, then we must expect Drumpf after Drumpf to haunt our national life in the years to come.
Attention must be paid.
Drump aside, it's apparently much tougher for an individual to avoid paying his or her fair share of taxes than a corporation. Hence, it behooves us to shift the burden of taxation onto to the shoulders of individuals - and use the full power of the state to pursue high net worth tax evasion.
To begin with, we should eliminate any distinction between ordinary income and investment income, introduce an additional bracket or two of marginal rates for high net worth individuals, dramatically lower corporate rates on companies that are based in America, and employ exclusively naturalized American workers being paid a living wage (these will be, by definition, small businesses, not YUGE ones) - with strict provisions disallowing the kind of loopholes that have allowed high net worth individuals to evade taxes by exploiting a corporate structure in the past - and make it the policy of the people of the United States that there will be no future tax repatriation holidays.
If Congress refuses to restore the economic vitality of America, by completely overhauling our tax code, and then reinvesting the proceeds from that tax harvest in America, then we must expect Drumpf after Drumpf to haunt our national life in the years to come.
Attention must be paid.
48
Let me get this straight. You are suggesting that we give up on corporate taxation because it's too hard? You could tax "high earners", (pick your threshold) at 100 percent and still not come near to making up for business taxes. Corporate taxes accounted for 33 percent of Federal Income tax in 1952. Today it is 9 percent. The burden has already been placed on the individual. The math is easy....
"AT&T and General Electric each paid a combined tax rate of only 18 percent since 2007, according to the S&P data. Coca-Cola, Apple and IBM paid 17 percent, and Alphabet (Google’s parent) is at 16 percent. Boeing is at 8 percent, Facebook at 4 percent."
Thanks for pointing out, Mr. Leonhardt, that negotiating, the corporate tax rate is merely a starting point, before all the loopholes get applied. The bigger the company, the more well-staffed their Washington lobby agent is, and the larger their tax breaks. A company like Boeing of course gets a defense industry break. Not sure how Facebook get such a low rate, as it's product is electronic trivia--a service, albeit popular, not a physical product.
Like anything in America, the bigger the easier the richer. Small companies can't buy their way to the Congressional "bargaining" table. Corporate titans, by avoiding paying their fair share, are helping to drain our tax coffers, increasing our debt.
Has anyone calculated the full cost of tax avoidance on our treasury? I'd like to know, out of our country's full revenue stream, the portion of money lost to tax avoidance, and the total increase in debt caused by Apple et al.
Donald Trump is right when he says the system is rigged. Problem is, he's one of the biggest players, in the real estate arena, in tax avoidance. And he claims "only he can fix it, because he knows the tax scams."
Sure- like inviting a pedophile to help Congress rewrite sex offender laws.
Thanks for pointing out, Mr. Leonhardt, that negotiating, the corporate tax rate is merely a starting point, before all the loopholes get applied. The bigger the company, the more well-staffed their Washington lobby agent is, and the larger their tax breaks. A company like Boeing of course gets a defense industry break. Not sure how Facebook get such a low rate, as it's product is electronic trivia--a service, albeit popular, not a physical product.
Like anything in America, the bigger the easier the richer. Small companies can't buy their way to the Congressional "bargaining" table. Corporate titans, by avoiding paying their fair share, are helping to drain our tax coffers, increasing our debt.
Has anyone calculated the full cost of tax avoidance on our treasury? I'd like to know, out of our country's full revenue stream, the portion of money lost to tax avoidance, and the total increase in debt caused by Apple et al.
Donald Trump is right when he says the system is rigged. Problem is, he's one of the biggest players, in the real estate arena, in tax avoidance. And he claims "only he can fix it, because he knows the tax scams."
Sure- like inviting a pedophile to help Congress rewrite sex offender laws.
126
Oh nonsense and you know it. 18, 17, 16% are perfectly respectable corporate tax rates, which must be added with the 23% tax on dividends that investors pay. With that, we're up 40%+, which is way too high. And to compare a political candidate to a sex offender is uncalled for beyond the scope of respectable discourse.
2
i'm not a Trump fan in the slightest but FDR did (apparently) remark when appointing Joe Kennedy to be the first head of SEC that, "it takes a thief to catch a thief."
1
America! STOP buying the products these companies are trying to sell you. Essentially they are causing YOU to pay more taxes.
One would expect, at least, the cult of Apple users would make a bigger stink about this!
Stop supporting them.
One would expect, at least, the cult of Apple users would make a bigger stink about this!
Stop supporting them.
77
Wouldn't it be easier to pass fairer tax laws? Not buying an IPhone isn't as easy as not buying a Trump tie.
Boaycotting these companies is not possible, because they own almost everything we consume: https://sputniknews.com/art_living/201509181027180035-top-ten-companies-...
How about stop supporting the politicians- Democrat and Republican - who enact these laws that allow this supposed avoidance? They are the ones to be mad at, not companies who use what is given them!
1
A few less jobs is better than the middle class having to pay more taxes every year to support running the country because the 1 % and Corporations are legally escaping their responsibilities.
Regardless of who wins the election the Politicians wont do much about it ,other than talk.
Regardless of who wins the election the Politicians wont do much about it ,other than talk.
24
Have you listened to Elizabeth Warren recently? For the first time in my memory, or at least since Regan was elected, this country will have a chance to recalibrate our tax system in the direction of fairness. With Hillary Clinton in the White House, and a Congress that seeks to govern rather than stymie, it's my hope and my belief that we will see progress in this area. That is only one of the reasons that this election is crucial.
1
The author writes: "Consider corporate taxes, which ultimately tend to be paid by the well-off, because they own the most stock." Wow, this statement of who bears the burden of the corporate income tax is completely wrong and outmoded. Before today's integrated global economy become clear, economists assumed that the corporate income tax was borne by corporate shareholders, and concluded that the corporate tax was therefore “progressive.” Since the 1990s, however, economists from both left and right have adopted more realistic “open-economy” models that demonstrate that high corporate taxes drive capital to other jurisdictions, leaving the tax burden on immobile domestic workers through lost jobs and lower wages. Who wins? Foreign workers who get new jobs from mobile capital. This is today’s global reality. Our unacceptable policy of high and complex corporate income taxes harms U.S. workers and benefits foreign workers. Obviously, the author is neither a tax expert nor a policy wonk -- just a Senator Russell Long "tax that fella behind the tree" guy. Luckily, there are many in DC who understand the reality of today's integrated economy and that corporate tax reform will benefit US workers and families.
8
Our major problem is trying to tax the worldwide income of corporations. Every other country in the world (except Somalia) just taxes the income that corporations make in their country. This puts our corporations at a major competitive disadvantage with the corporations from ever other country.
The best way for a US corporation to make more money is to be bought by a foreign corporation. It's surprising we have any businesses left in the US.
The best way for a US corporation to make more money is to be bought by a foreign corporation. It's surprising we have any businesses left in the US.
7
No, it is not that simple. The new consensus is that labor, capital, and customers all bear the costs of the corporate income tax. But there is no consensus that labor bears most of it. In fact, the consensus is that capital bears a larger share than do labor and customers.
See http://economix.blogs.nytimes.com/2013/02/19/who-pays-the-corporate-inco....
Thus, repealing the corporate income tax will not benefit the American worker to any appreciable degree. It will not result in a flood of jobs returning the US. It will not give a supply-side nirvana. It will benefit primarily capital--shareholders and CEOs.
See http://economix.blogs.nytimes.com/2013/02/19/who-pays-the-corporate-inco....
Thus, repealing the corporate income tax will not benefit the American worker to any appreciable degree. It will not result in a flood of jobs returning the US. It will not give a supply-side nirvana. It will benefit primarily capital--shareholders and CEOs.
Bill:
Thanks for the lucid explanation, but I fear you are casting pearls before swine.
Who writes the check to the IRS for taxes and who actually bears the economic effect of the tax can be quite different.
Thanks for the lucid explanation, but I fear you are casting pearls before swine.
Who writes the check to the IRS for taxes and who actually bears the economic effect of the tax can be quite different.
1
Paying way less than 20% while complaining that the tax rate is too high, paying lawyers and accountants, and indirectly politicians, to create shell games of avoidance, our corporate culture of tax denial is galling to say the least. Yeah, it's those damn unions, and teachers you say. Not.
140
About those "damn unions ad teachers," aren't they the nice people who enjoy long summer vacations and get to retire at 55, AND get taxpayer-funded health insurance until they qualify for Medicare?
Is it fair that all those working stiffs with 401k plans will have to reach into their pockets to bail out the teachers' pension funds that have been deliberately underfunded by crooked pols and teachers' unions?
Is it fair that all those working stiffs with 401k plans will have to reach into their pockets to bail out the teachers' pension funds that have been deliberately underfunded by crooked pols and teachers' unions?
1
"Fixing it should be an early priority for the next president. If Hillary Clinton wins, it may well be."
That's just an absurd statement, with absolutely no basis in fact.
That's just an absurd statement, with absolutely no basis in fact.
32
And you think Donald Trump, who many tax experts believe has paid NO income taxes for the past 18 years, will fix this?
1
I think Sanders would have been a more likely candidate to initiate tax law changes. Hillary.....good luck with her getting too much accomplished as we stagnate over the next 4 years.
1
Actually, if you read the rest of the paper today, you will read that Wikileaks has given us a glimpse into a more equitable financial and taxation future, and that Hillary Clinton is listening to those who propose it. There are plenty of facts on the subject, TB.
1
Excellent research, David, too bad the revelations are so depressing for those of us seeking a just and equitable tax system.
Apple, which has some $50 billion plus in stashed cash is paying less in corporate tax than I am.
I wonder to what extent W. Buffet would lobby to institute his famous "Buffet rule" to cover corporations as well as individuals.
Added to workers' state, federal and municipal taxes are ridiculously high health insurance premiums which Bill Clinton in a rare candid moment called the "craziest thing in the world."
It's no wonder corporations now rule the world. Like kings and nobles of long ago, they have convinced their partners in thievery -- the right-of-center governments -- to see the corporate world's existence as an essential fact of economic life, so much so that they've had their tax load lightened to that of a feather while the rest of us bumble along like Sisyphus, working day-by-day, barely succeeding to run in place and seldom if ever reaching the top of the hill.
Dear Bernie Sanders, please let it rip on November 9th!
Apple, which has some $50 billion plus in stashed cash is paying less in corporate tax than I am.
I wonder to what extent W. Buffet would lobby to institute his famous "Buffet rule" to cover corporations as well as individuals.
Added to workers' state, federal and municipal taxes are ridiculously high health insurance premiums which Bill Clinton in a rare candid moment called the "craziest thing in the world."
It's no wonder corporations now rule the world. Like kings and nobles of long ago, they have convinced their partners in thievery -- the right-of-center governments -- to see the corporate world's existence as an essential fact of economic life, so much so that they've had their tax load lightened to that of a feather while the rest of us bumble along like Sisyphus, working day-by-day, barely succeeding to run in place and seldom if ever reaching the top of the hill.
Dear Bernie Sanders, please let it rip on November 9th!
56
I don't want to nitpick, but I'm pretty sure Apple has 200billion cash on hand.
(And to everyone else: no, I don't need to consider their future liabilities because cash on hand means exactly what you think it means)
(And to everyone else: no, I don't need to consider their future liabilities because cash on hand means exactly what you think it means)
1
The real culprit here is the Citizens United court ruling, which allows corporate cash to pour into PAC's and pockets. But whatever reforms are enacted, they should make sure that companies are still encouraged to pay dividends, and perhaps lower the 35% rate to something that companies would not try so hard to avoid, like 25? I'm sure if we actually collected 25% of ALL corporate profits we'd balance the budget and level the playing fields. And the tax havens have GOT to go, something I would think all western democracies can agree on...it would seem to be very hard for a Congressional representative to come out in favor of offshoring profits if the spotlight is shining...
11
Sometimes you have to question even more basic assumptions: why are corporations taxed on their profits, while people are taxed on their revenue? I have essentially no profits at the end of the year, and I don't even get to depreciate my house, cars, and personal computers/printers etc. All rates would go down if taxes on people and corporations were on revenue with limited or no deductions (and I like the suggestion made by another that all such changes in the tax code require a 2/3 majority).
134
That would be grossly unfair across different types of businesses.
Look at grocery stores. They turn over their entire stock every week. Their revenues are enormous, but their gross profit margin is under 1%.
On the other hand, a luxury goods maker might sell a few hundred items a year to rich people, but make thousands of dollars on each sale.
Do you really want to sock it to your local grocer while letting Rolex off the hook?
Look at grocery stores. They turn over their entire stock every week. Their revenues are enormous, but their gross profit margin is under 1%.
On the other hand, a luxury goods maker might sell a few hundred items a year to rich people, but make thousands of dollars on each sale.
Do you really want to sock it to your local grocer while letting Rolex off the hook?
13
You are not taxed on your gross income (revenue). You can deduct the expenses incurred in producing that income.
Because if people were taxed on their "profits" almost no one would pay taxes and the US would be broke. Taxing companies on revenue would be vastly unfair because profit margins vary greatly by industry and company and other circumstances so companies like Apple that have high profit margins would reap a huge windfall, while companies with low profit margins would be lucky to break even.
1
You should have published the list along with the article.
What about using a different word when considering taxes like a tithe? Because that IS what taxes really are. Rather than punishment for succeeding, they are stored potential set aside to do what will benefit all that no one person or company can do alone, not even Amazon, Walmart and Google combined.
In this light the likes of facebook, at 4%, why does this not surprise me?! multiplies exponentially the drain that they've exacted from young people, profiting from in their youth giving bodies minds and souls away cheaply and for what? Now they want to become a central player in directing retail revenue. 4%?!
Closing the loopholes will not be enough. Changing taxes from an avoidance game to a tithe must exact a price from those evading their share of the mutual good. They must face direct proportional consequences. For instance, tax employers who cheat by not paying workers adequately that they qualify for SNAP and Medicaid--while working. Make them pay the displaced cost they dump on every other working person in the land.
The same principal for all rentier evasion. Someone whose income means a lifetime of renting should not mean never having to pay taxes again for their landlord as so well exposed by Trumps taxes.
The same for companies expecting expensive degrees of entry level workers at salaries that will never defray the cost to the worker who will pay for that education for decades.
What about using a different word when considering taxes like a tithe? Because that IS what taxes really are. Rather than punishment for succeeding, they are stored potential set aside to do what will benefit all that no one person or company can do alone, not even Amazon, Walmart and Google combined.
In this light the likes of facebook, at 4%, why does this not surprise me?! multiplies exponentially the drain that they've exacted from young people, profiting from in their youth giving bodies minds and souls away cheaply and for what? Now they want to become a central player in directing retail revenue. 4%?!
Closing the loopholes will not be enough. Changing taxes from an avoidance game to a tithe must exact a price from those evading their share of the mutual good. They must face direct proportional consequences. For instance, tax employers who cheat by not paying workers adequately that they qualify for SNAP and Medicaid--while working. Make them pay the displaced cost they dump on every other working person in the land.
The same principal for all rentier evasion. Someone whose income means a lifetime of renting should not mean never having to pay taxes again for their landlord as so well exposed by Trumps taxes.
The same for companies expecting expensive degrees of entry level workers at salaries that will never defray the cost to the worker who will pay for that education for decades.
77
Using the word 'tithe' may cause heartache to a bunch of people, but the concept of tithe is great > Judaism Christianity and Islam have similar requirements re tithe -- with the latter having a 'tithe' on capital and 'windfalls' [as in finding a treasure]. Rates vary from 2.5% to 20% [or more in very rare cases].
Trump grabbed that huge deduction because he could, and his accountants were doing there job.
But why did Congress permit, in the code, that particular exemption which only applied to real estate investments by big money moguls?
Are they still giving big tax subsidies the Florida and Louisiana sugar industry?
They need to chuck it all and start over.
Exemptions and subsidies are the same thing as import tariffs, if viewed from the other end of the scope.
But why did Congress permit, in the code, that particular exemption which only applied to real estate investments by big money moguls?
Are they still giving big tax subsidies the Florida and Louisiana sugar industry?
They need to chuck it all and start over.
Exemptions and subsidies are the same thing as import tariffs, if viewed from the other end of the scope.
19
I am gobsmacked by how many Americans buy into the GOP line that "we have the highest corporate tax in the world..." and don't understand that the vast majority of large corporations pay NO Taxes.
If the GOP would close loopholes THEN reduce the tax rate, their financial blueprint *may* work...but the can't buck their corporate masters, or the all powerful lobby of US Chamber Of Commerce.
If the GOP would close loopholes THEN reduce the tax rate, their financial blueprint *may* work...but the can't buck their corporate masters, or the all powerful lobby of US Chamber Of Commerce.
317
You don't get that the loopholes in our tax code are by Congress, for members of Congress and of members of Congress.
Tax loopholes are how members of Congress tilt the playing field in favor of industries and workers in their districts and states.
Tax loopholes are the stock-in-trade of members of Congress -- what they trade for campaign contributions.
Tax loopholes mean power for members of Congress.
The world is more complicated than your fevered populist paranoia about corporate masters and the powerful (?!) US Chamber of Commerce.
Tax loopholes are how members of Congress tilt the playing field in favor of industries and workers in their districts and states.
Tax loopholes are the stock-in-trade of members of Congress -- what they trade for campaign contributions.
Tax loopholes mean power for members of Congress.
The world is more complicated than your fevered populist paranoia about corporate masters and the powerful (?!) US Chamber of Commerce.
2
However, to the left of the article, "The Corporate-Tax Mess" chart indicates a completely different story... the S & P 500 companies paid an average "tax rate covering federal, state, local and foreign taxes (2007-2015)" of 26.9%, quite a bit more than "no taxes."
2
Did you notice the major tax reform the republicans passed when they had complete control of the government from 2002 to 2006? Or all the tax reforms that have made it to President Obama's desk since republicans have had control of the House and Senate?
No? Neither did I.
No? Neither did I.
1
Why did you neglect to blame Congress for the loopholes, or the tax laws that created them?
The greatest way to resolve this particular problem is: Flat Tax. Politicians hate this option because it restricts their ability to get something for nothing. Liberal politicians especially hate this option because in addition to losing the ability to get something for nothing, they are unable to deliver on their promise to steal from the middle class and give it to their 1% cronies or the bottom 50%.
Remember: Whenever you deduct charitable donations, or the interest on your mortgage, or whatever from your taxable income, you are engaging in the same practices that businesses do - all perfectly legally.
The greatest way to resolve this particular problem is: Flat Tax. Politicians hate this option because it restricts their ability to get something for nothing. Liberal politicians especially hate this option because in addition to losing the ability to get something for nothing, they are unable to deliver on their promise to steal from the middle class and give it to their 1% cronies or the bottom 50%.
Remember: Whenever you deduct charitable donations, or the interest on your mortgage, or whatever from your taxable income, you are engaging in the same practices that businesses do - all perfectly legally.
9
Do you know why the US Tax Code is so long? Every line in the Tax Code is a favor to somebody. Scrap it and levy 18%, see all the lobbyists disappear and US Tax Lawmakers actually get back into the business of governance instead of spending 75% of their time fund-raising.
21
Corporate tax codes, while closing 'loopholes'', should be
sensitive to American jobs - I believe Amazon employs
over 130,000 people, many of which are in the U.S.
GE employs that many in America alone - we're competing
globally. I would also like to point out, since everyone's talking about 'not paying taxes', 45% of all Americans don't
pay taxes. The top 10% of Americans pay over 50% of all income taxes. We need more Americans employed so we generate more tax revenue - let's keep our jobs here. Tax code
revisions should keep that in mind.
sensitive to American jobs - I believe Amazon employs
over 130,000 people, many of which are in the U.S.
GE employs that many in America alone - we're competing
globally. I would also like to point out, since everyone's talking about 'not paying taxes', 45% of all Americans don't
pay taxes. The top 10% of Americans pay over 50% of all income taxes. We need more Americans employed so we generate more tax revenue - let's keep our jobs here. Tax code
revisions should keep that in mind.
5
There are no Americans, much less 45%, who pay no taxes - except perhaps Donald Trump.
With all due respect to Senator Wyden, he can work across the aisle all he wants and produce a wonderful portfolio of bipartisan legislation which would greatly benefit the country. But it would all be for naught if the Democrats don't also win the House, because the Tea Party will never, ever allow a bill to pass which has any blue fingerprints on it at all.
THAT is the Congress America has.
THAT is the Congress America has.
26
Corporate Welfare.
When will we name it for what it is. We greatly reduced "welfare" for the poor during Bill Clinton's time in office, but when have we reduced corporate welfare? Now is the time. The rich corporations have to pay their fair share. If corporations want to truly embody being good stewards for the planet, then prove it! Stop taking corporate welfare through the tax code or lack thereof. Let us recreate code of conduct that expresses the spirit of the preamble to the Declaration of Independence which embraces that we are equal (pay an equal percentage of taxes), in the pursuit of life, liberty and happiness.
When will we name it for what it is. We greatly reduced "welfare" for the poor during Bill Clinton's time in office, but when have we reduced corporate welfare? Now is the time. The rich corporations have to pay their fair share. If corporations want to truly embody being good stewards for the planet, then prove it! Stop taking corporate welfare through the tax code or lack thereof. Let us recreate code of conduct that expresses the spirit of the preamble to the Declaration of Independence which embraces that we are equal (pay an equal percentage of taxes), in the pursuit of life, liberty and happiness.
181
Since Clinton, welfare has skyrocketed. Democrats boast that many more people have medical care insurance but Obama Care subsidizes 85% of the people on it. That is welfare plain and simple and has added to the national debt. Will there ever be a time to repay all of our obligations or can the Fed Reserve print money forever?
1
"We greatly reduced "welfare" for the poor during Bill Clinton's time in office, but when have we reduced corporate welfare?"
Certainly not under the Clinton or Obama administration!
Certainly not under the Clinton or Obama administration!
2
Nice word -- 'almost ALL' foreign aid is corporate welfare because it comes with the condition that it must be used to 'buy American'.
I recall a case [paraphrased and details may be off] where the US 'aid' of about $800M disbursed [i.e. spent] out of the $10BILLION [YES B] 'not a penny had hit the ground in Afghanistan' > but was spent on DC consultants 'figuring out' HOW that aid was to be spent. No wonder the aid receiving countries don't 'thank' the US ...
I recall a case [paraphrased and details may be off] where the US 'aid' of about $800M disbursed [i.e. spent] out of the $10BILLION [YES B] 'not a penny had hit the ground in Afghanistan' > but was spent on DC consultants 'figuring out' HOW that aid was to be spent. No wonder the aid receiving countries don't 'thank' the US ...
A couple of points:
1. Corporate taxes are not just paid for by the stockholders, but by the customers of the company in higher prices. As for the stockholders being mostly the "well off" - that's not true of anyone who has retirement savings or pensions that are invested in the stock market.
2. The US is unusual in how it taxes corporate income derived from foreign sales and operations once repatriated. Most other countries only tax locally derived income (which is at the heart of the Apple tax issue in Ireland).
3. Nearly all other western nations have much lower corporate taxes and much higher personal income and consumption taxes (usually VATs) that are paid for by the people. This lower corporate tax helps businesses pay their employees and shareholders more (see point 1).
As an outlier in a global economy, no wonder it's difficult for the US to get the maximum tax. However, it maintains a fiction that the tax is 35% while simultaneously avoiding taxing its citizens more for political, rather than fiscal reasons.
1. Corporate taxes are not just paid for by the stockholders, but by the customers of the company in higher prices. As for the stockholders being mostly the "well off" - that's not true of anyone who has retirement savings or pensions that are invested in the stock market.
2. The US is unusual in how it taxes corporate income derived from foreign sales and operations once repatriated. Most other countries only tax locally derived income (which is at the heart of the Apple tax issue in Ireland).
3. Nearly all other western nations have much lower corporate taxes and much higher personal income and consumption taxes (usually VATs) that are paid for by the people. This lower corporate tax helps businesses pay their employees and shareholders more (see point 1).
As an outlier in a global economy, no wonder it's difficult for the US to get the maximum tax. However, it maintains a fiction that the tax is 35% while simultaneously avoiding taxing its citizens more for political, rather than fiscal reasons.
6
Right, Matt. And don't forget that Uncle Sam gets to tax the same corporate profits TWICE -- first by levying corporate income tax, and then when the same profits are distributed to shareholders as dividends.
1
I pay almost 9% in sales tax, not to mention income and property taxes. And yet corporations complain?!? What a bunch of whiners!
Freedom isn't free.
Corporations should pay up or take their chances with Putin and his oligarchic kleptocracy.
Freedom isn't free.
Corporations should pay up or take their chances with Putin and his oligarchic kleptocracy.
26
When we accept that Apple or Microsoft or all the other big companies take up tax domicile in low tax countries like Ireland, they are taking advantage of everyone of us every day. Not paying taxes means degrading infrastructure, less jobs, less opportunities. It's not the trade deals, it's the tax heavens that create these problems. It could be argued that a lower corporate tax is what we need but then get rid of any deductions they take advantage off and tax them on their goods. If Apple decides to produce its phones overseas slap them with an import tax. For companies like BP, drilling for years in this country and not paying a single dime but getting big rebates in the billions for oil exploration, this is a crime against any middle class taxpayer in this country.
322
"If Apple decides to produce its phones overseas slap them with an import tax" but of course you will pay that tax in the form of higher prices.
The people who support Trump and the GOP in general, DO NOT UNDERSTAND any of this. They are too ignorant, too easily duped and too blind to understand that they must not elect those whose entire focus in government is to support the 1%. That they are this blind is the fault of getting most of their information from FOX, local newspapers and each other at church. How this gets fixed I don't know, but until and unless we have an informed citizenry, who stops shooting themselves in the foot, do not expect anything to change, least of all the tax system. Perhaps more money for "civics" in public grade schools instead of more money for stealth bombers?
2
Just to be clear: companies don't pay taxes. Their customers pay them, in the form of higher prices. This is economics 101.
14
Not necessarily. A lot depends on what the market will bear. It might be better for a company to make up the difference by, say, lowering their CEO's salary than trying to pass the cost along to the consumer and risk losing business.
2
Yes.
And what about the super rich?
And what about inequality in the U.S.A.?
And what about the corruption of government by corporations?
Please read Lewis Powell memo at
http://reclaimdemocracy.org/powell_memo_lewis/
And what about the super rich?
And what about inequality in the U.S.A.?
And what about the corruption of government by corporations?
Please read Lewis Powell memo at
http://reclaimdemocracy.org/powell_memo_lewis/
8
What is often lost in this focus is that there are many companies and individuals who DO pay at the full marginal tax rates -- which everyone agrees are absurdly high. if P&G pay $0, someone else is paying 35 corp rate. If Trump pays $0, someone else is paying the 43.9% Fed income tax rate.
But the only proposals on the table from the left is to raise the rates on those who pay further, or leave them with the comment "no one pays it". And from the right, to cut them without spreading the base.
Major reform will have to look at re-allocating the burden within income groups, not just across groups.
But the only proposals on the table from the left is to raise the rates on those who pay further, or leave them with the comment "no one pays it". And from the right, to cut them without spreading the base.
Major reform will have to look at re-allocating the burden within income groups, not just across groups.
87
Here is an extremely simple and effective plan that will not only generate the badly needed revenue, but also establish a belief in the fairness of the tax code and of american life more generally: limit the reduction in the tax rate that can be achieved by deductions and all other means to some specific value, such as one third. Whether business, corporate, or personal, if all entities always paid at least two thirds of their nominal tax rate the system would be much more fair. The minimum percentage paid could be phased in from 0% upward for the lowest-income entities so faimilies earning $30,000 or whatever could still have zero or even negative taxes.
Likewise, a floor for all corporations and entities doing business in the U.S. based on a percentage of U.S. revenue, regardless of the declared location of corporate offices would address that ridiculous situation.
Any "solution" involving hundreds of pages of provisions is a smokescreen. A "flat tax" is an unfair oversimplification. But, a "flat floor" imposed on the existing tax code is both simple and fair, as well as effective. Wonder why we never hear of such a thing?
Likewise, a floor for all corporations and entities doing business in the U.S. based on a percentage of U.S. revenue, regardless of the declared location of corporate offices would address that ridiculous situation.
Any "solution" involving hundreds of pages of provisions is a smokescreen. A "flat tax" is an unfair oversimplification. But, a "flat floor" imposed on the existing tax code is both simple and fair, as well as effective. Wonder why we never hear of such a thing?
1
For Democrats, it is ALWAYS more spending (borrowing) and higher taxes. Such an ideology does always make life better.
"Everyone" by no means agrees the marginal tax rates are too high, much less "absurdly high". In fact, they are rather low. You are not in touch with the range of opinion.
1
Yet a main pillar of Trump's so-called tax plan is to slash the corporate rate to 15%! Which will mean few corporations will pay any tax at all. Seems only the middle class and working poor should pay taxes.
210
This would be a good plan if they eliminated the loopholes, and made everybody pay. They would not work so hard to dodge taxes if the rate were lower.
Few people know that the IRS tax code accounting is different from the GAAP accounting that corporations use to report profits. If the IRS aligned with GAAP, and just took 15% of the money, they would get a lot more revenue than they are getting now.
Few people know that the IRS tax code accounting is different from the GAAP accounting that corporations use to report profits. If the IRS aligned with GAAP, and just took 15% of the money, they would get a lot more revenue than they are getting now.
3
True enough, but he's said nothing about eliminating loopholes.
With corporations paying 0.0% now, 15% of ALL earnings would be billions supporting the budget. Nothing from nothing is nothing, fifteen percent would fund infrastructure, utilities, and employee training these deadbeat corporations rely on every day. The key would be to eliminate all loopholes and include all corporate revenue to maximize payment and capture revenue hidden overseas.
I'm always shocked that publically traded master-limited partnerships never get mentioned in discussions around big companies that avoid paying taxes. For example, Shell Midstream - a company that enjoys "pass through taxation" - closed Friday with a reported market cap near 5 Billion.
5
But the owners of MLP shares pay Federal income tax at the full rate, 39.6% plus 3.8% Medicare tax, for a total of 43.4%. They are also subject to full state income tax, and they may end up paying state taxes in states where they don't live, but the MLP does business.
I always say don't buy an MLP unless you are both a lawyer and an accountant, it isn't worth the hassle.
I always say don't buy an MLP unless you are both a lawyer and an accountant, it isn't worth the hassle.
2
These companies and their stockholders are traitors, to be as blunt as possible. They take the best from our country, then give nothing back.
Worse, they are smugly proud of it.
Worse, they are smugly proud of it.
95
If the GOP won't work with Dems to pass legislation to close these loopholes, and ensure that corporations AND individuals pay their fair share, as to the corporations, perhaps we can publish the tax rates paid by every corporation in America, broken down by federal, state, local, etc., then consumer can choose which business they will continue to support. I'd rather pay a bit more for something at a business that supports our social contract, than a bit less to a business that is, in fact, part of the "moocher" class, as Romney called them. Turns out, the real moochers are rich corporations and rich individuals.
1
Do you have a retirement account? Pension? Index investments?
If so, then you are very likely a traitor by your own logic--and apparently smugly ignorant of it.
If so, then you are very likely a traitor by your own logic--and apparently smugly ignorant of it.
1
And even further worse, realize most of us have our retirement accounts tied to these very corporate entities. So, on one side we are prudent citizens saving for retirement, but on the other we are traitors, in taking profit.
We need to clean house and demand legislation
We need to clean house and demand legislation
This is an enduring problem.
Caterpillar skirted $2.4 billion in taxes, Senate report says
Industrial manufacturer Caterpillar shifted billions of dollars in profits from the United States to Switzerland over a decade to avoid paying $2.4 billion in U.S. taxes, according to a Senate report due out Tuesday.
http://napoleonlive.info/did-you-know/corporations-not-paying-taxes-2/
Caterpillar skirted $2.4 billion in taxes, Senate report says
Industrial manufacturer Caterpillar shifted billions of dollars in profits from the United States to Switzerland over a decade to avoid paying $2.4 billion in U.S. taxes, according to a Senate report due out Tuesday.
http://napoleonlive.info/did-you-know/corporations-not-paying-taxes-2/
8
corporations are people too....and like any person living/earning abroad, they should be forced to pay immediately on their world-wide income. enough with the "no tax until repatriated" loophole. i, a citizen of this country, am not granted that benefit, neither should my fellow "citizen" (and person) multi national inc. add to it that it is unseemly to see these "people" take advantage of all of the apparatus the rest of us have built, and not pay to support it. one last thought. if the "marginal" tax rate (which these "people" hardly ever pay) makes it sooo difficult to be competitive in this global economy, how did they get so much money to begin with?
8
Well, there are two sides to this coin. People living abroad having an $80K income tax exemption, and they can apply foreign taxes on their foreign income against the US tax they owe. If the foreign jurisdiction has taxes higher than the US, they don't owe anything.
So suppose we applied the same rules to corporations, They are paying income tax on their overseas profits to foreign countries. If we allow them to take the same credit as individuals, they'll probably owe little or nothing.
So suppose we applied the same rules to corporations, They are paying income tax on their overseas profits to foreign countries. If we allow them to take the same credit as individuals, they'll probably owe little or nothing.
1
agree with your assessment - but here's the thing - the corporations are complaining that US Corp taxes are too high. So if they pay more in foreign tax than they would owe in US corp tax, kinda defeats their argument, doesn't it? I mean these "people" are setting up shop in the lowest global tax havens as it is. As for a standard deduction - corporations (ahem "people") already have alot of deductions (PP&E for example) that you and I do not take...but I would have no problem with some marginal "deduction" if that is an issue. Of course the argument will be the level of deduction...
It is more like they are doing business where their customers are. GM sells more cars in China than they do in the US, and builds these cars in China. They pay Chinese corporate tax on these profits. Why should they pay US tax as well - the whole thing is a business in China. That is the way 99% of countries handle things - you're taxed on your profits on the business you do in the country.
As for PP&E, it is a balance-sheet line item. For computing income, you can depreciate you PP&E. This is totally legit, in my opinion, because plant and equipment is an expense, does wear out, and has to be replaced through capex. This deduction is also available to individuals on their Schedule C, if they are using tools and equipment to earn income.
As for PP&E, it is a balance-sheet line item. For computing income, you can depreciate you PP&E. This is totally legit, in my opinion, because plant and equipment is an expense, does wear out, and has to be replaced through capex. This deduction is also available to individuals on their Schedule C, if they are using tools and equipment to earn income.
New analysis, same old story. The greedy have to funds to payoff legislators at all levels. How else to explain that DC taxpayers are paying off $700,000,000 in bonds that funded a new stadium where the team owner takes all the profits earned at the stadium in addition to profits from the team. This criminal activity happens at all levels. If the trump supporters had a brain they would have been fighting this kind of robbery by corporations. Instead, they vote for someone like Cruz who shuts down the government at a cost to the taxpayers of $24 Billion. There is a price for ignorance and gullibility.
34
The large c-corp retailers have all kinds of influence, you are incorrect. Last year I installed $30,000 worth of HVAC equipment, my depreciation is 29 years because I am a manufacturer. If my building was used for retail? Seven years.
C-Corps get all the tax breaks, and can afford to pay lobbyist and CPA's to walk around the code. Small businesses, that are mostly all s-corps cannot.
Trump wants to cap their tax rate at 15%. Hillary and her minions call this a tax cut for the wealthy. They are wrong too. Trump understands that this is where the middle class lives and works, and they are the people most effected by a perverse tax code.
C-Corps get all the tax breaks, and can afford to pay lobbyist and CPA's to walk around the code. Small businesses, that are mostly all s-corps cannot.
Trump wants to cap their tax rate at 15%. Hillary and her minions call this a tax cut for the wealthy. They are wrong too. Trump understands that this is where the middle class lives and works, and they are the people most effected by a perverse tax code.
4
One reason this absurd situation has festered for so long is the waning investment by the mainstream news media in business coverage. Tax records of public corporations are open to the general public, but this results not in more coverage, but less. Business (or economics) reporters at local papers and in media properties like Gannett or McClatchy long ago were downsized. Those still assigned to the business beat mostly slap headlines on corporate earnings releases and fail to look beyond the numbers to uncover important data like combined tax cash payments.
Business reporting and economics coverage in the U.S. is really more aspirational than real. It proceeds from a very favorable premise, that because businesses generate jobs, they are the white hats of society, and should be treated with admiring deference.
Just another false narrative embedded in our culture today.
Business reporting and economics coverage in the U.S. is really more aspirational than real. It proceeds from a very favorable premise, that because businesses generate jobs, they are the white hats of society, and should be treated with admiring deference.
Just another false narrative embedded in our culture today.
13
You have to be pretty naive to believe corporations or their investors pay taxes. How is the P/E ratio computed? It's the price of the stock compared to earnings per share AFTER TAXES.
This means that investors and corporation treat taxes like any other expense. If corporations pay more taxes, then they will have to raise prices to maintain their return on capital. Otherwise, since capital is highly mobile in today's global economy, they won't be able to raise capital, or maintain the capital they have.
This is only common sense. Corporations are producers, not end consumers. If taxes are truly a transfer of real value, they imply a reduction of the consumption of goods and services by one party, and an increase in consumption by another party. The only one who can reduce consumption is the end consumer, not the producers along the chain.
Therefore, any corporate taxes fall ultimately on individuals who use their products. Even other businesses who pay these higher prices will treat them as expenses - the entire bill will eventually be presented to the end consumer.
This means that investors and corporation treat taxes like any other expense. If corporations pay more taxes, then they will have to raise prices to maintain their return on capital. Otherwise, since capital is highly mobile in today's global economy, they won't be able to raise capital, or maintain the capital they have.
This is only common sense. Corporations are producers, not end consumers. If taxes are truly a transfer of real value, they imply a reduction of the consumption of goods and services by one party, and an increase in consumption by another party. The only one who can reduce consumption is the end consumer, not the producers along the chain.
Therefore, any corporate taxes fall ultimately on individuals who use their products. Even other businesses who pay these higher prices will treat them as expenses - the entire bill will eventually be presented to the end consumer.
3
Then why aren't dividends paid to shareholders taxed at the same rate as income? The wealthy derive most of their income from stock dividends and bonds. Why is income from labor taxed at a higher rate than income from investments?
12
@Tony - That is an excellent point.
I am an advocate of making dividend payouts tax-deductible to corporations, and fully taxable to the recipient at their regular rate. That would be a much more rational system, because wealthy investors would pay higher taxes and middle-class investors would pay much less.
This is, however, against my own interests, because as a retiree I receive my dividend income tax-free at the Federal level.
I am an advocate of making dividend payouts tax-deductible to corporations, and fully taxable to the recipient at their regular rate. That would be a much more rational system, because wealthy investors would pay higher taxes and middle-class investors would pay much less.
This is, however, against my own interests, because as a retiree I receive my dividend income tax-free at the Federal level.
2
I'm not holding my breath; in this country, corporations are granted more of the prerogatives of personhood than persons.
21
These companies take our money and then expect us to pay for the government systems and infrastructure that they use every day. It's simply disgusting.
34
If anyone thinks that simply lowering the federal rate of 35% will reduce corporate tax avoidance, think again.
Forty-five states and DC tax corporate income at an average rate of just 5%. How bad is corporate income tax avoidance at that low rate? Pretty bad. Tax avoidance profit shifting to subsidiaries in Delaware is used by national corporations big and small. About half the states have adopted water's edge combined reporting to counter this profit shifting within the US. However, international profit shifting by US based and foreign based multinational corporations has been allowed to ramp up and states are missing billions in untaxed corporate profits...tilting the playing field in their favor and creating a tax disadvantage for smaller domestic corporations that conduct 100% of their business within the US.
The remedy is for the states to adopt (or re-adopt in the case of 12 states) mandatory worldwide combined reporting (aka worldwide formulary apportionment). This method was first tested and approved by the US Supreme Court in 1983 in the Container case. The vote was 5-3. Tested again in 1994 in the Barclays Bank and Colgate-Palmloive cases, the court again approved worldwide combined reporting but this time by votes of 7-2 and 9-0, respectively.
The number of states that use worldwide combined reporting today? Zero.
Why? PM Margaret Thatcher. Who came up with the water's edge method?Britain protecting it's many tax havens. Think of it as King George's revenge.
Forty-five states and DC tax corporate income at an average rate of just 5%. How bad is corporate income tax avoidance at that low rate? Pretty bad. Tax avoidance profit shifting to subsidiaries in Delaware is used by national corporations big and small. About half the states have adopted water's edge combined reporting to counter this profit shifting within the US. However, international profit shifting by US based and foreign based multinational corporations has been allowed to ramp up and states are missing billions in untaxed corporate profits...tilting the playing field in their favor and creating a tax disadvantage for smaller domestic corporations that conduct 100% of their business within the US.
The remedy is for the states to adopt (or re-adopt in the case of 12 states) mandatory worldwide combined reporting (aka worldwide formulary apportionment). This method was first tested and approved by the US Supreme Court in 1983 in the Container case. The vote was 5-3. Tested again in 1994 in the Barclays Bank and Colgate-Palmloive cases, the court again approved worldwide combined reporting but this time by votes of 7-2 and 9-0, respectively.
The number of states that use worldwide combined reporting today? Zero.
Why? PM Margaret Thatcher. Who came up with the water's edge method?Britain protecting it's many tax havens. Think of it as King George's revenge.
16
How is it that people who protest Citizens United and complain that corporations are not people then turn around and claim that corporations ARE people and should be taxed?
When you tax a corporation you tax not only the rich who own the stock but you tax the little people who might own a share or two. Why is that fair?
I think taxes on corporations should be very low and taxes on rich individuals should be much higher than they are.
When you tax a corporation you tax not only the rich who own the stock but you tax the little people who might own a share or two. Why is that fair?
I think taxes on corporations should be very low and taxes on rich individuals should be much higher than they are.
5
If the government were a better steward of our tax dollars, Trump and others would have no defense for their tax avoidance. But the government is not a good steward. I wish that wasn't the case.
3
In 1776 the battle cry was, "No taxation without representation." In 2017 the new battle cry should be , "No representation without taxation!"
462
...and the Tea Party's battle cry is "Representation without taxation."
Well spoken.
Another major area that needs similar investigation would be tax regulations, tax rates and laws applied to those companies that contract with the Federal government/US Military/Department of Defense--for the hardware (weapons, ships, planes), software (research, computer systems) and personnel (military, contract workers, lobbyists) that supply and maintain the Military Industrial Complex. Doubt that anybody knows the whole picture...
Another major area that needs similar investigation would be tax regulations, tax rates and laws applied to those companies that contract with the Federal government/US Military/Department of Defense--for the hardware (weapons, ships, planes), software (research, computer systems) and personnel (military, contract workers, lobbyists) that supply and maintain the Military Industrial Complex. Doubt that anybody knows the whole picture...
1
The Founding Fathers were willing to pay taxes. Please do not delude yourself otherwise.
"Mr. Justice Holmes said 'Taxes are what we pay for civilized society.' Too many individuals, however, want the civilization at a discount." FDR
"Mr. Justice Holmes said 'Taxes are what we pay for civilized society.' Too many individuals, however, want the civilization at a discount." FDR
1
>>>>
“What we have achieved in this country is socialism for the rich and free enterprise for the poor.”
Gore Vidal
“What we have achieved in this country is socialism for the rich and free enterprise for the poor.”
Gore Vidal
133
Your last paragraph should have bee your lead paragraph, as DT is not the the real culprit here.
1
Right Jon. They just cannot resist. NYT writers must suffer from similar impulse control as Trump.
2
Scrap company tax it is out of date . Allow profits to flow through to shareholders and tax them or replace with sales tax
Public financing of elections would go a long way toward making Congress able to strip these special interest loopholes out of the tax code. If a Congressperson doesn't need Apple's or GE's contribution to run for reelection, then he or she will be far more immune to their lobbyists.
33
The tax code could be re-written but, before the President's signature is dry on the revised law, legislators will be amending bills to change the code for a host of specific cases.
The only thing would be a law that would require all changes to the tax code to be in stand-alone bills that require a 2/3 majority in both houses.
Of course that will never happen and We-the-People will continue to hand corporations and industries tax breaks while the middle income segment gets handed the bill for running the government.
The only thing would be a law that would require all changes to the tax code to be in stand-alone bills that require a 2/3 majority in both houses.
Of course that will never happen and We-the-People will continue to hand corporations and industries tax breaks while the middle income segment gets handed the bill for running the government.
9
If ending war with no ill-effects were up for a vote it would fail....
Congress doesn't work.... and voters are to blame....
Congress doesn't work.... and voters are to blame....
5
That last part had me rolling on the floor. FB, care about you? Not on your life. GE, brings go things to life? Yeah, the bottom line for them. I know whenever this subject comes up I say the same thing: read Kleinbard. So I will again, read the papers Professor Kleinbard has written. It will put to rest how our corporations are not mistreated since that is the argument the shills will present.
3
Most tax reform proposals come down to cutting taxes for the wealthy and raising them on the middle class. This is usually disguised in various ways. Given the enormous influence of the super wealthy over US politics and media, I don't think we should expect this to change.
Let's not forget that foreign corporations are allowed to make profits by selling their goods to Americans without having to pay US taxes on those profits. They get the best deal of all. Tariff free access to US consumers and no US corporate tax on those profits. Of course free trade is sacred and fiercely defended by servants of wealthy elites because of the role it has played in reducing US labor costs.
We could insist that importers pay taxes on US revenue to compensate for the corporate taxes they avoid by being foreign. We could also impose an alternative minimum corporate tax to ensure that US corporations with many tax breaks pay at least a minimum amount of tax.
However, I wouldn't expect either proposal to make it past our corporate owned Congress.
Let's not forget that foreign corporations are allowed to make profits by selling their goods to Americans without having to pay US taxes on those profits. They get the best deal of all. Tariff free access to US consumers and no US corporate tax on those profits. Of course free trade is sacred and fiercely defended by servants of wealthy elites because of the role it has played in reducing US labor costs.
We could insist that importers pay taxes on US revenue to compensate for the corporate taxes they avoid by being foreign. We could also impose an alternative minimum corporate tax to ensure that US corporations with many tax breaks pay at least a minimum amount of tax.
However, I wouldn't expect either proposal to make it past our corporate owned Congress.
39
Wrong on facts. Foreign corporations that sell products in the US must pay import duties (taxes) on what they sell, and domestic and foreigner employees earning income in the US must pay income taxes on what they earn from their foreign employer in the US. Taxing their "profit" is just another form of theft.
At no point in time has there ever been a moment when adding more regulatory or taxation burden to any business, foreign or domestic, ever lowered prices for goods and services to consumers. It only ever results in reduced consumption - and thereby lowers tax revenues. c.f. Andrew Mellon, Treasury Secretary 1921-1932, who argued for lower taxes on things like movie tickets (because the poor were already burdened), as well as the removal of tax-free municipal bonds (which Congress refused, because doing so would have reduced income to pork projects in their home states).
But don't expect to escape your liberal, Marxist bias.
At no point in time has there ever been a moment when adding more regulatory or taxation burden to any business, foreign or domestic, ever lowered prices for goods and services to consumers. It only ever results in reduced consumption - and thereby lowers tax revenues. c.f. Andrew Mellon, Treasury Secretary 1921-1932, who argued for lower taxes on things like movie tickets (because the poor were already burdened), as well as the removal of tax-free municipal bonds (which Congress refused, because doing so would have reduced income to pork projects in their home states).
But don't expect to escape your liberal, Marxist bias.
3
It depends. If you just ship goods, you pay only import duties, but your US distributors pay taxes on their US operations.
If you have a US subsidiary distributing your goods, that is typically a US corporation that is taxed in the regular way.
Either scenario, you pay tax.
If you have a US subsidiary distributing your goods, that is typically a US corporation that is taxed in the regular way.
Either scenario, you pay tax.
3
The current tax code is tailor made to maximize political influence and campaign contributions to both parties, by combining a high marginal rate with thousands of tax breaks.
The effective Federal income tax paid by corporations is around 12%, compared to the standard rate of 35%, a 23 point gap.
Tax breaks are the currency of politics. Lower rates would provide less opportunity to show favor to powerful constituents. Don't expect big changes any time soon.
The effective Federal income tax paid by corporations is around 12%, compared to the standard rate of 35%, a 23 point gap.
Tax breaks are the currency of politics. Lower rates would provide less opportunity to show favor to powerful constituents. Don't expect big changes any time soon.
66
Too often in such a discussion, it is forgotten that customers pay taxes, not corporations - corporations are merely the conduit that pass tax revenues onto the government - and at root, government is us.
When looked at from this perspective, one realizes how much influence is wielded by the ' drown the government in the bath tub ' faction who inhabit corporations as well as the political sphere; a faction who disguise their agenda by pretending lower corporate taxes do anything except keep government small enough that corporations don't have to fear regulators.
Thought exercise: How many times has a corporation lowered the price of a good we purchase because the corporation received a tax break ? How many times has a corporation said they will raise prices if taxes went up ?
It's always been interesting that if prices go up, taxes/regulation are to blame, but if taxes/regulations are relaxed, prices don't seem to decline - instead it seems the only way prices go down is if a new corporate competitor appears and starts offering the same good/service.
We should remember that corporate America has an agenda to keep government small enough for them to manhandle, and the way this is accomplished is through lower taxes - higher taxes that raised the price of every product in Walmart and on Amazon by 1 penny would hardly be noticed by consumers, but that amount of money flowing to the government scares corporate America.
When looked at from this perspective, one realizes how much influence is wielded by the ' drown the government in the bath tub ' faction who inhabit corporations as well as the political sphere; a faction who disguise their agenda by pretending lower corporate taxes do anything except keep government small enough that corporations don't have to fear regulators.
Thought exercise: How many times has a corporation lowered the price of a good we purchase because the corporation received a tax break ? How many times has a corporation said they will raise prices if taxes went up ?
It's always been interesting that if prices go up, taxes/regulation are to blame, but if taxes/regulations are relaxed, prices don't seem to decline - instead it seems the only way prices go down is if a new corporate competitor appears and starts offering the same good/service.
We should remember that corporate America has an agenda to keep government small enough for them to manhandle, and the way this is accomplished is through lower taxes - higher taxes that raised the price of every product in Walmart and on Amazon by 1 penny would hardly be noticed by consumers, but that amount of money flowing to the government scares corporate America.
173
Similar to the trickle down lie that a cut in taxes will create jobs. Never happens. They pocket the cut as profit. How about making them create the jobs first before they get the tax break?
225
No, it is not correct to say that only customers bear the burden of paying corporate income taxes. Capital and labor also do, and probably mostly capital.
See http://economix.blogs.nytimes.com/2013/02/19/who-pays-the-corporate-inco....
See http://economix.blogs.nytimes.com/2013/02/19/who-pays-the-corporate-inco....
That is exactly why Republicans push "States rights" and have targeted State and local governments. They are much easier to manipulate than the Federals Gov.
6
No, it’s time that we adjust the most uncompetitive corporate taxes in the industrialized world to a marginal rate far lower; and eliminate all deductions and exemptions. This not only could bring in MORE “revenue” but set back the profession of creative accounting at least one generation. It also would get government out of the business of determining winners and losers and eliminate the strong temptation to play you-scratch-my-back-I’ll-scratch-yours in seeking to protect corporations in congressional districts.
But I’m not sanguine about ever seeing something this sensible. Members of Congress don’t go to that cesspool of Washington, D.C. merely to become accountants themselves – they go there to exercise real power over how Americans live their lives. You get 535 little Caesars each trying to distinguish himself or herself with laws that do that, it’s inevitable that our tax code is a mess.
But I’m not sanguine about ever seeing something this sensible. Members of Congress don’t go to that cesspool of Washington, D.C. merely to become accountants themselves – they go there to exercise real power over how Americans live their lives. You get 535 little Caesars each trying to distinguish himself or herself with laws that do that, it’s inevitable that our tax code is a mess.
22
How is an effective tax rate of 20% or less - which is what most large corporations pay - uncompetitive?
In any event, while your flat tax notion sounds appealing due to its simplicity, the fact is that countless academic studies have shown it doesn't work. Tax collections decline dramatically and government struggles to provide necessary services. Steve Forbes once ran for president on a flat tax concept and economists across the political spectrum showed how and why it was a loony idea.
In any event, while your flat tax notion sounds appealing due to its simplicity, the fact is that countless academic studies have shown it doesn't work. Tax collections decline dramatically and government struggles to provide necessary services. Steve Forbes once ran for president on a flat tax concept and economists across the political spectrum showed how and why it was a loony idea.
17
The problem is much more basic. The "privileged" class demands "privileges." They want things that you and I cannot have.
11
Re "... it’s time that we adjust the most uncompetitive corporate taxes in the industrialized world to a marginal rate far lower; and eliminate all deductions and exemptions."
And: "... I’m not sanguine about ever seeing something this sensible."
Agreed (and I don't often agree with Mr. Luettgen).
But what we do tend to get when blind tax-cutters get ahold of things is reduced tax rates combined with *more* deductions and exemptions. This fits, of course, with the bathtub-drowning scheme of Grover Norquist and Co.
In the broadest sense, there are only four things to do with money: save; invest; spend; pay taxes. So counter to some pie-in-the-sky liberal thinking, there is a cost to tax rates that are too high (i.e. that is less money available for the — usually — virtuous practices of saving, investing and spending, all of which drive the economy).
That said, historical data clearly point to the value of taxation when it comes to a nation's wellbeing.
Wouldn't it be nice if elected representatives could loose their bloody-fingered grip on ideology, acknowledge such facts, and come together to, y'know, work for the good of the nation?
And: "... I’m not sanguine about ever seeing something this sensible."
Agreed (and I don't often agree with Mr. Luettgen).
But what we do tend to get when blind tax-cutters get ahold of things is reduced tax rates combined with *more* deductions and exemptions. This fits, of course, with the bathtub-drowning scheme of Grover Norquist and Co.
In the broadest sense, there are only four things to do with money: save; invest; spend; pay taxes. So counter to some pie-in-the-sky liberal thinking, there is a cost to tax rates that are too high (i.e. that is less money available for the — usually — virtuous practices of saving, investing and spending, all of which drive the economy).
That said, historical data clearly point to the value of taxation when it comes to a nation's wellbeing.
Wouldn't it be nice if elected representatives could loose their bloody-fingered grip on ideology, acknowledge such facts, and come together to, y'know, work for the good of the nation?
3
It is infuriating to me that economic issues have been all but
buried in this election, and I cannot help but believe that is intentional. Corporate crimes and tax evasion and bloated military spending are the main reasons the taxpayers of my country are being robbed. We NEED our taxpayer dollars for infrastructure, free schools, senior
care, etc, It should be criminal to steal from the taxpayers no matter who you are. Boycotts work where
corporations and/or individuals pay no taxes
buried in this election, and I cannot help but believe that is intentional. Corporate crimes and tax evasion and bloated military spending are the main reasons the taxpayers of my country are being robbed. We NEED our taxpayer dollars for infrastructure, free schools, senior
care, etc, It should be criminal to steal from the taxpayers no matter who you are. Boycotts work where
corporations and/or individuals pay no taxes
281
There's a reason that the media would prefer to talk about Trump's sexual indiscretions rather than talk about Trump's economic policies. Deporting illegal immigrants and cracking down on China's trade surplus is actually rather popular with the plebs.
6
Pres. Obama described the tax evasion by American multinationals as "immortal, unethical and, sadly, perfectly legal."
10
Yes, Yes & Yes-Yes!
1
Its all politics. How else can politicians get campaign funds if not to offer million dollar tax breaks for thousand dollar campaign donations? Business is not run by compassionate people, and they do not buy compassionate politicians. We have segregated the wealthy from the needy, and do not think about each other at all any more. The French nobles of Louis XVI took no notice of the plight of the population that serviced them, and our ultra wealthy citizens take no notice of those that service them. I see little difference in the behavior of the people then and now. Then education was limited to the few, what is our excuse? It has been apparent to me for all of my adult life that the most of the people I knew aspired to live the life of the emperors, with all the trappings and admiration of wealth they could muster, enough is never enough. The consequences of this is that they have never been content, that there is always something else that they had to have to be happy. The material life brings no contentment. Advertising has wreaked our social fabric. Now it has wreaked our politics.
48
Leonhardt is right: the tax code needs an overhaul. All this tax dodging is legal!
Trump wants to crush ISIS but he's proud that he doesn't pay taxes. What/who does he, and these corporations, think will support the US military, schools, infrastructure, space program etc.?
253
Trump and those seeking a purely territorial system of taxation believe the only taxpayers should be Leona Helmsley's "little people."
2
For many years, the Dems had the chance to reform the tax code, but did nothing. Big donors take up all the room. Just ask HRC. Expect no changes led by her if she gets in.
50
I believe HRC has publicly said she's going to propose higher tax rates on the wealthy. Will it pass? Who knows, but she's on record.
6
Raymond indulges in fantasy. No party had a veto proof congress to enable the kind of changes he imagines. He should learn some history before he writes.
8
Does that mean there will be positive changes to the tax code if our tax evader wins? No, I don't think you mean that as it would be a bit absurd. HRC is advocating an 'exit tax" for companies hiding income and assets overseas, increased taxes on the 1%, and more. So, maybe your are just not aware of her alternatives.
7
I'd like to see a ranking of all 500 S&P companies, based on percentage of taxes paid. It would definitely influence my spending choices. I imagine many other consumers would be similarly interested.
462
If you tried to base your spending on such a metric your life stlyle would probably be hunter/gather. The corporations and cartels have control of virtually everthing that a modern human wants or needs.
1
I'm ashamed to say I'm a serial user of Amazon, one of the biggest tax dodgers around. I will try to be more mindful.
3
And I would like to see it clearly published somewhere how much each company donates to each representative. This would give an even clearer picture of how to vote.
4
Make me dictator and I would shorten the tax code to one half page. Companies would pay what they owe, not next year but in fact dating back 25 years or so. Tax clawback.
Oh yes, and Stumpf would be in jail. For the duration.
Oh yes, and Stumpf would be in jail. For the duration.
58
For many U.S. citizens tax avoidance is a personal and national duty: Tax is a dirty word, its negative image conjured up by Trickle Down economists who, in their Utopian world, would like zero taxes. After all, if taxes are bad, why not dismiss them entirely instead of simply reducing them?
What these short-sighted (or self-interested) economists ignore is that the lower the direct taxes (Federal, State, etc.,.) the higher the indirect taxes: Most of Europe offers free education, free on-the-job training and retraining for the unemployed, compulsory healthcare for all (including foreign residents), outstanding roads, high-speed trains, high speed internet in every corner, lengthy vacations/pregnancy leaves and other generous health benefits ......... all of which create a more productive and more satisfied work force. The State regains more than it invests.
The U.S. should focus its efforts exclusively on eliminating waste and corruption, not on eliminating the only instrument of economic welfare.
What these short-sighted (or self-interested) economists ignore is that the lower the direct taxes (Federal, State, etc.,.) the higher the indirect taxes: Most of Europe offers free education, free on-the-job training and retraining for the unemployed, compulsory healthcare for all (including foreign residents), outstanding roads, high-speed trains, high speed internet in every corner, lengthy vacations/pregnancy leaves and other generous health benefits ......... all of which create a more productive and more satisfied work force. The State regains more than it invests.
The U.S. should focus its efforts exclusively on eliminating waste and corruption, not on eliminating the only instrument of economic welfare.
134
Amazing that Spain can do all of that when about 50% of its citizens are paying little if any tax thanks to the cash economy. Little effort at enforcement means the rest pay through the nose.
How deep is Spain in debt today?
How deep is Spain in debt today?
2
NYHUGUENOT, you took a cheap shot by comparing the U.S. with Spain. Why not compare it with Germany, which meets all the criteria I listed in my original post?
As for Spain, it has recovered from the Armageddon-PIIGS scenario mocked by Mr. Soros and others, but it will take time to reduce corruption and legitimize the economy.
The U.S. has had 200 years to do so and its entitlement programmes and election procedures are more corrupt than ever. At least Spain is moving forwards, not backwards.
As for Spain, it has recovered from the Armageddon-PIIGS scenario mocked by Mr. Soros and others, but it will take time to reduce corruption and legitimize the economy.
The U.S. has had 200 years to do so and its entitlement programmes and election procedures are more corrupt than ever. At least Spain is moving forwards, not backwards.
3
That people don't see their health insurance premium as "taxation without representation" is just bewildering to me.
When I became eligible for Medicare and Kaiser supplemental I got a $600.00 a month raise.
When I became eligible for Medicare and Kaiser supplemental I got a $600.00 a month raise.
2
Paying little or no taxes is the dirty little secret of some of the rich, both individuals and corporations.
Any just nation will put an end to this by changing the laws and eliminating any loophole that allows it.
Any just nation will put an end to this by changing the laws and eliminating any loophole that allows it.
216
There was a time not that long ago when businesses of any size paid one-half of their gross profit in local, state and federal tax. Government used the money to pay for schools, roads, basic research in health and science, exploring space, national defense, hospitals, airports, and everything else a healthy, growing society needs to prosper.
Then in the 1980s the P T Barnum of politics, Ronald Reagan, somehow fooled the country into believing that by cutting taxes and allowing all sorts of nonsense loopholes into the tax code that reduced what businesses (and wealthy individuals) paid to support the country, we would all prosper. Like so many things Reagan said, it was a lie. But an entire cottage industry was born: Accountants whose only job was to hide or obscure revenue and profits so as to legally cheat Americans out of the money they needed to keep our nation growing and healthy.
Now we're faced with the ludicrous situation where American businesses pretend they are based in Ireland or Andorra or wherever to avoid paying US taxes while still taking advantage of the benefits of being American.
Amazon and Facebook and the other companies like them aren't going to pick up and move their actual operation to Lichtenstein or the Isle of Wight if they're compelled to pay 25- or 30-percent of their worldwide gross profit to states and Washington in taxes. But they will be helping to support the country that enabled them to be successful.
Then in the 1980s the P T Barnum of politics, Ronald Reagan, somehow fooled the country into believing that by cutting taxes and allowing all sorts of nonsense loopholes into the tax code that reduced what businesses (and wealthy individuals) paid to support the country, we would all prosper. Like so many things Reagan said, it was a lie. But an entire cottage industry was born: Accountants whose only job was to hide or obscure revenue and profits so as to legally cheat Americans out of the money they needed to keep our nation growing and healthy.
Now we're faced with the ludicrous situation where American businesses pretend they are based in Ireland or Andorra or wherever to avoid paying US taxes while still taking advantage of the benefits of being American.
Amazon and Facebook and the other companies like them aren't going to pick up and move their actual operation to Lichtenstein or the Isle of Wight if they're compelled to pay 25- or 30-percent of their worldwide gross profit to states and Washington in taxes. But they will be helping to support the country that enabled them to be successful.
413
" legally cheat " ?
That's an oxymoron.
That's an oxymoron.
2
There were many structural changes in the tax code such as S corp filing and spending/payroll taxes paid outside the corp tax line - you cannot blindly compare the breakdown pre and post Reagan. Estimates from credible sources (not Bernie) generally find around 15-20% reduction in corp-related revenue. And bottom line is the economy is global.
Not disagreeing, but looking back to the 60s and cherry picking is a bad idea -- for one thing, if you want to say one factor that broke the budget: remember medicare/medicaid starts and ss expansion came in the late 60s. And t what has been the biggest driver of budget problems since ? Coincidence? I think not. Does not mean we want to go back, of course.
Not disagreeing, but looking back to the 60s and cherry picking is a bad idea -- for one thing, if you want to say one factor that broke the budget: remember medicare/medicaid starts and ss expansion came in the late 60s. And t what has been the biggest driver of budget problems since ? Coincidence? I think not. Does not mean we want to go back, of course.
6
Loopholes? Where did get your accounting degree? There are no loopholes in the US Tax Code. They are written laws. oh and by the way take a walk on Capitol Hill one day and watch the thousands of lobbyists dressed in 3,000 suits working both sides of the aisle. Its both sides.
As for Facebook not moving to Lichtenstein if you took his tax from the 4% he paid last year up to 25 or 30%. Young Zuck would be out of here on the next Private jet.
As for Facebook not moving to Lichtenstein if you took his tax from the 4% he paid last year up to 25 or 30%. Young Zuck would be out of here on the next Private jet.
8