John Kerry weasels out of $500K in MA taxes

[Fern]

So, with what agency does one register a boat? Really, wouldn't it be that agency's fault that the tax was avoided?

What I'm thinking is that there was a break down somewhere along the way. As a similar situation, one could reside in a high-tax state like CA and buy a car in a lower tax state like NV. The problem with that is that when you guy the car the NV DMV will refuse to register the car without a proper NV permanent address. You will have to register in CA and pay the CA registration fees. Why doesn't whoever you register a boat with do something different and refuse the registration without a permanent address in state?

The boat is owned by a corporation.

Since the corporation does business in RI (apparently the boat is available for charter out of RI) and so is likely registered in and has an address in RI.

Fern

 

[Darwin333]

So, with what agency does one register a boat? Really, wouldn't it be that agency's fault that the tax was avoided?

What I'm thinking is that there was a break down somewhere along the way. As a similar situation, one could reside in a high-tax state like CA and buy a car in a lower tax state like NV. The problem with that is that when you guy the car the NV DMV will refuse to register the car without a proper NV permanent address. You will have to register in CA and pay the CA registration fees. Why doesn't whoever you register a boat with do something different and refuse the registration without a permanent address in state?

Because large expensive boats, unlike most cars, can and often are left in the state they are registered in. The state makes money off of the fuel you buy, taxes off of the dock you rent, people to keep the boat up, etc... Same reason some states can get away with no income taxes, it attracts people with boatloads of money to have a "residence" in their state. While they are down there they spend a ton of money.

 

[Darwin333]

Not all loopholes are equal. If i choose to buy a vacation house in one state over another based on tax differences, am I using a 'loophole'? Am I 'evading taxes'?

On the other hand, if I am a big corporation who puts up a phony headquarters in the Cayman islands to evade taxes in the US where I really make money, am I evading taxes?

Yes. I would say that is illegal if the only purpose of the company is to avoid taxes and if it isn't illegal it should be. Of course I am not an attorney so I could be wrong on the legality but I have always been under the impression a company must have a real purpose (granted, that is easily made up) or it is tax evasion and maybe even racketeering.

If I falsify my records to avoid the taxes on the prices one of my subsidiaries is selling good to another, am I evading taxes? Happens all the time.

I am pretty sure thats called fraud. Throw the book at em.

I haven't commented on Kerry yet here, haven't gotten the reasonable request to do so, but you are simplistic to lump all tax-related actions together as equal under 'loopholes'.

I would appreciate your comparison between your first example (setting up a phony business in the Cayman's to avoid taxation) and what Kerry actually did. Should be quite an interesting read.

 

[shira]

Isn't it the Democrats who are always complaining about loopholes for the wealthy?

LOLiberals.

Liberals don't say, "Rich people shouldn't take advantage of legal loopholes." They say, "The loopholes that allow the rich to reduce their taxes should be closed."

Now, tell me again how it's hypocritical to try to close loopholes, while taking advantage of them while they remain legal?

An analogy to the absurdity of your position is: If you advocate that laws criminalizing marijuana use be repealed, then it's hypocritical to NOT use weed while the law is still in force.

 

[brencat]

LOL. Spectacular!

Agreed. Nomination for pwnage post of the month. Nice work Peshak...

 

[Craig234]

Yes. I would say that is illegal if the only purpose of the company is to avoid taxes and if it isn't illegal it should be. Of course I am not an attorney so I could be wrong on the legality but I have always been under the impression a company must have a real purpose (granted, that is easily made up) or it is tax evasion and maybe even racketeering.

This is a big problem with the corporatization of our government - their preferred approach is to take something that is/should be legal, and just make it legal.

Far better to do that, than to rely on gray area or outright fraud and the risks and costs with that. Instead legalize it and say any critics are jealous of the rich.

I would appreciate your comparison between your first example (setting up a phony business in the Cayman's to avoid taxation) and what Kerry actually did. Should be quite an interesting read.

Did you see my later post?

 

[Craig234]

Agreed. Nomination for pwnage post of the month. Nice work Peshak...

I expected better of you than of the idiot crowd I'm always glad to see nipping at the heels.

I use the words idiot and idiocy very carefully, not as name-calling for but the precise thing they address, that is a real attribute nothing else accurately describes.

It's a perfectly accurate, justifiable response stopping just short of not responding to the idiots who crawl around among us here.

Note he did not include any of the quotes that the quips were responding to, did not defend any of them as not being idiocy and my posts as unjustified.

He could try, and fail - he could try with even just one, but he doesn't.

There is no 'rudeness' in my post, in the context of the content it's responding too, usually a pattern. There's actually way too little harshness given the posts.

You are off base here; the question is whether you have the ability to notice. Notice how this is phrased, to give you every chance because you have a better record.

 

[BoberFett]

Liberals don't say, "Rich people shouldn't take advantage of legal loopholes." They say, "The loopholes that allow the rich to reduce their taxes should be closed."

Now, tell me again how it's hypocritical to try to close loopholes, while taking advantage of them while they remain legal?

An analogy to the absurdity of your position is: If you advocate that laws criminalizing marijuana use be repealed, then it's hypocritical to NOT use weed while the law is still in force.

Conservatives/libertarians are routinely criticized for taking government money even though they advocate cutting those programs. Same thing.

Is it hypocritical to point out the hypocrisy of hypocrites who hypocritically attack you?

I don't know, and I don't care. I just think it's amusing to berate politicians and their acolytes.

 

[BoberFett]

*Idiocy snipped*

Craig, you're an idiot.

 

[Craig234]

Liberals don't say, "Rich people shouldn't take advantage of legal loopholes." They say, "The loopholes that allow the rich to reduce their taxes should be closed."

Now, tell me again how it's hypocritical to try to close loopholes, while taking advantage of them while they remain legal?

An analogy to the absurdity of your position is: If you advocate that laws criminalizing marijuana use be repealed, then it's hypocritical to NOT use weed while the law is still in force.

A good analogy on this is the non-scandal that erupted for Sam Donaldson, when it was publicized that he owned farms and got subsidies while he had called for an end to the subsidies. Oh my gosh, the outrage went, he's taking the very money that he's saying shouldn't be paid, what a crook!

Donaldson explained, while the subsidies were there, his competitors would take them, and you had to to be competitive in the industry. He'd take them under the law while everyone was offered them, but simultaneously would call for them to end for everyone, including his own. That's not hypocrisy, it's a principled position, but the righties who just hated Donaldson had no reluctance to try to use it to attack him.

 

[JeffreyLebowski]

I don't think anyone is saying tax the rich more. Most want to have an equal burden on all citizens to maintain the country. The only way to obtain an equal burden on all people is through a progressive tax structure. That is just basic economics.

Progressive taxation is not an equal burden. An equal burden is everyone pays the same percentage rate. Not the rich pay a higher rate because they can afford it.
And an equal burden isn't 40 something percent of the US population not paying anything in federal taxes because they don't make enough. It needs to be 1 set percentage rate and everyone gets it in the rear end from it.

A simple tax structure will never happen, because the instant it happens, millions of people will be out of work.

 

[crownjules]

Liberals don't say, "Rich people shouldn't take advantage of legal loopholes." They say, "The loopholes that allow the rich to reduce their taxes should be closed."

Now, tell me again how it's hypocritical to try to close loopholes, while taking advantage of them while they remain legal?

It makes you look like a fraud and that you are not a person of conviction that honestly believes in that which you're trying to accomplish. Perhaps it is a sad reflection on society that I have to point this out. Didn't your parents ever teach you actions speak louder than words?

 

[PeshakJang]

An analogy to the absurdity of your position is: If you advocate that laws criminalizing marijuana use be repealed, then it's hypocritical to NOT use weed while the law is still in force.

No, that's an absurd comparison, and nowhere close to what we are talking about.

An accurate comparison based on that example would be trying to pass legislation banning smoking in bars, talking about all the health hazards and second-hand smoke, then heading to the pub and having a cigar. You obviously either don't have any conviction in your position, or you think the rules shouldn't apply to you.

 

[MotF Bane]

I expected better of you than of the idiot crowd I'm always glad to see nipping at the heels.

I use the words idiot and idiocy very carefully, not as name-calling for but the precise thing they address, that is a real attribute nothing else accurately describes.

It's a perfectly accurate, justifiable response stopping just short of not responding to the idiots who crawl around among us here.

Note he did not include any of the quotes that the quips were responding to, did not defend any of them as not being idiocy and my posts as unjustified.

He could try, and fail - he could try with even just one, but he doesn't.

There is no 'rudeness' in my post, in the context of the content it's responding too, usually a pattern. There's actually way too little harshness given the posts.

You are off base here; the question is whether you have the ability to notice. Notice how this is phrased, to give you every chance because you have a better record.

What a load of bullshit.

 

[Darwin333]

Liberals don't say, "Rich people shouldn't take advantage of legal loopholes." They say, "The loopholes that allow the rich to reduce their taxes should be closed."

Now, tell me again how it's hypocritical to try to close loopholes, while taking advantage of them while they remain legal?

An analogy to the absurdity of your position is: If you advocate that laws criminalizing marijuana use be repealed, then it's hypocritical to NOT use weed while the law is still in force.

Definition of a hypocrite:

Hypocrisy is the act of persistently pretending to hold beliefs, opinions, virtues, feelings, qualities, or standards that one does not actually hold.

So yes, saying a loophole should be closed and bashing those that use them and then using loopholes for the very same reason is by definition hypocrisy.

 

[bfdd]

lol @ people still trying to spin this. Kerry is a fucking douche bag deal with it. He wants others to pay more in taxes, but doesn't want to himself. Fuck him and fuck everyone of you spinning this.

 

[lothar]

Not all loopholes are equal. If i choose to buy a vacation house in one state over another based on tax differences, am I using a 'loophole'? Am I 'evading taxes'?

On the other hand, if I am a big corporation who puts up a phony headquarters in the Cayman islands to evade taxes in the US where I really make money, am I evading taxes?

If I falsify my records to avoid the taxes on the prices one of my subsidiaries is selling good to another, am I evading taxes? Happens all the time.

I haven't commented on Kerry yet here, haven't gotten the reasonable request to do so, but you are simplistic to lump all tax-related actions together as equal under 'loopholes'.

1.) Yes, you are using a loop hole. Perfectly legal. Property taxes are local. Only the federal government has authority to regulate interstate commerce.

2.) Yes, they are using a loop hole. Perfectly legal. That's a loophole even I support. If such a loop hole was closed, companies would move their headquarters and corporation status completely abroad and avoid paying the tax on foreign income all together. You will be back with even less than you started.
http://www.bloomberg.com/news/2010-...on-in-taxes-even-tea-party-would-condemn.html
http://www.bloomberg.com/insight/lexapro.html (Very cool interactive with details)
The above is perfectly legal, BTW...There's nothing illegal about that.

3.) No. Falsifying records is clearly illegal. However it IS perfectly legal for a subsidiary to charge $1 to another subsidary which will charge $100 to a customer. If that original subsidary sold to the other subsidary for $50, and went back to change/falsify records to show that they had sold for $1 when it was $50 they sold for, that's illegal. There is nothing illegal about selling a product below cost to subsidiaries(or consumers).
a.) See linked example cited in #2 above.
b.) Microsoft's billions of lines of codes for their software and patents are invented in the US and sold to the Ireland division. Microsoft's subsidary in Ireland holds all their patents, and manufacturing rights to their software. They only pay a 12% corporate tax in Ireland vs. paying 35% here in the US on profit of the sales of Windows and Office products.
c.) It's no different from Google CEO's and hedgefund managers paying themselves a $1 salary and the remaining in all stock to avoid paying SS/Medicare tax while paying only 15% capital gains tax on the stock instead of 36+%.

Neither of the examples cited above need to "falsify" records to achieve reducing their legal tax liability.
I have no problems with them doing that since it's perfectly legal.

 

[Fern]

Originally Posted by Craig234
Not all loopholes are equal. If i choose to buy a vacation house in one state over another based on tax differences, am I using a 'loophole'? Am I 'evading taxes'?

#2 On the other hand, if I am a big corporation who puts up a phony headquarters in the Cayman islands to evade taxes in the US where I really make money, am I evading taxes?

#3 If I falsify my records to avoid the taxes on the prices one of my subsidiaries is selling good to another, am I evading taxes? Happens all the time.

I haven't commented on Kerry yet here, haven't gotten the reasonable request to do so, but you are simplistic to lump all tax-related actions together as equal under 'loopholes'.

-snip-

#2.) Yes, they are using a loop hole. Perfectly legal. That's a loophole even I support. If such a loop hole was closed, companies would move their headquarters and corporation status completely abroad and avoid paying the tax on foreign income all together. You will be back with even less than you started.
http://www.bloomberg.com/news/2010-...on-in-taxes-even-tea-party-would-condemn.html
http://www.bloomberg.com/insight/lexapro.html (Very cool interactive with details)
The above is perfectly legal, BTW...There's nothing illegal about that.

#3.) No. Falsifying records is clearly illegal. However it IS perfectly legal for a subsidiary to charge $1 to another subsidary which will charge $100 to a customer.
-snip-

Re: #2.

Non-existent hypothetical.

Any corporation, foreign or domestic, must pay taxes to the USA on income/profit earned here. We have a gazillion rules on it in federal tax law (states have similar rules too).

Also, if a US corporation 'moves' (reincorporates) overseas a transfer tax is triggered. Basically US tax law treats that 'move' as a sale of the entire company for it's FMV and income tax is charged on that sale. You don't wanna move overseas to get out of US tax since it does the exact opposite.

Re: #3.

No, a subsidiary cannot charge $1 or whatever on sales to another subsidiary, they must charge the FMV. These are called 'Transfer pricing Rules" and have been around for decades. Otherwise, income/profit can be artificially transfered between countries to obtain lowest possible tax.

Guys, since income tax was introduced in 1913 people have trying various schemes to avoid it and we've been writing more laws to stop it. There's a reason the tax code is so huge and, no, it's not to make your own Form 1040 difficult to prepare.

Fern

 

[Craig234]

Re: #2.

Non-existent hypothetical.

Any corporation, foreign or domestic, must pay taxes to the USA on income/profit earned here. We have a gazillion rules on it in federal tax law (states have similar rules too).

Also, if a US corporation 'moves' (reincorporates) overseas a transfer tax is triggered. Basically US tax law treats that 'move' as a sale of the entire company for it's FMV and income tax is charged on that sale. You don't wanna move overseas to get out of US tax since it does the exact opposite.

Re: #3.

No, a subsidiary cannot charge $1 or whatever on sales to another subsidiary, they must charge the FMV. These are called 'Transfer pricing Rules" and have been around for decades. Otherwise, income/profit can be artificially transfered between countries to obtain lowest possible tax.

Guys, since income tax was introduced in 1913 people have trying various schemes to avoid it and we've been writing more laws to stop it. There's a reason the tax code is so huge and, no, it's not to make your own Form 1040 difficult to prepare.

Fern

Fern, you really need to read something like books by (Pulitzer-Prize winning tax author) David Cay Johnston for something about what the wealthy do compared to what the laws say they're supposed to do; for the second topic, there have been massive violations of 'transfer pricing rules'. Enforcement is partly a *political* question.

We lose hundreds of billions a year to the scams.

 

[Craig234]

An accurate comparison based on that example would be trying to pass legislation banning smoking in bars, talking about all the health hazards and second-hand smoke, then heading to the pub and having a cigar. You obviously either don't have any conviction in your position, or you think the rules shouldn't apply to you.

You on the right lose again on hypocrisy.

DeLay recently revealed how he felt about rules of general applicability. When he tried smoking a cigar in a restaurant on federal property, the manager told him it violated federal law. His response, according to The Washington Post, was, “I am the federal government.”

 

[Darwin333]

I just learned of this on my 2008 taxes, and immediately complied (it came to hundreds of dollars in extra tax, for what it's worth).

To your question, turns out you have to actively lie in Turbotax now to not pay the tax - it asks you, 'did you buy anything on the internet that you use in your state?'

I think it's fair to tax the internet purchases and put the online companies more on an equal competition with the brick & mortar stores.

The real difference isn't some principle, it's merely enforcability.

You are basically like a shoplifter who steals when you can get away with it and rationalizes what you do to try to find some justification that's not there.

You are a thief - those tax burdens you don't pay don't disappear, they go onto other people.

You lack the honesty to try to make some coherent argument against the sales tax at all (which you would have a hard time doing), you just steal when it's easy.

But let me guess, a government employee steals something far less valuable than your unpaid taxes from the government that taxpayers have to replace, you are OUTRAGED.

The ONLY difference between the two is legality.

Your main point of "those tax burdens you don't pay don't disappear, they go onto other people" directly applies to Kerry's actions. You are the first to argue, and I happen to agree, that just because its legal doesn't make it right.

We have phrase framed and hanging on the wall in our conference room "Integrity is doing whats right even when no one is looking".

 

[PeshakJang]

You on the right lose again on hypocrisy.

DeLay recently revealed how he felt about rules of general applicability. When he tried smoking a cigar in a restaurant on federal property, the manager told him it violated federal law. His response, according to The Washington Post, was, “I am the federal government.”

Well, now that you've demonstrated that you don't know what hypocrisy is, it's much easier to understand why you never make any sense.

 

[lothar]

Re: #2.

Non-existent hypothetical.

Any corporation, foreign or domestic, must pay taxes to the USA on income/profit earned here. We have a gazillion rules on it in federal tax law (states have similar rules too).

Also, if a US corporation 'moves' (reincorporates) overseas a transfer tax is triggered. Basically US tax law treats that 'move' as a sale of the entire company for it's FMV and income tax is charged on that sale. You don't wanna move overseas to get out of US tax since it does the exact opposite.

Re: #3.

No, a subsidiary cannot charge $1 or whatever on sales to another subsidiary, they must charge the FMV. These are called 'Transfer pricing Rules" and have been around for decades. Otherwise, income/profit can be artificially transfered between countries to obtain lowest possible tax.

Guys, since income tax was introduced in 1913 people have trying various schemes to avoid it and we've been writing more laws to stop it. There's a reason the tax code is so huge and, no, it's not to make your own Form 1040 difficult to prepare.

Fern

I explained what I wanted to backwards in error. From what I know if the money is brought back to the US, they have to pay tax. However if the money stays foreign and locked up in whatever country and never comes, they delay paying taxes(meaning they don't have to pay).

Check out below for the full details and click on each picture. Can you explain why 83 of the 100 biggest US corporations have foreign tax heavens?
http://www.bloomberg.com/insight/lexapro.html

Every Fortune 500 company does this from Microsoft, General Electric, Johnson and Johnson, Pfizer, and many others(especially tech and health care companies.
"Asset transfer pricing" and creating subsidiaries in Ireland, Bermuda, or Cayman Islands is nothing new.

Also, you missed a "possibly"(I'm saying possibly here because you're the accountant expert and not me) important fact.
American companies(and citizens) are taxed on their "worldwide" income.
That's not the case in many developed countries.

Does BP and Shell pay US taxes on income earned from oil wells in Africa, Europe, and Asia? Exxon on the other hand has to pay taxes on *all* oil wells worldwide since they're incorporated here unless they use the strategy above used by many US Fortune 500 corporations of delaying taxes(which they do) by not bringing the money home and leaving it at a subsidiary.

In this case, the Ireland division of Microsoft pays 35% tax on US sales and 12% Ireland tax everywhere else(Europe, Asia, etc...) vs. paying a 35% tax on "worldwide" sales.
Like the "Lexapro" example shown in the link above, if they went even further and created a Bermuda division, they only have to pay a 35% tax on US sales, and 0% everywhere else...Until they decide to bring the money back that is.

More information of how corporations delay having to pay taxes below:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a6qcwZCtO0_w
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=avJFFjW9I5Ag
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=axF8.RHSF9IM

 

[shira]

Conservatives/libertarians are routinely criticized for taking government money even though they advocate cutting those programs. Same thing.

Is it hypocritical to point out the hypocrisy of hypocrites who hypocritically attack you?

I don't know, and I don't care. I just think it's amusing to berate politicians and their acolytes.

A hypocrite is one who advocates that others behave a certain (moral) way while behaving the opposite way themselves. Advocating that programs be cut is NOT the same as advocating that others should not take advantage of those programs. Thus, it's not hypocritical to take advantage of programs that one is trying to cut.

Another example: I advocate that taxes for the wealthy should be higher, and I WOULD be affected by those tax increases. Am I a hypocrite because I legally compute and pay my taxes at the current low rate rather than at the higher rate I advocate?

 

[PeshakJang]

A hypocrite is one who advocates that others behave a certain (moral) way while behaving the opposite way themselves.

He's advocated that others (people and corporations) need to "pay their fair share", and then he takes actions to avoid "paying his fair share" in his home state. Check. Fits your bill.

Advocating that programs be cut is NOT the same as advocating that others should not take advantage of those programs. Thus, it's not hypocritical to take advantage of programs that one is trying to cut.

These aren't "programs", they are loopholes. This means it is something that, while legal, is generally thought to be circumventing the intent of the law. Advocating that a certain loophole be closed to ensure that others must "pay their fair share", while taking advantage of another similar loophole yourself so that you can avoid doing just that, is the epitome of hypocrisy.

Another example: I advocate that taxes for the wealthy should be higher, and I would be affected by those tax increases. Am I a hypocrite because I legally compute and pay my taxes at the current low rate rather than at the higher rate I advocate?

Not similar at all. You aren't taking advantage of any loopholes or otherwise circumventing the tax system in any way. You're computing your taxes in an honest method that meets the intent of the law, while advocating that the tax be increased.

I'll go back to my earlier example and change it a little. Say we passed a law outlawing smoking in public, but the law was written in such a way that it only effectively banned cigarettes. Due to a loophole in the way the law was written, you could still smoke cigars and pipes in public without breaking the law. If I, as a politician, actively advocated fixing the law to include cigars in the ban, saying that the people who continued smoking cigars were just circumventing the law and still harming others with their smoke, and all the while I continued smoking pipe tobacco in public, I would be a hypocrite, wouldn't I?