In Study, Most Companies Reported No Taxes
- Thread starter Ferocious
- Start date
Corn
Diamond Member
- Nov 12, 1999
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.....and here I was, all along thinking that our liberal friends were the intellectually elite, but then Tool arrives to shatter that stereotype.
Companies that pay dividends earn what, and thus taxed why?
Companies that don't pay taxes don't earn what, and don't pay dividends why?
So you are saying 2/3rds of US companies either made no profit, or paid it all out in dividends?
Care to back that up?
Corn
Diamond Member
- Nov 12, 1999
- 6,390
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That's not what I'm saying. But then again, it's no big suprise that you haven't a clue what my questions really said.
Paying a dividend is not a tax shelter (unlike paying out stock options, etc), therefore paying out profits in the form of dividends typically does not affect the tax liability of most companies. Also, if one were actually educated on the subject, one would know that per the Bush plan, the only dividends that qualify for "tax free" to the individual are those paid by companies who pay taxes in the first place and that the amount of "tax free" dividends is determined by the overall tax liability of said company.
I won't do your homework for you Tool, you can choose to remain ignorant for all I care.
Your questions implied that they aren't paying taxes because they aren't earning money. That is not the case.
If you don't believe corporations should pay taxes, just say it, and stop trying to weasel out with your lame personal attacks.
Michael
Elite member
- Nov 19, 1999
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SuperTool - If they're not paying taxes, then they're not earning profits. Earning profits as defined by what goes down on the tax return.
It actually makes a certain amount of sense that taxes would be lower in high growth times. You tend to make lots of capital investments during that time and accelerated depreciation is one big tax break. If you're uissueing options, then they're being cashed in at decent profit levels and this doesn't show up as an expense on the income statement but does on the tax return.
I'm more interested in why they reported no taxes. The tax code is set up to reward certain behaviour. If the companies are doing what the code tells them to do, then the country should be getting other benefits. If that is not happening, then the tax code needs to be changed.
Michael
It actually makes a certain amount of sense that taxes would be lower in high growth times. You tend to make lots of capital investments during that time and accelerated depreciation is one big tax break. If you're uissueing options, then they're being cashed in at decent profit levels and this doesn't show up as an expense on the income statement but does on the tax return.
I'm more interested in why they reported no taxes. The tax code is set up to reward certain behaviour. If the companies are doing what the code tells them to do, then the country should be getting other benefits. If that is not happening, then the tax code needs to be changed.
Michael
Corn
Diamond Member
- Nov 12, 1999
- 6,390
- 29
- 91
No, as I stated in my previous post, in order to qualify to pay out "tax free" dividends, these companies are required to earn taxable income. The "tax free" part is reaped by the individual investor, not the company issuing the dividend.
As far as this discussion is concerned, you are ignorant to the point of being unable to argue competently. This is not a "lame" personal attack, simply a matter of fact.
I think corporations should use their SEC filings as tax returns. It seems to me that they are telling SEC one thing, and IRS another.
Corn, you need to wake up and smell the coffee.
Corn, you need to wake up and smell the coffee.
Corn
Diamond Member
- Nov 12, 1999
- 6,390
- 29
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Irony abounds in your ignorance Tool: Firstly, "tax free" dividends rewards individual investors, not the corporations paying the dividends (thus could hardly be termed "corporate welfare". Second few of those companies listed in the spreadsheet on that site would qualify to give out "tax free" dividends (or would be severly limited in the amount they could pay) to their shareholders because of their lack of giving the treasury some coin...
Michael
Elite member
- Nov 19, 1999
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SuperTool - Do you understand that what is on a corporate tax return and what is their income statement are different? On purpose? That the starting point is the information filed with the SEC (for public companies)? Just like your personal taxes are computed on a different adjusted income basis instead of your gross income on your W-2?
Michael
Michael
Forget it ST, they won't come straight out and say they believe it is perfectly fine for the biggest Corporations that claim to be American Companies to make tons of profit but yet not pay a penny in tax. They won't say it but they certainly support it.
Michael
Elite member
- Nov 19, 1999
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I support companies following the law.
Let us us Microsoft as an example (one of the companies off of the link).
Microsoft has 2 large deductions that do not show up on their Income Statement the same way they do for tax purposes.
The first is stock options. When their employees received and exercised options, the accounting rules did not require Microsoft to record an expense. That is simply GAAP. However, the tax rules to list that as an expense. The employee ends up with the income that is taxed at personal tax rates and Microsoft gets a deduction for it.
That simply is the lasw and has been there forever.
Microsoft also generates a fair amount of R&D tax credit. I think that we want R&D to be done in the USA. The tax laws are set up to give extra credit for that which lowers tax. Essentially a subsidy to keep R&D in the USA.
Some large multi-nationals (GE for example) make a great deal of their profits overseas. US Tax law doesn't want to double tax this (once at the place it is earned and once in the USA). In addition, GE does a lot of R&D in the USA and makes large capital investments in the USA. I already discussed the R&D tax credit. The government also wants to encourage this type of investment because it leads to more jobs. So it offers accelerated depreciation as a benefit. This causes a much larger expense for tax purposes than what shows up on the GAAP financial statements.
To be perfectly honest, large companies employ teams of lawyers and accountants to be sure that they get the maximum benefit possible. No different than us trying to get the best price possible when we buy something.
I have much more of a problem with companies moving their HQs offshore (like Tyco) to lower taxes. Again, that is what the tax code allows. It does leave a sour taste in my mouth, however.
Raising taxes on companies is a possible source of increased revenue. It will either raise prices or lower investment, but it can be done.
----
I haven't read the full study to see is the vast majority of companies, small personal companies, were included in the count. In my experience as an accountant, almost all of these earn no profits and pay no taxes. If they're included in the count, then the numbers are being gamed.
----
Michael
Let us us Microsoft as an example (one of the companies off of the link).
Microsoft has 2 large deductions that do not show up on their Income Statement the same way they do for tax purposes.
The first is stock options. When their employees received and exercised options, the accounting rules did not require Microsoft to record an expense. That is simply GAAP. However, the tax rules to list that as an expense. The employee ends up with the income that is taxed at personal tax rates and Microsoft gets a deduction for it.
That simply is the lasw and has been there forever.
Microsoft also generates a fair amount of R&D tax credit. I think that we want R&D to be done in the USA. The tax laws are set up to give extra credit for that which lowers tax. Essentially a subsidy to keep R&D in the USA.
Some large multi-nationals (GE for example) make a great deal of their profits overseas. US Tax law doesn't want to double tax this (once at the place it is earned and once in the USA). In addition, GE does a lot of R&D in the USA and makes large capital investments in the USA. I already discussed the R&D tax credit. The government also wants to encourage this type of investment because it leads to more jobs. So it offers accelerated depreciation as a benefit. This causes a much larger expense for tax purposes than what shows up on the GAAP financial statements.
To be perfectly honest, large companies employ teams of lawyers and accountants to be sure that they get the maximum benefit possible. No different than us trying to get the best price possible when we buy something.
I have much more of a problem with companies moving their HQs offshore (like Tyco) to lower taxes. Again, that is what the tax code allows. It does leave a sour taste in my mouth, however.
Raising taxes on companies is a possible source of increased revenue. It will either raise prices or lower investment, but it can be done.
----
I haven't read the full study to see is the vast majority of companies, small personal companies, were included in the count. In my experience as an accountant, almost all of these earn no profits and pay no taxes. If they're included in the count, then the numbers are being gamed.
----
Michael
XZeroII
Lifer
- Jun 30, 2001
- 12,572
- 0
- 0
Wow, the ignorance is running rampant in this thread. It's like the blind, deaf and dumb leading the blind, deaf and dumb. The problem is that all these blind, deaf and dumb people act as if they are God and can see and hear everything.
(and yea, dumb. People who are dumb can't speak, but can make noise...think about it)
(and yea, dumb. People who are dumb can't speak, but can make noise...think about it)
He's talking about me not you of course. You've come up with excuses for the Corps without actually coming up with specific excuses so he is all happy.
Not bad, that's about to as close to an admittance that there is a "hint" and only a slight hint of a problem or what I term as "Thuggery" as you'll see SuperTool.
Michael
Elite member
- Nov 19, 1999
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You can disagree with the amount that corporations pay and suggest they pay more. It would be good to talk through what that means, but it is a valid discussion point.
You can talk about the lobbying that goes on that results in the different tax breaks (quite a few the government comes up with all their own). The discussion that goes along with that is what happens if you take the break away.
You "thug" insinuation is stupid. Again, the companies are following the law and doing it in the open, including filing tax returns with the government. You must hate companies to the point where you're blinded to any reason.
Michael
You can talk about the lobbying that goes on that results in the different tax breaks (quite a few the government comes up with all their own). The discussion that goes along with that is what happens if you take the break away.
You "thug" insinuation is stupid. Again, the companies are following the law and doing it in the open, including filing tax returns with the government. You must hate companies to the point where you're blinded to any reason.
Michael
It's an extremely complex issue. I think, however, that it's important to realize that most of the tax law changes in the last 20 years or so have come at the request of the political donor class- extremely wealthy individuals whose patronage can make or break any candidate for national public office. And that's been true on both sides of the aisle. If the Dems become recalcitrant, then the money flows to the Repubs-
It's also fair to say that multinational corporations and wealthy businessmen have ways of manipulating their cash flow not available to ordinary wage earners, at least on paper. Current tax law actually favors offshoring, and the chances of getting caught in many of the available tax avoidance schemes are almost non-existent, the penalties absolutely so. We have billionaires wh've never filed a tax return, and wealthy individuals who openly snub their nose at the IRS, refusing to even withhold from their employees' paychecks...
Enron and Global Crossing only came to light because they actually went broke- money making operations can easily employ the same techniques for tax avoidance, and often do. Yeh, it's "Perfectly Legal"- the title of a book I recently finished. A very interesting read, and highly recommended- the author is David Cay Johnston. Given the lack of enforcement and gaping loopholes available, it speaks well of many wealthy Americans that they pay any taxes at all.
Supertool has a valid point concerning the incredible differences between the SEC filings and those with the IRS. Global Crossing used those differences to defraud investors and the govt, but most of the time they're used to beat Uncle Sam out of tax revenues. We all need to remember that tax dollars will come from somewhere. If not from corporate interests, then from the rest of us- our credit rating isn't inexhaustible, and there's no free lunch, despite the spin from the Admin...
It's also fair to say that multinational corporations and wealthy businessmen have ways of manipulating their cash flow not available to ordinary wage earners, at least on paper. Current tax law actually favors offshoring, and the chances of getting caught in many of the available tax avoidance schemes are almost non-existent, the penalties absolutely so. We have billionaires wh've never filed a tax return, and wealthy individuals who openly snub their nose at the IRS, refusing to even withhold from their employees' paychecks...
Enron and Global Crossing only came to light because they actually went broke- money making operations can easily employ the same techniques for tax avoidance, and often do. Yeh, it's "Perfectly Legal"- the title of a book I recently finished. A very interesting read, and highly recommended- the author is David Cay Johnston. Given the lack of enforcement and gaping loopholes available, it speaks well of many wealthy Americans that they pay any taxes at all.
Supertool has a valid point concerning the incredible differences between the SEC filings and those with the IRS. Global Crossing used those differences to defraud investors and the govt, but most of the time they're used to beat Uncle Sam out of tax revenues. We all need to remember that tax dollars will come from somewhere. If not from corporate interests, then from the rest of us- our credit rating isn't inexhaustible, and there's no free lunch, despite the spin from the Admin...
It's an extremely complex issue. I think, however, that it's important to realize that most of the tax law changes in the last 20 years or so have come at the request of the political donor class- extremely wealthy individuals whose patronage can make or break any candidate for national public office. And that's been true on both sides of the aisle. If the Dems become recalcitrant, then the money flows to the Repubs-
It's also fair to say that multinational corporations and wealthy businessmen have ways of manipulating their cash flow not available to ordinary wage earners, at least on paper. Current tax law actually favors offshoring, and the chances of getting caught in many of the available tax avoidance schemes are almost non-existent, the penalties absolutely so. We have billionaires wh've never filed a tax return, and wealthy individuals who openly snub their nose at the IRS, refusing to even withhold from their employees' paychecks...
Enron and Global Crossing only came to light because they actually went broke- money making operations can easily employ the same techniques for tax avoidance, and often do. Yeh, it's "Perfectly Legal"- the title of a book I recently finished. A very interesting read, and highly recommended- the author is David Cay Johnston. Given the lack of enforcement and gaping loopholes available, it speaks well of many wealthy Americans that they pay any taxes at all.
Supertool has a valid point concerning the incredible differences between the SEC filings and those with the IRS. Global Crossing used those differences to defraud investors and the govt, but most of the time they're used to beat Uncle Sam out of tax revenues. We all need to remember that tax dollars will come from somewhere. If not from corporate interests, then from the rest of us- our credit rating isn't inexhaustible, and there's no free lunch, despite the spin from the Admin...
It's also fair to say that multinational corporations and wealthy businessmen have ways of manipulating their cash flow not available to ordinary wage earners, at least on paper. Current tax law actually favors offshoring, and the chances of getting caught in many of the available tax avoidance schemes are almost non-existent, the penalties absolutely so. We have billionaires wh've never filed a tax return, and wealthy individuals who openly snub their nose at the IRS, refusing to even withhold from their employees' paychecks...
Enron and Global Crossing only came to light because they actually went broke- money making operations can easily employ the same techniques for tax avoidance, and often do. Yeh, it's "Perfectly Legal"- the title of a book I recently finished. A very interesting read, and highly recommended- the author is David Cay Johnston. Given the lack of enforcement and gaping loopholes available, it speaks well of many wealthy Americans that they pay any taxes at all.
Supertool has a valid point concerning the incredible differences between the SEC filings and those with the IRS. Global Crossing used those differences to defraud investors and the govt, but most of the time they're used to beat Uncle Sam out of tax revenues. We all need to remember that tax dollars will come from somewhere. If not from corporate interests, then from the rest of us- our credit rating isn't inexhaustible, and there's no free lunch, despite the spin from the Admin...
Michael
Elite member
- Nov 19, 1999
- 5,435
- 234
- 106
Jhhnn - The IRS is about to launch a massive campaign against the "non-witholders" (a complete farce). They just finished closing off the offshore credit card dodge that was being used. They're also slamming KPMG and a couple of other big accounting firms very hard over some of the avaoidance schemes they were peddling. The IRS used to do more, but the American people got their panties in a bunch and told their Congress to rein them in a little.
We're in agreement that it is complex. The reason why "off-shoring" is better right now was an attempt to arm American companies to better compete against foreign companies. This came as a result of strong competition from Japan and Europe well before the current "offshoring" problem hit. The laws have been messed with a few times as they were attacked under the WTO.
The problem is that any raises in tax simply make it even more expensive to do business in the USA.
I do agree that it is time to review the current set of tax breaks and to make sure they're all still needed. Same goes for the general code for individuals.
Michael
We're in agreement that it is complex. The reason why "off-shoring" is better right now was an attempt to arm American companies to better compete against foreign companies. This came as a result of strong competition from Japan and Europe well before the current "offshoring" problem hit. The laws have been messed with a few times as they were attacked under the WTO.
The problem is that any raises in tax simply make it even more expensive to do business in the USA.
I do agree that it is time to review the current set of tax breaks and to make sure they're all still needed. Same goes for the general code for individuals.
Michael
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