Corporate Tax Behavior So Bad Even Fortune Magazine Can’t Stomach It

[ivwshane]

Even better. In the hobby lobby thread liberals were all upset about the idea of corporations having moral values, and claimed they should only do whatever maximizes shareholder value.

And here they are crying about them doing just that.:hmm:

Nope! Wrong again!

They are complaining about our, as in the citizens of the USA, not prioritizing what issues we should be concerned with. We, as a nation, demonize peoples economic status (especially the poor) without questioning how they got there in the first place.

 

[PokerGuy]

So just to keep track of the scorecard, taking legal steps to avoid paying taxes is OK if your name is Clinton, but horrible tax dodging unpatriotic behavior if you are a republican, conservative or any corporation acting all corporationy??

 

[Zebo]

Worst part of this is is corps use govt services more than anyone. Our federal courts are tied up with all their disputes, FBI pursue their patent and copyrights, FDA guarantees profits for exclusive rights to sell drugs among other things. Trillions a year in govt contracts. Military protection and projection for their profits.

If anything they should pay more not less than your avg person. But golden rule dominates US today. That is: Those with gold make the rules.

Proof
https://www.princeton.edu/~mgilens/...ens and Page 2014-Testing Theories 3-7-14.pdf

 

[chucky2]

I think you missed the OP's point. I'll post it for you:

Haven't read that thread, so no idea what the OP is whining about. Here is from his article:

"It’s all perfectly legal, Sloan writes, but “being legal isn’t the same as being right.” He cites a Joint Committee on Taxation report that says inversions alone will cost the U.S. Treasury—read “taxpayers”—$19.5 billion in lost tax revenue over the next ten years, “enough to cover what Uncle Sam spends on programs to help homeless veterans and to conduct research to create better prosthetic arms and legs for our wounded warriors.”"

These companies are working the tax code to the best of their abilities, just like private citizens. It seems you guys are mad that these Corp are doing what is best for them legally? If you're happy for the woman driving a Benz collecting food stamps, that is, maximizing what she can get legally, shouldn't you be happy for this Corp maximizing what it can get legally? It's not like a single Corp maximizing what it can get legally even has affect on the revenue of the US Gov, we know from previous threads that individual (whether that be singular citizens or Corp, doesn't matter) contributions added together cumulatively don't have any affect on the Gov...I'm not seeing the issue here?

 

[chucky2]

Even better. In the hobby lobby thread liberals were all upset about the idea of corporations having moral values, and claimed they should only do whatever maximizes shareholder value.

And here they are crying about them doing just that.:hmm:

Yes, that is strange...

 

[ivwshane]

It's odd because you quote me, which would indicate that you read what I wrote and yet when I clarify the OP's point you ignore it and make up your own reason for why the OP is upset.
Maybe you should bother with reading the thread to understand what the thread is about. I know sometimes I post articles where the writers point is irreverent to my own point but the data provided is relevant.

Haven't read that thread, so no idea what the OP is whining about. Here is from his article:

"It’s all perfectly legal, Sloan writes, but “being legal isn’t the same as being right.” He cites a Joint Committee on Taxation report that says inversions alone will cost the U.S. Treasury—read “taxpayers”—$19.5 billion in lost tax revenue over the next ten years, “enough to cover what Uncle Sam spends on programs to help homeless veterans and to conduct research to create better prosthetic arms and legs for our wounded warriors.”"

These companies are working the tax code to the best of their abilities, just like private citizens. It seems you guys are mad that these Corp are doing what is best for them legally? If you're happy for the woman driving a Benz collecting food stamps, that is, maximizing what she can get legally, shouldn't you be happy for this Corp maximizing what it can get legally? It's not like a single Corp maximizing what it can get legally even has affect on the revenue of the US Gov, we know from previous threads that individual (whether that be singular citizens or Corp, doesn't matter) contributions added together cumulatively don't have any affect on the Gov...I'm not seeing the issue here?

 

[ivwshane]

Yes, that is strange...

It is strange because no one said that. Religious beliefs are not the same as morals. Sure some idiots believe that, like nehlam, but he also has sex with toasters.

 

[chucky2]

It's odd because you quote me, which would indicate that you read what I wrote and yet when I clarify the OP's point you ignore it and make up your own reason for why the OP is upset.
Maybe you should bother with reading the thread to understand what the thread is about. I know sometimes I post articles where the writers point is irreverent to my own point but the data provided is relevant.

I read it, it's why I'm confused. The OP is talking about priorities being mixed up. If the OP, presumably, because I haven't read the thread he refers to so I don't know his stance...although given his past postings, I'm sure my guess would be accurate, is fine with the Benz lady also getting food stamps, but actually has a problem with a Corp getting what it can, then I'm not sure what the OP point is.

Both are maximizing what they can get legally. Thus the OP should have a problem with neither, and those that have a problem with Benz lady should also have a problem with the Corp.

The OP is the OP...thus no one was bashing the Corp as the OP was just starting this thread about it.

Since you understand the OP better than I, can you maybe clarify WTF his problem is, and include Benz lady reference in that explanation?

 

[chucky2]

It is strange because no one said that. Religious beliefs are not the same as morals. Sure some idiots believe that, like nehlam, but he also has sex with toasters.

What is with the toaster thing? You're like the 3rd person I've seen reference that, yet, I don't remember anyone saying they wanted to have sex with a toaster. It's...odd...

 

[BurnItDwn]

What is with the toaster thing? You're like the 3rd person I've seen reference that, yet, I don't remember anyone saying they wanted to have sex with a toaster. It's...odd...

He "REALLLY" likes toast... a lot ... (I don't know, I just thought it would be funny to say that.)

 

[glenn1]

Haven't read that thread, so no idea what the OP is whining about. Here is from his article:

"It’s all perfectly legal, Sloan writes, but “being legal isn’t the same as being right.” He cites a Joint Committee on Taxation report that says inversions alone will cost the U.S. Treasury—read “taxpayers”—$19.5 billion in lost tax revenue over the next ten years, “enough to cover what Uncle Sam spends on programs to help homeless veterans and to conduct research to create better prosthetic arms and legs for our wounded warriors.”"

These companies are working the tax code to the best of their abilities, just like private citizens. It seems you guys are mad that these Corp are doing what is best for them legally? If you're happy for the woman driving a Benz collecting food stamps, that is, maximizing what she can get legally, shouldn't you be happy for this Corp maximizing what it can get legally? It's not like a single Corp maximizing what it can get legally even has affect on the revenue of the US Gov, we know from previous threads that individual (whether that be singular citizens or Corp, doesn't matter) contributions added together cumulatively don't have any affect on the Gov...I'm not seeing the issue here?

It's pretty simple actually. Don't worry about the process or anything else, just go to the result and if it's not positive for "the little guy" or harmful to the "rich and powerful" then work yourself backwards to where you can change the rules to get the outcome you want.

 

[Cozarkian]

Worst part of this is is corps use govt services more than anyone. Our federal courts are tied up with all their disputes, FBI pursue their patent and copyrights, FDA guarantees profits for exclusive rights to sell drugs among other things. Trillions a year in govt contracts. Military protection and projection for their profits.

Marshall's and H&M are two companies that both operate in the U.S. and provide similar services. It seems likely they receive the same legal benefits. For example, they use the same court system for slip-and-fall cases, copyright disputes, breach of contract, etc..., and the military protects their stores equally.

However, Marshall's is an American Corporation and H&M isn't. Thus, if H&M and Marshall's have identical profits and those profits are created in at least two countries (like the U.S. and Mexico), H&M would pay less in taxes, by virtue of its foreign citizenship.

Can you (or anyone else) explain why the defining characteristic in the amount of taxes you pay should be whether you incorporated in the U.S. or a foreign country? Wouldn't it make more sense to make the defining characteristic the amount of profits generated in the U.S.?

 

[Oldgamer]

It's odd because you quote me, which would indicate that you read what I wrote and yet when I clarify the OP's point you ignore it and make up your own reason for why the OP is upset.
Maybe you should bother with reading the thread to understand what the thread is about. I know sometimes I post articles where the writers point is irreverent to my own point but the data provided is relevant.

Sometimes it just isn't worth engaging with some folks who clearly aren't interested in reading a post or what is in an article to give an informed opinion. They just want to whine and complain that someone is whining and complaining without knowing why, because you know, they didn't read the article..lol

 

[Zebo]

Marshall's and H&M are two companies that both operate in the U.S. and provide similar services. It seems likely they receive the same legal benefits. For example, they use the same court system for slip-and-fall cases, copyright disputes, breach of contract, etc..., and the military protects their stores equally.

However, Marshall's is an American Corporation and H&M isn't. Thus, if H&M and Marshall's have identical profits and those profits are created in at least two countries (like the U.S. and Mexico), H&M would pay less in taxes, by virtue of its foreign citizenship.

Can you (or anyone else) explain why the defining characteristic in the amount of taxes you pay should be whether you incorporated in the U.S. or a foreign country? Wouldn't it make more sense to make the defining characteristic the amount of profits generated in the U.S.?

I wouldnt say "profit" at all. Sales, flat tax 20-30%. It's to easy to show zero profit in high tax zones for these multinationals - they simply expense their R&D and other costs from world wide operations to country with highest tax and show no profits.

 

[Cozarkian]

I wouldnt say "profit" at all. Sales, flat tax 20-30%.

So companies that sell products with a small markup (like gas) either go out of business or drastically increase prices?

 

[ivwshane]

Marshall's and H&M are two companies that both operate in the U.S. and provide similar services. It seems likely they receive the same legal benefits. For example, they use the same court system for slip-and-fall cases, copyright disputes, breach of contract, etc..., and the military protects their stores equally.

However, Marshall's is an American Corporation and H&M isn't. Thus, if H&M and Marshall's have identical profits and those profits are created in at least two countries (like the U.S. and Mexico), H&M would pay less in taxes, by virtue of its foreign citizenship.

Can you (or anyone else) explain why the defining characteristic in the amount of taxes you pay should be whether you incorporated in the U.S. or a foreign country? Wouldn't it make more sense to make the defining characteristic the amount of profits generated in the U.S.?

I personally can't argue against that.

 

[Darwin333]

The Clinton's are taking US subsidies?

In some form or another it can be argued, and very often is by your side, that every last one of us benefits from subsidies.

The bottom line to this discussion is that the law needs to be changed, period. I have a very hard time finding fault in anyone legally reducing their tax liability. I do it every year at tax time to the full extent that I legally can, I am quite sure that you do the same thing as does everyone else posting in this thread (assuming you/they file taxes).

 

[Engineer]

In some form or another it can be argued, and very often is by your side, that every last one of us benefits from subsidies.

The bottom line to this discussion is that the law needs to be changed, period. I have a very hard time finding fault in anyone legally reducing their tax liability. I do it every year at tax time to the full extent that I legally can, I am quite sure that you do the same thing as does everyone else posting in this thread (assuming you/they file taxes).

This.

 

[ivwshane]

In some form or another it can be argued, and very often is by your side, that every last one of us benefits from subsidies.

The bottom line to this discussion is that the law needs to be changed, period. I have a very hard time finding fault in anyone legally reducing their tax liability. I do it every year at tax time to the full extent that I legally can, I am quite sure that you do the same thing as does everyone else posting in this thread (assuming you/they file taxes).

You are absolutely correct and I suspect that the OP agrees with you. The issue is that the laws need to be changed and instead of demonizing people or corporations we should be demonizing those who aren't pushing forth that change. We aren't doing that though.

 

[alkemyst]

If you guise really want to change things you gotz to get over Demo/Rep/Ind bullshit.

However; your fanhood has set their roots deep.

 

[Fern]

-snip-
Can you (or anyone else) explain why the defining characteristic in the amount of taxes you pay should be whether you incorporated in the U.S. or a foreign country? Wouldn't it make more sense to make the defining characteristic the amount of profits generated in the U.S.?

That, in a nutshell, defines the problem. The responsibility for this problem rests soley with Congress. It was they who decided to be different among the world and tax all income, no matter where earned.

In times, before international business and global corporations it had no effect; it wasn't really a problem. US businesses were here and sold to US customers. Same for foreign business.

Even when companies exported their products it didn't matter. E.g., if I make the product here and ship to France for sale I cannot be taxed in France. I have no operations there. There is no legal, academic or theoretical basis for France to tax me. And if they tried they could never enforce it.

Now OTOH, if/when I set up manufacturing France ca tax me, but the USA thinks it too can tax me. This is where we are now, and this is why we are now seeing the problem. Another recent example is Walgreen's. If they merely shipped their products to customers in Europe there would be no problem. Instead, they brought up a bunch of retail stores in England. Now they have a problem; the cure is an inversion.

The OP continually used the term "evasion' in his post. That is 100% incorrect. The correct term is 'avoidance'. Tax avoidance is entirely legal.

The term "loophole" is also 100% incorrect. A loophole is an unforeseen and/or unintended benefit. There is nothing unforeseen or unintended here. There is also no 'benefit'.

If you democrats/liberals/progressives got what you wanted you'd foolishly kill US businesses and leave the world to our foreign competitors. Now, isn't that stupid?

E.g., a British drug store can start a US subsidiary and open stores and sell its products in the US without any of its British profits being tax here. Now if a US drug store (e.g., Walgreens) starts a British subsidiary to open stores and sell in Britain all it's British profits are subject to tax in Britain AND here in the USA. What happens in a competitive market when one player is burdened with a higher cost model? That's right, they go out of business.

Fern

 

[Fern]

-snip-
The bottom line to this discussion is that the law needs to be changed, period. I have a very hard time finding fault in anyone legally reducing their tax liability. I do it every year at tax time to the full extent that I legally can, I am quite sure that you do the same thing as does everyone else posting in this thread (assuming you/they file taxes).

"[T]he law needs to be changed"? How?

How are you going to change the law?

The only way I can see to reach the Dems/libs/progs objective is to outlaw foreign ownership of a US corporation. I.e., an inversion couldn't be done, but, then again, the British drug store company couldn't do business here by starting a US subsidiary.

Do you think that's even legally possible?

Do you think that's politically possible?

If such a law were passed how would other countries react to all the US owned subsidiaries doing business over there? Is such a law even practically possible?

Or do you have some other law change in mind? If so, please elaborate.

Fern

 

[Fern]

My point is you don't know WTF you are talking about.
-snip-

Everything in his post was correct.

Fern

 

[Fern]

A lot problems, misunderstanding and misinformation in this thread and the article. Of course, since this is about income taxation that is the norm.

I guess the loopholes aren't enough for these guys. Large corporations in the US pay a pretty small effective rate. Average effective rate of 12.6%. If true, make it a fixed 18% or so, remove the loopholes and scrap much of the code (credits, deductions, additions, etc) and call it a day.

http://money.cnn.com/2013/07/01/news/economy/corporate-tax-rate/index.html

The 12.6% number is entirely bogus, even if calculated with mathematical precision.

The amount of income tax charged is based on the profit calculated under (tax accounting) rules mandated by Congress. The amount of profit such studies use is calculated on a completely different basis - Generally Accepted Accounting Principles (GAAP).

I do corporate tax returns for a living. Corporations DO pay 35%. There are few exceptions (the 'green tax credit' received by GE for making green appliances is an example of an exception).

Why are there differences in the tax accounting rules and the GAAP accounting rules? Answer: A fundamental problem that accounting tries to solve is allocating revenue and expenses to the (artificial) period of a year or a even month. If you imagine a simple business like a lemonade stand whose entire business life exists of one single Saturday on a weekend it's not hard to determine profit/loss. How much did you spend on lemonade and how much did you make in sales - it's easy. OTOH, imagine a manufacturing business that will exist for many years. Imagine they paid millions for a building. Imagine that they paid millions for equipment. Are those 'expensed' the minute the building and equipment is paid for? No, since those have useful lives of many years we must allocate those costs over many years. Now here's where some differences between tax and GAAP rules can be seen.

Under the tax rules Congress tells you how many years you must spread the cost out. Under GAAP rules the accountants get to pick the number of years to spread the costs. I can all but guarantee you the numbers will NOT be the same. This will result in a substantial difference on the calculation of profit/loss.

GAAP prepared financial statements are what investors look at. What makes a stock's price higher? Larger profits. Guess what GAAP statements show? That's right, a longer depreciation period (more years) thus a lower cost per year meaning a higher profit.

Now isn't it abundantly clear when you see the amount of taxes paid compared to the GAAP profit why the tax rate seems so small? (Hint: the GAAP profit number is inflated compared to tax profit.) I.e., it's an 'apples to oranges' type comparison and, thus, is worthless.

Such differences are known as 'timing differences'. Over the life of the business they will disappear. No matter which method you choose, tax or GAAP, when you calculate the profit/loss from the first day of business to the last day the amount will be the same. It will be like calculating the profit/loss for the lemonade stand.

----------------

Since I've not read this, what kind of subsidies are we talking about here?

No one has yet identified any subsidies although they are throwing the word around quite a bit.

I'm going to go ahead and guess that for those using the term when pressed they will define it so loosely as to have no real meaning.

BTW: A subsidy is when the govt gives you OPM (other peoples' money), not when you get to keep your own.

Fern

 

[Fern]

If a company says it's no longer American, they should be at a much higher tax bracket and not get any benefits from our government unless there is a real proof they are giving much more back.

That's the shell game though.

Please identify these so-called "benefits".

Fern