Reply With QuoteGo ahead, vote kerry in. If he tries to "fix" this, you can kiss this recovery goodbye.
If you're wondering why your tax bill is so high when you're writing your check to the IRS in the next few days....here's one of the reasons:
Firms Often Avoided Taxes
Findings about federal income taxes paid in the late 1990s feed into a key political debate in this election year.
By Warren Vieth, Times Staff Writer
WASHINGTON â More than half of U.S. corporations paid no federal income taxes during the boom years of the late 1990s, and those that did were able to shelter much of their income, according to congressional accountants.
The report by the General Accounting Office raises questions about whether the corporate income tax burden is too light and distributed unequally. It could undermine arguments that U.S. companies are overtaxed and provide ammunition to politicians and activists who claim companies are using loopholes to avoid paying their fair share.
"This describes a problem in the corporate tax system in which a good many of these companies are avoiding any tax obligation at all," said Sen. Byron L. Dorgan (D-N.D.), a former state tax commissioner who requested the GAO study. "We've got a bad tax law that tells ordinary folks, 'You pay up,' and allows some of the largest enterprises to avoid paying."
The share of tax receipts paid by corporations has been declining for decades, U.S. government figures show. But it has been falling at an even faster rate in many other countries, said Gary Hufbauer, senior fellow at the Institute for International Economics, and any attempt to raise corporate taxes or close loopholes in this country runs the risk of making U.S. companies less competitive in world markets.
"When you get a report like this people think, gee, they're getting away with murder," he said. "But most of the murder they're getting away with was deliberately designed by legislatures in response to competitive concerns. This is the result."
The GAO report showed that 61% of U.S. corporations paid no federal income taxes from 1996 through 2000, a period of rapid economic growth and rising corporate profits. The study was based on an Internal Revenue Service sampling of more than 2 million tax returns, most of them from smaller companies.
An estimated 94% of U.S. corporations reported tax liabilities amounting to less than 5% of their total income in 2000. The corporate income tax rate is ostensibly 35%, but companies are able to reduce their effective burden by claiming various deductions and credits, in some cases for losses incurred in other years.
U.S. companies paid an average of $11.88 in corporate taxes for every $1,000 in gross receipts, the study said.
Small corporations were more likely to avoid taxation than large ones, it showed. About 38% of big companies (those with more than $250 million in assets or $50 million in revenue) paid no taxes during the five-year period.
Foreign-owned firms fared better in some respects than their U.S.-based competitors. The report found that 71% of foreign-controlled corporations paid no taxes on their U.S. income, while 89% had liabilities of less than 5% of their income.
The GAO didn't attempt to determine why so many firms were able to avoid paying taxes. It said possible explanations included legitimate deductions for current-year operating losses, losses carried forward from previous years and sufficient credits to offset any tax liabilities. In addition, it said improper pricing of transactions between U.S. and foreign operations could contribute to tax avoidance.
The findings feed into a broader political debate over taxes. President Bush and many Republicans have been working to reduce corporate taxes, contending that tax cuts would make U.S. companies more competitive globally and better able to create jobs at home.
Democratic challenger Sen. John F. Kerry cited the GAO findings Tuesday during a rally on the banks of the Ohio River in Cincinnati, expressing outrage that many companies were paying no taxes despite productivity-driven profit gains.
"The burden of the tax share is being shifted to the average worker in this country," Kerry said, eliciting a chorus of boos from his audience. "It's being shifted to the worker at the expense of fairness in America."
Yet even Kerry has advocated an across-the-board reduction in corporate taxes, although he has called for closing loopholes that may encourage U.S. companies to move jobs overseas.
The percentage of federal tax collections paid by corporations has tumbled from a high of 39.8% in 1943 to a low of 7.4% last year. It ranged from 10% to 11% in 1996 to 2000, the period studied by the GAO. But since World War II, the share paid by individual income tax filers has remained relatively stable, bouncing between 40% and 50%. Most of the difference is explained by higher payroll taxes for Social Security and Medicare.
"The accounting firms have been very aggressive at marketing shelters to the companies," said Robert McIntyre, director of Citizens for Tax Justice, a Washington advocacy group. "I am very hopeful it will be a big issue in the presidential campaign."
Eugene Steuerle, a former Reagan administration tax official, said the declining share of corporate taxes reflected the increasing sophistication of companies and of the lawyers and accountants who advise them.
"It's called arbitraging the tax system," said Steuerle, now a senior fellow at the Urban Institute. "You move income from a high-tax-rate country to a low-tax-rate country. You move deductions to where they get the biggest tax advantage ⦠and so on and so forth."
Said lawmaker Dorgan, "The IRS has to begin enforcing the tax laws in an acceptable way. Part of this is a problem with the tax law. Another part of it is massive tax avoidance, and perhaps in many cases tax evasion."
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BTW - I don't care about the 'ef'ing politics - just the fact that these corporate pukes aren't paying there share and haven't been for some time.
Go ahead, vote kerry in. If he tries to "fix" this, you can kiss this recovery goodbye.
This is all B.S.
The tax is on profit so if your company has no profit then therefore no tax right?
Wrong..... There is an AMT that makes the largest firms ineligible for certain deductions that small companies receive. The AMT is designed to make sure large companies pay MORE than their fair share.
Also there is capital gains taxes on "growth".
The real trick is that many firms reinvest profit in their business in hopes that it will "grow". The expenses from their reinvestment in the form of OUR WAGES PAID AND OUR PRODUCTS PURCHASED not only help our economy but reduce their CURRENT taxable income.
This is a politically motived story because they ignore the capital gains tax paid when people buy or sell the stock of these corporations to take advantage of this "growth".
Captial gains tax is what filled the government coffers of the late 90's that disappeared when the market struggled.
The tax laws got it covered.
DaveC<----- tax and pension consultant for business'
The reason your tax bill is so high has nothing to do with how much tax corporations pay. the problem is the government spends to much money! Look at the revenue from 5 years ago and look at it now.
Originally posted by Dave C
This is all B.S.
The tax is on profit so if your company has no profit then therefore no tax right?
Wrong..... There is an AMT that makes the largest firms ineligible for certain deductions that small companies receive. The AMT is designed to make sure large companies pay MORE than their fair share.
Also there is capital gains taxes on "growth".
The real trick is that many firms reinvest profit in their business in hopes that it will "grow". The expenses from their reinvestment in the form of OUR WAGES PAID AND OUR PRODUCTS PURCHASED not only help our economy but reduce their CURRENT taxable income.
This is a politically motived story because they ignore the capital gains tax paid when people buy or sell the stock of these corporations to take advantage of this "growth".
Captial gains tax is what filled the government coffers of the late 90's that disappeared when the market struggled.
The tax laws got it covered.
DaveC<----- tax and pension consultant for business'
If you believe this story doesn't affect you then you are a fool. Time Warner merged with AOL to relieve itself of its tax burden. Since the merger, the combined entity has paid no corporate income tax. AOL never has paid taxes.
Originally posted by vodkarocks
The reason your tax bill is so high has nothing to do with how much tax corporations pay. the problem is the government spends to much money! Look at the revenue from 5 years ago and look at it now.
If corporations paid the same tax rate on their profits as you do on your income we'd not need the personal income tax laws at all.
Tax Quotes
"Taxes are what we pay for civilized society.'' Oliver Wendell Holmes, Jr., U.S. Supreme Court Justice
"The power of taxing people and their property is essential to the very existence of government.'' James Madison, U.S. President
"To tax and to please, no more than to love and to be wise, is not given to men." Edmund Burke, 18th Century Irish political philosopher and British statesman
I am proud to be paying taxes in the United States. The only thing is I could be just as proud for half the money. Arthur Godfrey, entertainer
People who complain about taxes can be divided into two classes: men and women.
Unknown
"No government can exist without taxation. This money must necessarily be levied on the people; and the grand art consists of levying so as not to oppress.'' Frederick the Great, 18th Century Prussian king
"Like mothers, taxes are often misunderstood, but seldom forgotten.'' Lord Bramwell, 19th Century English jurist
"The best measure of a man's honesty isn't his income tax return. It's the zero adjust on his bathroom scale.'' Arthur C. Clarke, author
"Next to being shot at and missed, nothing is really quite as satisfying as an income tax refund. F. J. Raymond, humorist
A tax loophole is "something that benefits the other guy. If it benefits you, it is tax reform.''
Russell B. Long, U.S. Senator
"Few of us ever test our powers of deduction, except when filling out an income tax form.''
Laurence J. Peter, author
The hardest thing in the world to understand is the income tax. Albert Einstein, physicist
Taxation with representation aint so hot either. Gerald Barzan, humorist
Where there is an income tax, the just man will pay more and the unjust less on the same amount of income. Plato
Income tax has made more liars out of the American people than golf. Will Rogers, humorist
GE, Iomega, Flextronix, Tyco, Heintz are among the worst !!
Also...look at the company that award the highest stock option quantities...they use the option grants to reduce the tax burden and reward the management of the companies. This is one of the techniques used by AOL/Time Warner.
My vote is to have the corporations pay NO INCOME TAXES AT ALL!!! Lets do away with all the IRS organization and elect some people who will move the national retail sales tax to the ballot box!! All of the money the corporations spend on their accountants to figure out how to shelter the income as well as the taxes themselves are passed on in the retail price of goods and services. Lets get rid of this nonsense and just pay the tax one time at the cash register. Drug money, hooker money and hard earned income are taxed equally.
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