Are businesses taxed to death? Not so much it seems...

[Gulli]

http://charlestonnewsalternative.org/article/In_The_News/In_The_News/How_Corporations_Dont_Pay_Taxes_While_You_Do/22972

HOW CORPORATIONS DON'T PAY TAXES WHILE YOU DO

When Republicans in the U. S. House of Representative unveiled its “jobs plan” (See “Republican Job Plan Is More Of The Same” on the home page), one of its features is to reduce corporate taxes from 35 percent to 25 percent.
The truth is most corporations pay much less than 35 percent. A good example is Boeing which has only paid 4.5 percent in taxes on its profits over the past five years.
Worse, General Electric is expected to pay little or no federal tax for its 2010 profits. How do they get away with it? Its called tax breaks and loopholes. and it's been going on for years.
Through deductions, accounting gimmicks, and tax shelters, American corporations are only providing nine percent of the nation’s total revenue. In 2010, corporations put only $191 billion in the federal coffers while individuals gave $899 billion [federal income tax].

And what will the loopholes deprive the treasury of this year [2011]? At least $102 billion in revenue.

$191 billion was 1,3% of the 2010 GDP, half of what other developed nations rake in and no, state taxes don't make up the difference by a long shot. Total taxable income of all American businesses in 2010 was $1,65 trillion, meaning that only 11,5% of taxable income was collected in federal corporate taxes (officially the lowest rate is 15% and that's for small shops, corporations are supposed to pay 35%). Effective corporate taxes in the United States are the lowest in the developed world (in addition the US also has very low capital gains tax rates, so rich shareholders get double the pleasure in sodomizing the middle class), but try telling the bought for politicians that...

This has been going on for years and has become a major part of the national debt.

 

[Energy96]

Don't confuse what mega corporations pay, or should I say don't pay vs. what small and medium sized businesses pay. As a small business owner I can tell you I pay an insane amount of tax. My accountant is taking advantage of every loophole available to me, sadly they are few compared to what companies like GE can take advantage of. The money I pay in tax I would much rather spend on equipment (creating jobs for other companies) and even an extra employee or 2. Instead I give it to the government to be spent on unemployment, welfare, "stimulus", corporate bailouts, kickbacks for campaign support, and other nonsense.

The system is set up to reward the huge companies and the lazy or unemployed and kill the small to medium businesses. People wonder why the economy is getting worse all the time. Remember, small businesses easily account for most of the jobs in America. The jobs that haven't been shipped off to China by mega corps like GE while it's CEO struts around The White House acting like he actually cares about American workers.

 

[Gulli]

Don't confuse what mega corporations pay, or should I say don't pay vs. what small and medium sized businesses pay. As a small business owner I can tell you I pay an insane amount of tax. My accountant is taking advantage of every loophole available to me, sadly they are few compared to what companies like GE can take advantage of. The money I pay in tax I would much rather spend on equipment (creating jobs for other companies) and even an extra employee or 2. Instead I give it to the government to be spent on unemployment, welfare, "stimulus", corporate bailouts, kickbacks for campaign support, and other nonsense.

The system is set up to reward the huge companies and the lazy or unemployed and kill the small to medium businesses. People wonder why the economy is getting worse all the time. Remember, small businesses easily account for most of the jobs in America. The jobs that haven't been shipped off to China by mega corps like GE while it's CEO struts around The White House acting like he actually cares about American workers.

This is mostly about large corporations. Small businesses pay more than that 11,5%, since they indeed have less loopholes to explore, but they too are not "taxed to death" compared to businesses in other countries and that was the point I was trying to make.

Interesting read: http://www.ctj.org/pdf/oecd201106.pdf

Now the question is do politicians not know about these numbers or are they ignoring them? I don't know which would be worse...

 

[chunkymonster]

This is mostly about large corporations. Small businesses pay more than that 11,5%, since they indeed have less loopholes to explore, but they too are not "taxed to death" compared to businesses in other countries and that was the point I was trying to make.

Interesting read: http://www.ctj.org/pdf/oecd201106.pdf

Now the question is do politicians not know about these numbers or are they ignoring them? I don't know which would be worse...

Believe it or not Gulli, I agree with you on the corporate welfare issue. Although I am not totally onboard with comparing one countries taxes and economy to another. This hints at perpetuating the global economy and subverting each country's sovereignty. Not saying that you are doing this but I'm just not a fan of using comparison and disparity as a means to forward an agenda of leveling the economic playing field across international borders.

I don't think that more taxes are what is needed as it has been reported that the level of waste, corruption, and mis-directed regulation would have a significant increase in federal revenue that the American government could implement just about any social program without being a drain on the people and/or economy; providing those are programs the American people (not politicians) actually want implemented. But, cleaning up the waste and fraud alone will not fix the issues at hand, there is a fundamental need to reform, overhaul, and rewrite the tax code, entitlement programs, and government departments and agencies. The issues have become systemic.

Politicians do know these loopholes exist but there is little political incentive to make significant changes without the continued push from the electorate. The 2010 mid-term elections, the Tea Party Movement, and increased conservative public opinion are moves against the politicians and government to mitigate the continued abuses. Loopholes, write-offs, and tax shelters are part and parcel of the reason why the American tax code is as fvc*ed up as it is.

 

[cats_Paw]

There are ways for companies to use law gray areas for their benefit and avoid paying taxes.

The oldest trick (in spain at least) is buying stuff with your profit, to lower taxes. In theory this stimulates the economy and keeps the wheel turning, but the reality is quite grim.

First, many companies dont buy products perse, instead they buy bonds, loans, etc.
Since none of that is actually *produced*, it scrambles the economies taxes.

Bare in mind, that if a company would buy, lets say 100 cars, a car dealer would pay taxes for those items instead of the company, but in this case, the taxes are non-existant, as they are not based on a product.

 

[Gulli]

The largest "loophole" which in other terms is legal tax law, is the ability for large corporations like GE and Exxon to write off income earned over seas. I digress........

This^^ is assuming you accept the premise that corporations pay taxes in the first place, which they don't.

Time for this lesson once again until it sinks in.

Corporations and businesses consider taxes a 'cost of doing business'. Taxes payments are worked into the pricing structure of whatever goods or services the business provides. Got it?

For example, to raise taxes on Exxon means you are just going to be paying that tax at the pump. Who does that hurt the most? That's right, the poor and middle class! Remember from the other thread, most of "the poor" in America have their own vehicle or even mulitple vehicles?

To raise taxes on say, a company like Home Depot; this just means the poor mexicans buying sheetrock in bulk along with nails and hammers will paying more for them. The little old lady that likes to work in her garden will be payiing more for those roses and top soil. k?

To sum up. Everytime you here a call to raise taxes on corporations, it is a call to raise taxes on the poor and middle class who buy the goods or services of the corporation. "The Rich" can easily absorb the higher prices at the pump or otherwise. The poor and middle class, on a budget, can not.

It's the little guy that ultimately gets hurt when you jack up the taxes on businesses and corporations.

Didn't we already discuss this? Corporations are not in the business of charity: if there were room to raise their prices they would have done so already. In general the global market determines the prices, not the corporations. In much of the global market corporations pay more taxes already, so even if American corporations did decide to raise prices they'd be outfoxed by foreign competitors. The empirical evidence is clear on this: when you account for VAT and other sales taxes stuff costs the same at the counter in Europe and America. Finally there is the fact that civilized nations give their workers a voice through unions and such: if commodity prices were to skyrocket then the corporations would soon find themselves battling every union there is because the workers would demand a pay raise.

 

[Wisecracker]

Don't confuse what mega corporations pay, or should I say don't pay vs. what small and medium sized businesses pay. As a small business owner I can tell you I pay an insane amount of tax. My accountant is taking advantage of every loophole available to me, sadly they are few compared to what companies like GE can take advantage of. The money I pay in tax I would much rather spend on equipment (creating jobs for other companies) and even an extra employee or 2. Instead I give it to the government to be spent on unemployment, welfare, "stimulus", corporate bailouts, kickbacks for campaign support, and other nonsense.

The system is set up to reward the huge companies and the lazy or unemployed and kill the small to medium businesses. People wonder why the economy is getting worse all the time. Remember, small businesses easily account for most of the jobs in America. The jobs that haven't been shipped off to China by mega corps like GE while it's CEO struts around The White House acting like he actually cares about American workers.

This is BS.

You don't even know the taxes you pay. You are simply trolling. And if you ACTUALLY own a business you sure don't know how to operate it. I'd start with firing your so-called accountant.

If your S-Corp or LLC is paying ANY taxes, you are doing it wrong. Sorry. That's just the way it is.

 

[beenthere]

This is BS.

You don't even know the taxes you pay. You are simply trolling. And if you ACTUALLY own a business you sure don't know how to operate it. I'd start with firing your so-called accountant.

If your S-Corp or LLC is paying ANY taxes, you are doing it wrong. Sorry. That's just the way it is.

I don't think so... If you're not paying taxes as a small/medium sized Biz then eventually the IRS will nail you. Sure there are crooked accountants that are willing to go to jail with you, but most reputable businesses avoid them.

The bottom line is many large corporations do not pay their fair share. Intel has been convicted numerous times for U.S. tax fraud.

 

[ltrazaklt]

1, OlgManG ..is again exactly right, the taxes are factored into cost, and passed onto to the consumer ..the same way when the Dems , just arbitrarily raise minimum wage, that cost is factored in, and the price goes up.
2, The VAST Majority of Businesses are ..SMALL Businesses that employ 10 or less
3, most of those Small Businesses are 'inCORPORATED' ..and depending on how much money they make, pay as much as 35% ..(not too mention things like payroll taxes etc)
4, S-Corps and LLC ..STILL pay taxes , the number of these companies from the smallest to the biggest who pay no taxes , are a very tiny in ACTUAL real numbers.
5, I will give you a REAL Life example , my Fathers 'inCORPORATED' Business ..employed in the best of times, 8 people, his accountant (one of the top 5 in the nation) ..took advantage of every 'loophole' they legally could ..they still payed 35% in taxes , and while he would have loved to Hire more people ..he couldnt.
he was an 'independent contractor' who worked for the 7th largest company in America.
6, hey Gulli , Since you know soo much about how it works ..why dont you Start a Corporation of your own, and lead by example , and show the rest of us how it's done. you remind me of Micheal Moore ..railing against business and 'corporate greed' ..did you know that Mr Moore has $50 Million in the bank( kind of greedy of him aint it?) sooo why doesnt he start his own Health Insurance Company , and lead by example, and show the rest of us how its done..the reason , because he is even more full of *** and bs than Gulli.

 

[Gulli]

1, OlgManG ..is again exactly right, the taxes are factored into cost, and passed onto to the consumer ..the same way when the Dems , just arbitrarily raise minimum wage, that cost is factored in, and the price goes up.
2, The VAST Majority of Businesses are ..SMALL Businesses that employ 10 or less
3, most of those Small Businesses are 'inCORPORATED' ..and depending on how much money they make, pay as much as 35% ..(not too mention things like payroll taxes etc)
4, S-Corps and LLC ..STILL pay taxes , the number of these companies from the smallest to the biggest who pay no taxes , are a very tiny in ACTUAL real numbers.
5, I will give you a REAL Life example , my Fathers 'inCORPORATED' Business ..employed in the best of times, 8 people, his accountant (one of the top 5 in the nation) ..took advantage of every 'loophole' they legally could ..they still payed 35% in taxes , and while he would have loved to Hire more people ..he couldnt.
he was an 'independent contractor' who worked for the 7th largest company in America.
6, hey Gulli , Since you know soo much about how it works ..why dont you Start a Corporation of your own, and lead by example , and show the rest of us how it's done. you remind me of Micheal Moore ..railing against business and 'corporate greed' ..did you know that Mr Moore has $50 Million in the bank( kind of greedy of him aint it?) sooo why doesnt he start his own Health Insurance Company , and lead by example, and show the rest of us how its done..the reason , because he is even more full of *** and bs than Gulli.

You continuously fail to look beyond direct consequences and first order effects.

1) Prices cannot be raised arbitrarily since (I pointed all of this out twice before) prices have to be balanced against demand, spending power and (foreign) competition. You are also wrong on the minimum wage thing: since labor costs are never 100% of the total cost an x% increase in wages can only justify an increase in prices of less than x%, so the workers still benefit from higher wages. Also, even if there were an x% price increase one can extend your reasoning and get a vicious circle where corporations keep raising prices and workers keep demanding higher wages. This would help no one so it doesn't happen: believe it or not but employers and unions actually negotiate to reach an equilibrium where both parties benefit.

2) The vast numerical majority of businesses yes, but they do not necessarily represent the vast majority of profit. In fact they don't: corporate loopholes basically took at least $100 billion, leaving only $200 billion (a 1/3 reduction), so their impact is far from negligible.

3) Maybe some do, but they are not the problem, they are overshadowed by larger corporations, see 2).

4) see 2).

5) When was this (before the Bush tax cuts?), does the 35% include state and/or payroll taxes? Not saying I don't believe, in fact I hope it's true.

6) I am not an American and do not currently live in America, nor do I have any desire to own a business or cheat my way out of paying taxes.

 

[Wisecracker]

I don't think so... If you're not paying taxes as a small/medium sized Biz then eventually the IRS will nail you. Sure their are crooked accountants that are willing to go to jail with you, but most reputable businesses avoid them.

The bottom line is many large corporations do not pay their fair share. Intel has been convicted numerous times for U.S. tax fraud.

Hey, Genius:

Any profit made in an S-Corp or LLC should be passed directly to the owners as a 'distribution' where the max 15% cap gains rate applies to the individual. If you have contributed capital to offset the distribution YOU PAY NO PERSONAL TAX whatsoever on the monies. The business entity itself pays no tax on the distribution.

A 15% personal cap gains tax on a distribution from an S-Corp or LLC is NOT INSANE. It's damn near a gift not subject to any payroll tax. The guy who posted this drivel was simply trolling and whining with no basis in fact.

The only 'tax' the entity is subject to would be the payroll tax match. This 8-9% is NOT INSANE and is deductible dollar-for-dollar.

You guys have no clue as to how to run a business and need to stop trolling or educate yourself.

 

[Gulli]

Again, really nice right from the socialist playbook but completely lacking any real world experience.

Businesses operate on a margin Gulli. Of course they can not just arbitrarily raise prices to whatever they want market forces being what they are. They can however raise them enough to make sure they stay on margin and are able to cover taxes owed. Do they end up paying some taxes? Of course, but the vast majority of the taxes corporations and businesses pay is covered by the consumer.

Oh please, stop drinking the corporate kool aid: almost all corporations are in very good shape and don't need to raise prices to make up for a modest tax increase and come out positive. Having a percentage based margin is what store owners do, not large corporations, their margin is "whatever the market allows and makes the shareholders happy".

 

[Wisecracker]

You don't know the definition 'socialism and communism'.

Here's a hint: You will not find 'taxes/fees/regulations' in the definition.

You are simply name-calling and labeling with 'gotcha' buzz words because everything Gulli has posted is factually accurate and you cannot refute it.

 

[Gulli]

Once again, you think taxes/fees/regulations have no affect on human behavior. This is the constant failure of socialism and communism.

You think "we'll just raise taxes on x and they will happy to pay it with no other consequences whatsoever".

Fail.

No, I actually know the rules of the system and how they can force corporations to accept a tax increase, because I meticulously research my sh*t before I open my mouth, instead of just blurting out spin I heard from some guy.

 

[wanamingo]

lol I actually had to google Minnie Pearl to figure out who she was.

 

[chunkymonster]

6) I am not an American and do not currently live in America, nor do I have any desire to own a business or cheat my way out of paying taxes.

No, I actually know the rules of the system and how they can force corporations to accept a tax increase, because I meticulously research my sh*t before I open my mouth, instead of just blurting out spin I heard from some guy.

Again, this is where you lose me. You may know the "rules" and the "system" in theory, but not being an American makes many of your arguments about how and what american companies are/are not and should/should not do largely moot points. As far as any your research goes, not being an american and not actually having been involved with the day-to-day operation of running a business, dealing with regulators, working within the american tax code, and not having any desire to do so, by default, is inherently flawed.

I would not even begin to imply any knowledge of Dutch business law, the Dutch tax code, or how changes to those laws and codes impact the Dutch people. To do otherwise, as you do, is easily perceived as elitist, arrogant, presumptuous, and just plain wrong. It's easy to argue what other people should do, how they should spend their money, and what laws they should enact when you have no first hand knowledge and the changes do not affect you.

 

[chunkymonster]

lol I actually had to google Minnie Pearl to figure out who she was.

HOWDY!

 

[Gulli]

Again, this is where you lose me. You may know the "rules" and the "system" in theory, but not being an American makes many of your arguments about how and what american companies are/are not and should/should not do largely moot points. As far as any your research goes, not being an american and not actually having been involved with the day-to-day operation of running a business, dealing with regulators, working within the american tax code, and not having any desire to do so, by default, is inherently flawed.

I would not even begin to imply any knowledge of Dutch business law, the Dutch tax code, or how changes to those laws and codes impact the Dutch people. To do otherwise, as you do, is easily perceived as elitist, arrogant, presumptuous, and just plain wrong. It's easy to argue what other people should do, how they should spend their money, and what laws they should enact when you have no first hand knowledge and the changes do not affect you.

The laws of capitalism are the same everwhere. Specific tax rules differ between countries but much has been written about the American one and so I can find out just as much about it as any American. I do not claim to know every little detail but that is irrelevant since I restrict my comments to things I do know something about. If I were to say "businesses evade taxes like so and so" then I'd be talking BS because I don't know how they do it exactly (for that you'd have to talk to wisecracker), what I do know is that the cold hard numbers prove that one third of corporate taxes ($100 billion) disappears through loopholes.

 

[JAYDEEJOHN]

Didn't we already discuss this? Corporations are not in the business of charity: if there were room to raise their prices they would have done so already. In general the global market determines the prices, not the corporations. In much of the global market corporations pay more taxes already, so even if American corporations did decide to raise prices they'd be outfoxed by foreign competitors. The empirical evidence is clear on this: when you account for VAT and other sales taxes stuff costs the same at the counter in Europe and America. Finally there is the fact that civilized nations give their workers a voice through unions and such: if commodity prices were to skyrocket then the corporations would soon find themselves battling every union there is because the workers would demand a pay raise.

Mr gulli, you seem to miss the mark, time and time again on this particular issue

Now, corps are not government, where they can at will just raise their revenues
Why not some may unfortunately ask?
They are part of a market, again, unlike a totalitarian type government monopoly, where theres actually other competitors around
Now, hows this different you might ask?
If business A sells their widgets for 1$ apiece, but B sells theirs for 1.2$ apiece, its just math, as some have said, easy to understand.

But, now consider several things
If both business A and business B have their taxes raised, and both are selling their widgets for 1$ apiece, and their profits are set in stone, as those taxes hit bottom line, they then can both raise their prices, since this wont effect competion
EXCEPT
enter business C, from overseas, where they just couldnt quite crack into business A&B's market, now, with their raised pricing due to higher taxes, which only costs the consumer more, C can now enter into this market, and both A and B suffer thru higher competition derived solely thru taxation, where possibly both A and B will have to lay off workers, thus creating a lower tax base, as both A and Bs numbers fall, also a smaller net number to tax overall.
Now, one may say, this wont happen, all I can say at this point is, look around you

 

[JAYDEEJOHN]

This is BS.

You don't even know the taxes you pay. You are simply trolling. And if you ACTUALLY own a business you sure don't know how to operate it. I'd start with firing your so-called accountant.

If your S-Corp or LLC is paying ANY taxes, you are doing it wrong. Sorry. That's just the way it is.

Now, since I havnt owned a business since 1997, this isnt so
You pay taxes, and especially state taxes
Yes, there are writeoffs in Scorps, but only if you arent making any money, or, any real money

 

[Gulli]

Mr gulli, you seem to miss the mark, time and time again on this particular issue

Now, corps are not government, where they can at will just raise their revenues
Why not some may unfortunately ask?
They are part of a market, again, unlike a totalitarian type government monopoly, where theres actually other competitors around
Now, hows this different you might ask?
If business A sells their widgets for 1$ apiece, but B sells theirs for 1.2$ apiece, its just math, as some have said, easy to understand.

But, now consider several things
If both business A and business B have their taxes raised, and both are selling their widgets for 1$ apiece, and their profits are set in stone, as those taxes hit bottom line, they then can both raise their prices, since this wont effect competion
EXCEPT
enter business C, from overseas, where they just couldnt quite crack into business A&B's market, now, with their raised pricing due to higher taxes, which only costs the consumer more, C can now enter into this market, and both A and B suffer thru higher competition derived solely thru taxation, where possibly both A and B will have to lay off workers, thus creating a lower tax base, as both A and Bs numbers fall, also a smaller net number to tax overall.
Now, one may say, this wont happen, all I can say at this point is, look around you

You completely ignored the role of unions and the facts that labor and taxes are both only part of the total cost, that business C has already cracked into A&B's market (don't you own anything coming from Sony, Toyota, Philips, Nvidia, etc... ?) and that jacking up corporate tax revenue closer to (but still less than or equal to what foreign competitors have to pay) won't cost any jobs (or too few to negate the $100 billion extra revenue) because the foreign competition still won't have a fiscal advantage (they'll have less of a disadvantage, that's all).

 

[JAYDEEJOHN]

Well, lets see
Since you own a time machine, and then bring up bottom line thats already accounted for, you were saying what?

 

[JAYDEEJOHN]

I guess these actions wouldnt have an impact atr all?
And yes, wed be seeing much more sony et al, and less US peoples working, thus lower taxable i9ncome, plus taxable income from the corporations themselves, as they see their bottom line dwindle

 

[Gulli]

I guess these actions wouldnt have an impact atr all?
And yes, wed be seeing much more sony et al, and less US peoples working, thus lower taxable i9ncome, plus taxable income from the corporations themselves, as they see their bottom line dwindle

Yeah sure, GE would be on the brink of bankrupcy and would have to fire thousands of employees if they had to actually pay taxes...

You can't just say "A causes B and B is bad so we won't do A, even though A is a good thing", you have to weigh them against each other. For example: even if corporations actually paying taxes would result in layoffs it would not negate the increased revenue unless millions of people are laid off.

 

[JAYDEEJOHN]

Yeah sure, GE would be on the brink of bankrupcy and would have to fire thousands of employees if they had to actually pay taxes...

You can't just say "A causes B and B is bad so we won't do A, even though A is a good thing", you have to weigh them against each other. For example: even if corporations actually paying taxes would result in layoffs it would not negate the increased revenue unless millions of people are laid off.

Its what Obamas whole premise is layed upon, are you kidding me? Really?