20 U.S. companies that paid 0% in taxes

[Texashiker]

No outside taxpayer subsidized a thing in that example. You're so steeped in the jealousy over someone else spending money in amounts you'll never in your life see, your brain doesn't function properly. (It's generally a result of leftardation that does this to people, in your case, who knows.)

Somehow I am jealous because companies have become a black hole for taxpayer bailouts?

http://www.usatoday.com/story/money/cars/2014/04/30/taxpayers-gm-bailout-losses/8522681/

The loss now is recorded as $11.2 billion, up from $10.3 billion. A Treasury Department auditor said the government had written off on March 20 an $826-million "administrative claim" tied to the bailout and not included in the initial estimate.

Explain to me why companies like GM need bailouts and tax breaks.

Screw GM.

If they can not make a product people want to buy, they deserve to go under.

 

[Zaap]

Geeze, so now you switch from bullshitting over movie production losses to the auto bailouts?

Who besides government suck-ups were in favor of the bailouts?

 

[Texashiker]

Who besides government suck-ups were in favor of the bailouts?

What do you consider it when a company has zero tax burden?

 

[dank69]

I don't think you people understand how companies pay their employees. They don't care what your take home is.

Right. They care about paying you as little as possible for the quality they need. You are the one who cares about take home, and you factor that into what you will accept as salary.

 

[Michael]

Corporations have to prepare consolidated financial statement, where inter-companies transactions like loan, interest expense, sales, and payable will be eliminated.

You don't file consolidated GAAP statements with tax authorities for income tax returns, you file financial statements by legal entity. There is no elimination for tax purposes.

Michael

 

[Michael]

A company reinvesting money for growth is good.

A company creating a series of international shell companies, cross-selling products within them and creating extravagant financial schemes between them to essentially avoid all tax liabilities is bad.

This is thanks to the million pet projects every bought and paid for senator/representative throws into our insanely complicated tax code.

I'll use this as an example. There are two parts to the overseas tax claims. The first is the simple part of the law that says profits made overseas are not taxable until they are repatriated to the USA. Without that law, there would be an enormous incentive to not be headquartered in the USA as the corporate tax rate is extremely high. The base law - taxing on worldwide income - creates huge issues.

So if a company has not repatriated the profits yet, the. I do not view that as a loophole at all. That is not some lawyer seizing on poor wording and escaping the intent of the law, it is exactly what the law says.

The current law punishes investment back into the USA with money made overseas. In my opinion, it is a poor law.

The second aspect is moving intellectual property assets to an overseas location and then charging a royalty rate from the low tax haven. That is legal, and OK in the simple application where it was actually developed overseas, but terrible in that it has been exploited by the creation of paper companies that use transfer taxes to reduce income taxes on money actually earned in the USA.

Michael

 

[Spungo]

Explain to me why companies like GM need bailouts and tax breaks.

Screw GM.

If they can not make a product people want to buy, they deserve to go under.

Yeah but then total demand for cars would drop and people would no longer buy cars.
(People have actually said this, and I think they were serious).

A studio doesn't just "lose" 200 million. That's 200 million spent on the salaries of all the people that made the movie

Translation: 200 million worth of capital misallocation. Instead of making things people wanted, they were doing the equivalent of digging holes just to fill them up.

Two and more importantly, the market sets the price of goods and services. If companies can raise their prices to cover higher taxes then they certainly could raise prices at any time, they can't and they don't. Only an idiot CEO wouldn't raise prices if the market would support it.

Econ 101.

This reminds me of an election debate I saw a few years ago. The republican was saying lower taxes would cause fewer bankruptcies. The democrat pointed out that companies losing money already pay no taxes. The republican either didn't understand or didn't care, but he kept repeating the same thing. It's really weird how many people think companies pay taxes on gross earnings instead of net earnings.

 

[BoberFett]

This reminds me of an election debate I saw a few years ago. The republican was saying lower taxes would cause fewer bankruptcies. The democrat pointed out that companies losing money already pay no taxes. The republican either didn't understand or didn't care, but he kept repeating the same thing. It's really weird how many people think companies pay taxes on gross earnings instead of net earnings.

It's really surprising how many ignoramuses (ignoramii?) think that companies SHOULD pay taxes on revenue and not profits. There are some right in this forum.

 

[PlanetJosh]

I was also thinking that 20 isn't a lot. But that's just an initial reaction so I could be wrong. If it was 20% of all major U.S. companies then all hell would break loose.

 

[Exterous]

I do not view that as a loophole at all. That is not some lawyer seizing on poor wording and escaping the intent of the law, it is exactly what the law says.

The current law punishes investment back into the USA with money made overseas. In my opinion, it is a poor law.

A loophole does not soley consist of poor wording or escaping the intent. The definition allows for application if the law is found to be inadequate (lacking quality):

An ambiguity or inadequacy in the law or a set of rules

So while you may not find it to be a loophole the Oxford Dictionary does.

 

[Michael]

A loophole does not soley consist of poor wording or escaping the intent. The definition allows for application if the law is found to be inadequate (lacking quality):



So while you may not find it to be a loophole the Oxford Dictionary does.

I don't think your conclusion fits the definition. There is no doubt what the law says, it says no taxes until repatriated. The law in not inadequate. The intent is not to tax unless repatriated.

Michael

 

[Fern]

-snip-

I'm also not sure if the employer portion is capped.

The Medicare portion is not capped (for either employer or employee).

http://www.irs.gov/taxtopics/tc751.html

Fern

 

[Fern]

-snip-
With that in mind, chew on this little nugget: If companies were taxed the crap out if them, what do you think those companies would do, assuming no loopholes, tax havens, etc exist? Do you think they will just throw their hands up and continue to hand over large checks to the government? Or do you think, they just might, put that extra money towards investing? I'd imagine that most companies would invest in themselves and produce lower profits than pay more in taxes.

Difficult to know.

If the problem is high taxes your suggestion of investing in themselves doesn't make a whole of sense since the problem isn't solved. Such investment is only a solution to excess demand, meaning investment will result in higher sales/profits. Useless investment for a write-off isn't much better than simply donating to a tax deductible nonprofit.

For large multinational corporations, which is the topic of discussion here, I think it quite difficult to get an immediate 100% write-off for such investments.

In any case, shoveling out money to avoid taxes today doesn't make much sense since you're only postponing the high tax until later. However, if you're expecting a lower tax rate in the (near) future it does make sense.

But I think the real question is not what corporations would do about excessive income taxes, but what would investors do. I believe they would move out of the stock market and into better yielding investments unburdened by excessive taxes. Killing the stock market would have profoundly negative consequences.

Fern

 

[s0me0nesmind1]

The biggest loophole is "accelerated depreciation" which is a bonus for investing in equipment that usually creates jobs.

Another big "loophole" is R&D tax credit. Promotes spending on R&D in the USA.

Sometimes I wonder if people really know what a loophole is ....

Michael

Agreed. But notice how our president Obama will only mention loopholes that the mentally handicapped will understand.... He won't talk about accelerated depreciation. Why is that liberals?

 

[Fern]

The article is unhelpful at best.

'Outrage' over 20 companies not paying taxes is rather stupid, and of course just partisan red meat. The real question is why are these corporations not paying income taxes?

I would bet that there is no one reason.

A pharmaceutical company might get a credit/deduction for R&D. But is it really wrong to allow them a deduction for money actually spent? I.e., those expenditures are treated as others actually paid out like wages, rent, insurance and utilities. In any case the treatment only results in a timing difference. Those expenditures are going to deducted anyway. It's only a mater of when.

Some of these corporations may have incurred huge losses in prior years and are still carrying these losses (NOLs) forward. There's nothing wrong with that. Even we as individuals are allowed to do that.

Again, before going off half-cocked about 20 corporations not paying taxes we need to know the 'why' and this article doesn't address that at all.

Fern

 

[Fern]

A loophole does not soley consist of poor wording or escaping the intent. The definition allows for application if the law is found to be inadequate (lacking quality):



So while you may not find it to be a loophole the Oxford Dictionary does.

I don't find that you are saying anything different than what Michael has said.

A loophole is an unintended consequence of tax law. To be a (true) "loophole" it most certainly must escape the intent of Congress etc. Since it does not conform or result in the intended consequences all loopholes can be said to be " inadequate".

Loopholes can exist for several reasons. They can be caused by ambiguity. They can be caused by poor wording (which may be seen as the same as ambiguity). These are typically cleared up by a 'technical correction' bill upon discovery.

The most difficult loopholes to fix are those resulting from the application of two or more separate tax laws that apply to a single transaction. These are often complicated situations. A good example is the 'Carried Interest' that applies to fund managers and (IMO unjustifiably) converts ordinary income into LTCG taxed at a much lower rate.

As a tax professional I find the use of the term "tax loophole" by non- tax professionals to be regularly bastardized beyond recognition.

Fern

 

[Exterous]

I don't think your conclusion fits the definition. There is no doubt what the law says, it says no taxes until repatriated. The law in not inadequate. The intent is not to tax unless repatriated.

Michael

Completely delving off the topic of the thread and into near useless semantic debate: You are focusing on a condition that is not part of the definition. The definition does not require a law to succeed or not succeed in its intent to be considered a loophole. It does not require a skirting due to poor wording. It can be a loophole solely by being considered inadequate. This is not to say the law is inadequate in achieving its goal - merely that it is found to be lacking in quality or insufficient for a purpose. This purpose is not limited to its stated goal and can be viewed in terms of a more comprehensive effect at different levels of view. An example of one such level: Was its purpose to keep trillions of dollars overseas? I think not. If we look at it in terms of quality the definition does not require it to be of poor quality in achieving its goal but only be of poor quality. The definition of loophole allows for opinion based application

For example - you said it was a poor law in your opinion. Poor and inadequate are synonyms so it would also be correct to say this as an inadequate law in your opinion - not in terms of achieving its goal but in what I would assume would be the overall goal of having a good tax code. An inadequate law is by definition a law with loophole(s)

All that said I don't know if there is really a point in the debate as I can't imagine any sort of fruitful benefit from this. I am not even really sure why if it was worth typing the reply - not as an offense to you but really - what does this gain either one of us? I think it'll likely be left that neither one of us agrees with the other and thats fine. More importantly I am rambling and really should get to bed.

Have a good afternoon!

A loophole is an unintended consequence of tax law.

To which I would think the effect of encouraging trillions of dollars to be kept overseas would apply.

As a tax professional I find the use of the term "tax loophole" by non- tax professionals to be regularly bastardized beyond recognition.

This I don't doubt given that the definition allows for an opinion based application of the word

I don't find that you are saying anything different than what Michael has said.

Which is what most semantic debates come down to which is why I don't understand why I drag myself into them....

 

[Michael]

Once again, you miss the obvious error in your attempt to prove that applying a law as written and as clearly intended is a "loophole". The wording of the repatriation law is not inadequate. The entire concept of taxing worldwide income and then forcing the provision that there is no tax unless the money is brought back is the inadequate result of the poor system. The consequence of that law may make companies look for loopholes to bring cash back and not pay tax, but an adverse consequence does not make a loophole.

Fern and I routinely deal with the US tax code. What you are proposing as a definition of "loophole" is not what the common usage of exploiting a loophole in the tax code means. As Fern said, there is a big difference in companies using the law as intended (accelerated depreciation, loss carry forwards or loss carry backs etc) and finding a poorly written a section of the tax code and exploiting it (carried interest being applied to managment fees of PE firms).

Michael

 

[schmuckley]

Taxes are at near historic lows, that's what makes the Tea Party movement so ridiculous. T axed E nough A lready? Not hardly, It's not taxes that's the problem, it's the "job creators" and the decades of stagnant wages, that's the real problem.

What stuff have you been smoking?
Maybe taxes for corporations,but certainly NOT for the average citizen.
Property taxes doubled during the "boom" and have only backed off 15%
Fuel taxes are up and the Fed is wanting more even though only 15% of the revenue actually goes to roads and bridges.
FICA is up
and now there's Obamacare tax.
Not to mention various local taxes and fees that increased (doubled) after the housing bubble burst.

Not sure where you get your information;but it is most certainly incorrect

To add to that,Food prices keep rising.

 

[CPA]

so if the corporate tax rate is so low, why are companies moving off shore to avoid the high US taxes to pay a lower tax to the country they move to?

because liberals want to say they won the argument both ways.

 

[dank69]

because liberals want to say they won the argument both ways.

Or because zero is more attractive than too low.

 

[CPA]

See, this thread just shows some people should not be discussing things they have no clue about.

GM, one of the three listed by the OP, knew it would have a 0% effective tax rate for years. Why? it's called loss-carryforwards. They had $45B, that's Billion, in loss-carryforwards that they could apply going back to 2010. so, this was known 4 years ago! But, it gets better because GM may not have been able to take these carryforwards because of their change of ownership. The change, was the government takeing ownership and we all know they will do whatever they want. Well, the government decided to exempt GM from the loss carryforward restriction. Remember when many of you were hailing the government intervention of GM? "saved millions of job", "kept an american icon going", blah, blah, blah. Well, this is one of consequences most of you didn't consider. You got what you asked for OP. Oh, GM will probably be 0% EFFECTIVE next year, as well.

But the federal government, in a little-noticed ruling last year, decided that companies that received U.S. bailout money under the Troubled Asset Relief Program won't fall under that rule.

"The Internal Revenue Service has decided that the government's involvement with these companies, both its acquisitions plus its disposals of their stock, means they should be exempt" from the rule, said Robert Willens, a New York tax consultant who advises investment banks and hedge funds.

The government's rationale, said people familiar with the situation, is that the profit-shielding tax credit makes the bailed-out companies more attractive to investors, and that the value of the benefit is greater than the lost tax payments, especially since the tax payments would not exist if the companies fail.

 

[BoberFett]

What stuff have you been smoking?
Maybe taxes for corporations,but certainly NOT for the average citizen.
Property taxes doubled during the "boom" and have only backed off 15%
Fuel taxes are up and the Fed is wanting more even though only 15% of the revenue actually goes to roads and bridges.
FICA is up
and now there's Obamacare tax.
Not to mention various local taxes and fees that increased (doubled) after the housing bubble burst.

Not sure where you get your information;but it is most certainly incorrect

To add to that,Food prices keep rising.

The federal income tax is barely more than a century old.

To partisan assholes looking to pass lies off as truth, history only goes back as far as they need it to in order to make their point.

"TAXES ARE AT HISTORIC LOWS!!!!!"*


*Assuming the US didn't exist before 1900.

 

[dank69]

The federal income tax is barely more than a century old.

To partisan assholes looking to pass lies off as truth, history only goes back as far as they need it to in order to make their point.

"TAXES ARE AT HISTORIC LOWS!!!!!"*


*Assuming the US didn't exist before 1900.

Historic doesn't necessarily mean "all the way back to the big bang."

 

[BoberFett]

Historic doesn't necessarily mean "all the way back to the big bang."

Taxes are at historic highs. *









* Measured against the tax rate last week