Report says most corporations pay no federal income taxes; lawmakers blame loopholes

[ZeroClub]

link (http://www.startribune.com/politics/national/congress/26854929.html)

Report says most corporations pay no federal income taxes; lawmakers blame loopholes

By JENNIFER C. KERR , Associated Press
Last update: August 12, 2008 - 8:23 AM

WASHINGTON - Two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, according to a new report from Congress.

The study by the Government Accountability Office, expected to be released Tuesday, said about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period.

Collectively, the companies reported trillions of dollars in sales, according to GAO's estimate.

"It's shameful that so many corporations make big profits and pay nothing to support our country," said Sen. Byron Dorgan, D-N.D., who asked for the GAO study with Sen. Carl Levin, D-Mich.

An outside tax expert, Chris Edwards of the libertarian Cato Institute in Washington, said increasing numbers of limited liability corporations and so-called "S" corporations pay taxes under individual tax codes.

"Half of all business income in the United States now ends up going through the individual tax code," Edwards said.

The GAO study did not investigate why corporations weren't paying federal income taxes or corporate taxes and it did not identify any corporations by name. It said companies may escape paying such taxes due to operating losses or because of tax credits.

More than 38,000 foreign corporations had no tax liability in 2005 and 1.2 million U.S. companies paid no income tax, the GAO said. Combined, the companies had $2.5 trillion in sales. About 25 percent of the U.S. corporations not paying corporate taxes were considered large corporations, meaning they had at least $250 million in assets or $50 million in receipts.

The GAO said it analyzed data from the Internal Revenue Service, examining samples of corporate returns for the years 1998 through 2005. For 2005, for example, it reviewed 110,003 tax returns from among more than 1.2 million corporations doing business in the U.S.

Dorgan and Levin have complained about companies abusing transfer prices — amounts charged on transactions between companies in a group, such as a parent and subsidiary. In some cases, multinational companies can manipulate transfer prices to shift income from higher to lower tax jurisdictions, cutting their tax liabilities. The GAO did not suggest which companies might be doing this.

"It's time for the big corporations to pay their fair share," Dorgan said.

____

On the Net:
Government Accountability Office: http://www.gao.gov (http://www.gao.gov/)

[Ben_n_austin]

I definitely think this is one of the biggest issues for tax payers, picking up the slack corporations let out through loopholes. I, for one, hate tax loopholes.

2/3rd of corporations paying no taxes = ridiculous.

[trickblue]

I definitely think this is one of the biggest issues for tax payers, picking up the slack corporations let out through loopholes. I, for one, hate tax loopholes.

2/3rd of corporations paying no taxes = ridiculous.

Corporations don't pay taxes...

Any tax they have is reflected in the price of their products/services. I don't understand why people don't grasp this. Actually the politicians do but they just want more money to spend. They could care less about those that put them in office.

The mock outrage from politicians is humorous...

A tax on corporations=tax on consumers.

[Ben_n_austin]

Corporations don't pay taxes...

Any tax they have is reflected in the price of their products/services. I don't understand why people don't grasp this. Actually the politicians do but they just want more money to spend. They could care less about those that put them in office.

The mock outrage from politicians is humorous...

A tax on corporations=tax on consumers.

Not exactly, but you tell yourself that to make yourself feel better.

[trickblue]

Not exactly, but you tell yourself that to make yourself feel better.

I can answer this easily, but outside of regulated industries, I would love to hear your explanation...

And don't worry about me feeling better... I can take it... ;)

[Ben_n_austin]

I can answer this easily, but outside of regulated industries, I would love to hear your explanation...

And don't worry about me feeling better... I can take it... ;)

http://img112.imageshack.us/img112/7370/snapshot20080812200809bi0.png


http://www.youtube.com/watch?v=unm7DJ0jXjI

[Ben_n_austin]

http://www.youtube.com/watch?v=gxytdULcuT0&feature=related

[Cajuncowboy]

I can answer this easily, but outside of regulated industries, I would love to hear your explanation...

And don't worry about me feeling better... I can take it... ;)

I know this. If I have to pay more in taxes then it affects my overhead. That is factored into everything that I do. So if the taxes go up, so do the prices. If Ben thinks I am taking the hit on the taxes and not passing it on, he is the single most naive individual on the planet.

Ok, maybe he is now that I think about it.

[trickblue]

http://www.youtube.com/watch?v=unm7DJ0jXjI

http://www.youtube.com/watch?v=gxytdULcuT0&feature=related

First of all... I don't like McCain... and I'm not voting for him...

One thing I will give McCain, he has been a stalwart on stopping pork barrel spending. Does he not get points for that?

Besides that, what do these videos have to do with corporations raising prices on goods and services to offset paying taxes?

Here's one for you from a few months back...
New Pig Book says Hillary Clinton's tops in pork spending, Barack Obama's 2nd, but John McCain had none! (http://latimesblogs.latimes.com/washington/2008/04/pig-book.html)

The nonpartisan taxpayer watchdog group Citizens Against Government Waste is out with its newest Pig Book, an overwhelming detailing of all 11,610 pork barrel projects inserted in the current fiscal year's appropriations bills by individual members of Congress.

These semi-secret spending measures cost taxpayers an extra $17.2 billion this fiscal year alone. This is the first year legislators have had to attach their names to these measures.

That's B for billion dollar$. In extra spending. That typically didn't go through the usual legislative committee screening. A huge increase over the previous year.

And guess which one of the surviving presidential candidates likes pork the most? And the least?

According to the Pig Book ("The Book Washington Does Not Want You to Read"), New York Sen. Hillary Clinton is our new grand national oinker among presidential contenders for most pork barrel spending. She inserted a whopping 281 individual spending projects into bills for the benefit of New York interests at the cost of taxpayers everywhere.

That totals $296.2 million.

The new national hero, on the other hand, for not inserting one penny of pork barrel spending is the Republican Party's presumptive nominee, Sen. John McCain of Arizona. As a longtime staunch opponent of such earmarks, McCain may be expected to raise the subject of such special spending if Clinton becomes his Democratic opponent in the fall's general election.

He may also bring it up if his opponent is Illinois Sen. Barack Obama, who may be a freshman senator but still isn't shy about inserting special earmarks into legislation cataloged by the taxpayer group's annual report. He accounted for 53 special earmarks, totaling almost $97.4 million.
This includes about $402,000 for a juvenile delinquency program at the Shedd Aquarium and $383,000 for another ethanol research plant.

Rep. Ron Paul of Texas, who still technically is in the GOP race, has campaigned against large government seeping into the lives of American citizens. However, according to the Pig Book (http://www.cagw.org/site/PageServer?pagename=homePage), that didn't keep him from proposing eight pork-spending bills totaling $22 million, including nearly $4 million to alter a Galveston bridge.

-- Andrew Malcolm
Photo: Baltimore Sun

[burmafrd]

Anyone stupid enough to think that raising taxes on corporations will not result in higher prices is truly a moron.

And its CONGRESS that allows and approves all these loopholes.

[trickblue]

And its CONGRESS that allows and approves all these loopholes.


No it's not... it's McCain... I saw it on youtube for myself...

He's also going to declare Martial Law as Bush is running out of time to get it done. I know this is so as the Libs said so...

[Cajuncowboy]

Anyone stupid enough to think that raising taxes on corporations will not result in higher prices is truly a moron.

And its CONGRESS that allows and approves all these loopholes.

Well obviously there are some morons here.

[theogt]

LOL. What a misleading article. These "corporations" don't pay "corporate taxes" because they're -- wait for it -- NOT CORPORATIONS!

You've discovered that S-corps and LLCs are flow-through tax entities. Amazing stuff, really.

Seriously, though, I'm just stunned that someone actually took time to write an article about this. Loophole? They wrote an entire code section JUST FOR THE PURPOSE OF NOT HAVING TO PAY ENTITY-LEVEL TAXES. It's not a loophole. I literally laughed out loud.

[AtlCB]

Not exactly, but you tell yourself that to make yourself feel better.They explain that in Economics. You must have slept during that course.

[AtlCB]

I definitely think this is one of the biggest issues for tax payers, picking up the slack corporations let out through loopholes. I, for one, hate tax loopholes.

2/3rd of corporations paying no taxes = ridiculous.You realize that most of the companies not paying taxes are either LLC's or unprofitable corporations.

[zrinkill]

You realize that most of the companies not paying taxes are either LLC's or unprofitable corporations.

:laugh2:

[Royal Laegotti]

Anyone stupid enough to think that raising taxes on corporations will not result in higher prices is truly a moron.

And its CONGRESS that allows and approves all these loopholes.

Not only that but it will influence more corporations to send more of our jobs overseas. My job is always under threat of going to Mexico or China, if Barack Bin Ladin gets elected Pres. and raises/creates every tax he can think of then that just might be the final nail in the coffin of my job.:(

[BrAinPaiNt]

Not only that but it will influence more corporations to send more of our jobs overseas. My job is always under threat of going to Mexico or China, if Barack Bin Ladin gets elected Pres. and raises/creates every tax he can think of then that just might be the final nail in the coffin of my job.:(

Maybe you deserve to lose your job for saying silly things. I did say maybe.:laugh2:

[Royal Laegotti]

Maybe you deserve to lose your job for saying silly things. I did say maybe.:laugh2:

That's what my boss keeps tellin' me.:p:

[joseephuss]

I know this. If I have to pay more in taxes then it affects my overhead. That is factored into everything that I do. So if the taxes go up, so do the prices. If Ben thinks I am taking the hit on the taxes and not passing it on, he is the single most naive individual on the planet.

Ok, maybe he is now that I think about it.

Raising taxes and getting rid of loopholes are two different things.

[Doomsday101]

While I do not want to see tax increases in this country I do think we need to have major tax reform. Unlike some I'm not anti-big business and while I think some loop holes should be closed I also know that US has one of the highest corporate taxes rates in the world. Does not seem like a good idea when these companies are competing in a world economy. Close the loop hole and lower corporate taxes

[DFWJC]

[quote=ZeroClub;2189656]link (http://www.startribune.com/politics/national/congress/26854929.html)


An outside tax expert, Chris Edwards of the libertarian Cato Institute in Washington, said increasing numbers of limited liability corporations and so-called "S" corporations pay taxes under individual tax codes.

"Half of all business income in the United States now ends up going through the individual tax code," Edwards said. [quote]

Already that number of 2/3 just fell to 1/3 if you accept this statement.


[quote] More than 38,000 foreign corporations had no tax liability in 2005 and 1.2 million U.S. companies paid no income tax, the GAO said. Combined, the companies had $2.5 trillion in sales. About 25 percent of the U.S. corporations not paying corporate taxes were considered large corporations, meaning they had at least $250 million in assets or $50 million in receipts.[quote]

Any moron knows sales do not equal profits....you could have 1 million in sales and 1.2 million is expenses and obviously not make a profit and therefore not owe tax.


[quote]In some cases, multinational companies can manipulate transfer prices to shift income from higher to lower tax jurisdictions, cutting their tax liabilities. The GAO did not suggest which companies might be doing this.[quote]


For sure if a company makes a PROFIT, they should pay tax on that profit. And the loopholes to transfer income from a profitable loser to get tax breaks should be closed.

Otherwise this article is very deceiving but a somewhat typical apples and oranges approach to complaining about "big business"--which so often really is not that at all, bu just happens to be me and you.

[Cajuncowboy]

Raising taxes and getting rid of loopholes are two different things.

The point is that no matter what you do, if the end result is higher taxes for businesses you are going to pay more for the product or service.

[joseephuss]

The point is that no matter what you do, if the end result is higher taxes for businesses you are going to pay more for the product or service.

Sure and I agree with you. I just think loop hole should be closed. Loop holes are abused and it should be corrected. There are lots of people and companies that don't abuse loop holes. They pay their fair share. Then are some that do abuse loop holes. If the loop holes are closed and these people try to pass that on to their consumers, then maybe the consumers will look elsewhere. Maybe they will look to other companies that weren't abusing loop holes in the first place, therefore they aren't raising their prices.

[Cajuncowboy]

Sure and I agree with you. I just think loop hole should be closed. Loop holes are abused and it should be corrected. There are lots of people and companies that don't abuse loop holes. They pay their fair share. Then are some that do abuse loop holes. If the loop holes are closed and these people try to pass that on to their consumers, then maybe the consumers will look elsewhere. Maybe they will look to other companies that weren't abusing loop holes in the first place, therefore they aren't raising their prices.

Theoretically I agree 100%. But you don't honestly think Congress (Dems or Repubs) are going to really do this do you?

[BrAinPaiNt]

Theoretically I agree 100%. But you don't honestly think Congress (Dems or Repubs) are going to really do this do you?

Heck no...because that cuts into money that winds up in their back pockets.

That old...business behind closed door type of loophole.

[joseephuss]

Theoretically I agree 100%. But you don't honestly think Congress (Dems or Repubs) are going to really do this do you?

No, because I don't live in my fantasy land 100% of the time. Just around 83%.

[Cajuncowboy]

No, because I don't live in my fantasy land 100% of the time. Just around 83%.

Me too, but it's that other 17% bites us in the butt.:laugh1:

[joseephuss]

Me too, but it's that other 17% bites us in the butt.:laugh1:

No, biting the butt is in the 83%.