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Thread: Tax dodging Corporations -- Are They Traitors to US?

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    Default Tax dodging Corporations -- Are They Traitors to US?

    "Last year, the American people faced 3.8 million foreclosure filings due to reckless Wall Street banks, footed a whopping $115 billion to bail out those banks, and lost 130,000 people to coal pollution-related deaths. We know these dirty corporations are costing us dearly. Unfortunately, now we also that they’re not paying up."

    "RAN (Rainforest Action Network) reviewed 12 of the dirtiest corporate tax dodgers: Bank of America, Citi, JPMorgan, Wells Fargo, Chevron, BP, Shell, Exxon, Massey Energy, Alpha Natural Resources, Peabody Energy and Arch Coal. These 12 banks, oil and coal companies are largely responsible for foreclosing on millions of people’s homes and polluting our air, water and climate. At the same time, we found that they pay next to nothing into a tax system that provides the very services that protect the homeless, the sick and our environment."

    "To add insult to injury, while these multi-billion dollar industries we raking in the profits and evading their taxes they were also paying millions in CEO compensation and lobby dollars. These corporations are happy to pay large sums to manipulate our democracy but aren’t so interested in paying to support it."

    "We don’t have a money problem, we have a priorities problem. We’re slashing billions from our budget, much of which will come out of social services and environmental protections, while allowing corporate giants to slip ever-increasing profits into offshore accounts."

    excepted from - http://www.alternet.org/news/150617/...dirtiest_dozen
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    Default Re: Tax dodging Corporations -- Are They Traitors to US?

    Corporations have a duty to their shareholders to maximize profits. The reason that corporations like G. E. have corporate tax departments with over 900 people is a 35% tax rate and a Tax Code that encourages them to leave overseas profits overseas.

    What we ought to do is cut the Corporate Tax Rate to 20 % while eliminating all the crony capitalist deductions, credits and exemptions and raise the rates on dividends and Capital Gains. I realize I am commiting economic heresy and parting from some of my philosophical brethren like Larry Kudlow but the fact remains that the super rich are NOT paying their fair share of taxes. I also suport a reasonable inheritance tax. Does anyone besides me think it was ridiculous that billion dollar estates like George Steinbrenner's did not pay a penny in inheritance taxes thanks to a statutory quirk given to us by Bush The Dumb ?

    On a related note look at this :

    In the 1950's Corporations paid 39% of all taxes; individuals 61%.
    In the 1960's it fell to 33% for corporations and rose to 67% for individuals.
    In the 1970's it was 25% and 75%.
    In the 1980's it fell again to 17% and rose to 83%.
    Starting in the 1990's it stabilized at 19% for corporations and 81% for individuals where it has stayed.
    Last edited by Eric Stoner; 04-15-2011 at 08:27 AM.

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    Default Re: Tax dodging Corporations -- Are They Traitors to US?

    This avoids the real issue that the government just spends too damned much. Corporations avoid paying taxes because they CAN. Trying to force the issue is useless. Tax code is too complex, their accountants can find loopholes faster than we can fill them. You want corporations to pay taxes? How about having those taxes spent wisely instead of bleeding through the government's fingers like a sieve? Give them some incentive to pay in knowing that their money is being put to good use.

    Edit: Oh, and while we're quoting tax rates from the 1950's... keep in mind, back in 1950, if you made over $400,000, 91% of your income was paid to the IRS. Which is great if you're a poor person. It doesn't give much incentive for people to achieve, though. I mean, fuck, what's the point in working hard and becoming rich if the government is going to just take 90% of your profits?
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    Default Re: Tax dodging Corporations -- Are They Traitors to US?

    Quote Originally Posted by johnjdick View Post
    This avoids the real issue that the government just spends too damned much. Corporations avoid paying taxes because they CAN. Trying to force the issue is useless. Tax code is too complex, their accountants can find loopholes faster than we can fill them. You want corporations to pay taxes? How about having those taxes spent wisely instead of bleeding through the government's fingers like a sieve? Give them some incentive to pay in knowing that their money is being put to good use.

    Edit: Oh, and while we're quoting tax rates from the 1950's... keep in mind, back in 1950, if you made over $400,000, 91% of your income was paid to the IRS. Which is great if you're a poor person. It doesn't give much incentive for people to achieve, though. I mean, fuck, what's the point in working hard and becoming rich if the government is going to just take 90% of your profits?
    Nobody paid 91%. That was the top marginal rate on the last dollar earned and there were plenty of deductions, exemptions and credits that the rich used to pay a lower rate. Tax avoidance was just as big then as it is now.

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    Default Re: Tax dodging Corporations -- Are They Traitors to US?

    I would also point out that a large number of tax 'avoiding' corporations were left off the RAN / Alternet list ... among them Microsoft, Google, General Motors, General Electric etc. If we're going to demonize particular corporations on the basis of tax 'avoidance', those that contribute to the democratic party as well as the republican party should be equally included !

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    Default Re: Tax dodging Corporations -- Are They Traitors to US?

    My point was that I'd rather vilify the government for wasting tax dollars than vilify corporations for avoiding paying taxes. If the government took in a reasonable amount of money, and spent it wisely, then I'd have a problem with people dodging taxes. As it is, hell, I don't claim everything I earn either.
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    Default Re: Tax dodging Corporations -- Are They Traitors to US?

    Quote Originally Posted by johnjdick View Post
    My point was that I'd rather vilify the government for wasting tax dollars than vilify corporations for avoiding paying taxes. If the government took in a reasonable amount of money, and spent it wisely, then I'd have a problem with people dodging taxes. As it is, hell, I don't claim everything I earn either.
    Both should be villified. A corporation should not be getting tax breaks to send jobs overseas, for example. Government should cut its waste (having worked in government I saw a lot of waste). Everyone should pay their fair share of taxes, whether it's corporation or person (and no, I don't think the tax system is set up fairly for people either).

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    Default Re: Tax dodging Corporations -- Are They Traitors to US?

    Regarding the initial question about tax dodging corporations being traitors... I'd have to say yes. But the government is also a traitor to the principles that the country was founded on. I really can't hate someone who backstabs a thief. All I can do is sit back, shake my head and try to stay out of both of their ways.
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    Default Re: Tax dodging Corporations -- Are They Traitors to US?

    Quote Originally Posted by Eric Stoner View Post
    Corporations have a duty to their shareholders to maximize profits. The reason that corporations like G. E. have corporate tax departments with over 900 people is a 35% tax rate and a Tax Code that encourages them to leave overseas profits overseas.

    What we ought to do is cut the Corporate Tax Rate to 20 % while eliminating all the crony capitalist deductions, credits and exemptions and raise the rates on dividends and Capital Gains. I realize I am commiting economic heresy and parting from some of my philosophical brethren like Larry Kudlow but the fact remains that the super rich are NOT paying their fair share of taxes. I also suport a reasonable inheritance tax. Does anyone besides me think it was ridiculous that billion dollar estates like George Steinbrenner's did not pay a penny in inheritance taxes thanks to a statutory quirk given to us by Bush The Dumb ?

    On a related note look at this :

    In the 1950's Corporations paid 39% of all taxes; individuals 61%.
    In the 1960's it fell to 33% for corporations and rose to 67% for individuals.
    In the 1970's it was 25% and 75%.
    In the 1980's it fell again to 17% and rose to 83%.
    Starting in the 1990's it stabilized at 19% for corporations and 81% for individuals where it has stayed.
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

    What first, Eric, chicken or egg? Lower rate to 20% first? Or lower only after eliminating all those deductions and exemptions? The later like winning the war on poverty. I'm well aware of your position that lowering tax rates increases revenues. But OP's "sore point" were those corporations whose tax liability was ZERO. If it is attractive to dodge, say, a $350M tax bill on $1B profit, dodging $200M (20% vs 35%) bill would still be an attractive proposition for those companies. Not to mention $200M wouldn't exactly be chump change for shareholders.
    As for capital gains: Short term gains are still taxed as ordinary income if I'm not mistaken. Interesting to find out which income bracket gets proportionately more short term vs long term gains. I'm speculating, but I'd wager that the lower/middle income brackets are more likely to own dividend paying stocks, if they own any. Thus, increase in dividend tax rate would hurt this group some too. Versus the uber wealthy insiders cashing in on their stock options on companies that don't pay, or pay a paltry rate on dividends.
    On OP's question- yes, I think those companies are traitors.
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    Default Re: Tax dodging Corporations -- Are They Traitors to US?

    There are two issues at work here, double taxation of corporate profits and the inheritance tax. Let me suggest a solution to the first and an observation on the second.

    Corporate profits taxes:In theory, a corporation pays taxes on its net profit after deducting all ordinary and necessary expenses plus depreciation. Combined with the tax loss carry forward rule we get a situation where a profitable corporation can reduce its tax liability to almost zero. Under our system, when a corporation declares a dividend, shareholders are taxed on the dividend at a rate ranging from 5% to 15% depending on their overall tax rate. (An unduly complicated system.) In theory, a dividend represents a dollar taxed twice. Although we have seen situations where companies pay dividends even when they don't have profits or they have no taxable profit but still pay dividends. Also there are companies that do not pay dividends at all. Thus double taxation is not as frequent a problem as it might first appear. However, as therelayer's table shows, the share of taxes paid by corporation has declined significantly since the 1950s.

    I suggest that double taxation motivates both corporations and shareholders to make investment financial decisions that are not in the best interests of the business but decisions that are distorted by tax considerations. The better route would be to impose a single layer of taxation on corporate profits the way the United Kingdom does. The UK has what is called an advance corporations tax. The tax works like this, the company is taxed on income at a reasonable rate. Then, if it pays a dividend, the shareholder receives a tax credit on the dividend income equal to the pro rata share corporate tax already paid. Dividends are included in a British Subject's overall income. The UK tax is calculated and then the British Subject takes a credit for her share of advance corporations tax. This makes corporate profits taxed only once.

    Inheritance Tax: Not a suggestion, but an observation. George Steinbrenner probably paid a lot of taxes during his lifetime. (Except on his illegal campaign contributions to Richard Nixon, but that's a different matter.) Thus Steinbrenner's fortune got taxed at least once. To the extent his fortune was the result of dividends it was taxed twice. Should it really be taxed a third time? Let us consider what would have happened if Steinbrenner had died owning all of the Yankees in a year with inheritance tax. The Yankees are probably worth $1.0 billion. At the 50% inheritance tax rate, Steinbrenner's estate would have paid roughly $500 million in taxes. I doubt that the Steinbrenner sons had $500 million in spare cash so they would have had to either borrow the money to pay the taxes on the Yankees or they would have had to sell the Yankees. Steinbrenner is an extreme example, but the inheritance tax drives many businesses into various tax strategies that add nothing to the value of the business or the family.

    HTH
    Z

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    Default Re: Tax dodging Corporations -- Are They Traitors to US?

    but Steinbrenner never paid taxes on the increase in value (capital gains) of the Yankees since bought them. He paid less than $10 million, and now they're worth approximately $1 billion as you mentioned.

    Here's a quote from Harvey Greene, the Yankees' Director of Media Relations from 1986-1989, about the experience of working under Steinbrenner:

    "When the team was on the road, you’d come back to your hotel late at night, and if your phone light was on, you knew that either there had been a death in the family or George was looking for you. After a while, you started to hope that there had been a death in the family."

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    Default Re: Tax dodging Corporations -- Are They Traitors to US?

    Quote Originally Posted by eagle2 View Post
    but Steinbrenner never paid taxes on the increase in value (capital gains) of the Yankees since bought them. He paid less than $10 million, and now they're worth approximately $1 billion as you mentioned
    That is the counter-argument. Which at first glance is somewhat compelling. I mean why shouldn't the appreciation be taxed? Well, the team wasn't sold. Normally we tax gain on assets when they get sold. We call it a capital gains tax. And we do so at rates between 5% and 15%.

    Why then should an involuntary transfer be taxed at a substantially higher rate, as high as 50%? More important, the Steinbrenners didn't sell the club, nor apparently do they want to. Yet, with an estate tax, they are forced to recognize the gain and get taxed at a higher rate than if they voluntarily sold the business.

    HTH
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    Default Re: Tax dodging Corporations -- Are They Traitors to US?

    At the minimum, when/if they sell the team, they should at least have to pay the capital gains tax based on how much was paid for the team in 1973.

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    Default Re: Tax dodging Corporations -- Are They Traitors to US?

    Quote Originally Posted by eagle2 View Post
    At the minimum, when/if they sell the team, they should at least have to pay the capital gains tax based on how much was paid for the team in 1973.
    That means they'd pay inheritance taxes on about $990,000,000 because George paid $10 million in 1973. And very little of that $10 million even came from HIM ! The conundrum that OUGHT to have been faced by Hank and Hal when George died has been faced thousands of times by wealthy families

    I understand the double and triple taxation arguments about dividends , capital gains and inheritances. I also favor entrepreneurs and risk takers over those who are wealthy via either an accident of birth or just marrying well.

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    Default Re: Tax dodging Corporations -- Are They Traitors to US?

    double taxation....
    Taxes are paid on money transfer. A corporation gets taxes and declares dividends. Those dividends are taxed (at a lower rate) when transferred, even if that transfer is to a pseudo-owner. A corporation manufactures a widget and sells it; the manufacturer pays tax on the profits from the sale; I paid taxes on the money I used to buy the widget. Money is transferred and tax is paid on it. Now is that double taxation?

    Maybe that comes down to dividends and pseudo-owners, i.e, shareholders. What do shareholders own anyway; they do not really own any assets of the company, other than profits, if they are paid out as dividends. They will never own any tangible assets of the company; if the company is liquidated, they may or may not receive some cash value. But really they receive nothing but a dividend; they will not even own a widget. If the stock appreciates or depreciates, they only own the certificate and its value depends on market forces largely outside of the control of the company. So really what do they own besides dividends on profits and a speculative certificate?

    So where is the double taxation? I just see single taxation twice.
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    Default Re: Tax dodging Corporations -- Are They Traitors to US?

    One can quibble about taxation rates, and I certainly do, but taxation seems to be a normal part of any transaction/transfer. Inheritance taxes should only be levied on the inheritors when and if they transfer the property they inherited. Otherwise as far as I am concerned, that was a gift.

    All you out there who plan on transferring huge assets by inheritance tax-free, I suggest you make arrangements very soon to do so. Oh, and my condolences and good bye.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: Tax dodging Corporations -- Are They Traitors to US?

    Quote Originally Posted by eagle2 View Post
    At the minimum, when/if they sell the team, they should at least have to pay the capital gains tax based on how much was paid for the team in 1973.
    Of course if they sell the team they will be taxed on the capital gain. As they should. The problem is that this is not a sale. Hank and Hal don't apparently want to sell, and the tax code should not force them to.

    HTH
    Z

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