Obama's Latest Speech

[wreckingball]

I say that we revert back to our founding principles and abolish most forms of regulation and taxation on our job creators for half a decade.  We would reassert our global economic dominance and turn nation's economy around overnight.

On the topic of inheritance tax:

Others wanted to go much further; Thomas Paine, like Smith and Jefferson, made much of the idea that landed property itself was an affront to the natural right of each generation to the usufruct of the earth, and proposed a "ground rent" — in fact an inheritance tax — on property at the time it is conveyed at death, with the money so collected to be distributed to all citizens at age 21, "as a compensation in part, for the loss of his or her natural inheritance, by the introduction of the system of landed property."

And...

The US did not become a global economic dominant force until after WWII and it was due to every other industrialized power being annihilated.

[Vandy Vol]

, I would take Bernie Sanders with a cup of salt. A grain won't do. The guy thinks Obama is a right winger. In other words, he so out there to the left, he's about to fall off the edge. He isn't gonna paint capitalism or corporations in a positive light.

Yeah, politically, the guy is a nutbag.  But the statistics he quotes seem to pan out, at least from a cursory review of his accusations.

Even if they're not entirely accurate, I still stand by the fact that there is just too much shit in the tax code.  The rates need to be dropped and a majority, if not all, of these bullshit credits and deductions need to be removed.

The government may collect less from some companies that have previously been raped, but it will also collect more from those companies which have creatively "avoided" taxes in the past.  The cost of filing taxes will be reduced, as you wouldn't necessarily need an accountant to fiddle with your numbers and figure out the best deductions for you, and the cost of tax administration for the government would be reduced, as you won't have complex laws to decipher when trying to figure out whether your assessment of taxes due is correct.

[GarMan]

The fact still stands that they paid no federal income taxes for tax year 2009, regardless of what they did or didn't do in 2010.  This alone proves my point that many corporations, even multi-million dollar corporations, are able to zero out their taxable income due to the variety of deductions, exemptions, and credits that exist.

I'm talking about 2009.  They paid lots of taxes in 2009.  In fact, their taxes exceeded their profits in 2009. 

Essentially, I think you're missing my main point here.  No, not every corporation zeroes out its taxable income with deductions.  And no, even those corporations who can do that aren't able to do it every year.  But the fact that they can and do zero out their income completely despite making millions in profits exemplifies why the tax code as it stands is completely screwy.

I generally agree...  But, don't believe for one second that they are still not paying significant taxes.  They may not be paying corporate income tax, but they still paid an exhorbatant amount of taxes compared to their actual earnings. 

Do I think that corporations which have paid 47% of their income into taxes should be taxed more just because they still have millions of dollars left over?  No, of course not.  My only point is that even this particular corporation which got raped in 2010 didn't pay anything in 2009 in income taxes.  The fact that they did this in 2009, even if they get raped in subsequent years, shows me that there's a problem with the tax code that needs to be fixed.  And yes, the fact that they then turned around in 2010 and got raped also shows me that there's a problem with the tax code on the opposite end of the spectrum that needs to be fixed.

Again, my facts are from 2009, so your response is pointless. 

All of the studies you referenced dealt with corporations, not "companies" which could include pass through business entities.  All of your initial posts prior to the chart I presented was in reference to the corporate tax rates.  It wasn't until after the chart was posted that you brought up pass through entities, so I'm not sure how my use of a corporate tax rate chart was misleading when the topic was, in fact, corporate tax rates.

No...  If you're going to use pure comparisons of corporate tax rates amongst various countries as a percentage of GDP, you simply cannot make a reasonable comparison with countries that do not recognize or support pass-through entities.  If the vast majority of their economic activity is conducted by corparate structures, those statistics cannot be compared with similar statistics in the United States as the majority of our employers typically fall into pass-through entity structures.  To further clarify, more than 50% of our workers are employed by small businesses.  The majority of small businesses as well as a number of large ones are structured as pass-through entities.  This represents a siginificant portion of the US economy (and the GDP) that does not fall under corporate taxation.  Again, there is no comparison.  It's smoke-and-mirrors nonsense.   

You're creating strawman arguments and comparing apples and oranges at the same time.

Strawman argument:  I didn't state that we should follow their examples.  Yes, our current method of assessing and collecting taxes is inferior to many other countries, as other countries are able to collect a larger percentage of the GDP in the form of tax.  This doesn't mean that we should implement their system of collecting taxes.  What it means is that we need to better our system of collecting taxes.  Whether we should do so by adopting their system or creating our own system is an entirely different point, and I've never made any statements addressing that point one way or the other.

This is pointless...  The comparison is flawed from the start.  Your conclusions are nonsense. 

Erroneous comparison:  The fact that the U.S. has more economic freedoms doesn't relate to whether its ability to assess and collect taxes is better than other countries' abilities to do so.  Just because I state that we are inferior in one aspect doesn't mean that I also believe we're inferior in all other aspects, or that we're inferior in general.

You're assuming that this pure comparison of corporate tax rates amongst various countries as a percentage of GDP somehow concludes that the US's ability to assess and collect taxes is a problem.  Aside from the fact that the US tax system is actually fukt, you cannot arrive at that conclusion from this study as explained above.  To borrow your characterization, it is an erroneous comparison and a false conclusion. 

Look at what you've just said, and then look at your own studies.  Completeness?  Your studies didn't compare all corporations.  One compared the 2,000 largest corporations, and the other only compared corporations with the highest tax rates.  How is this a "complete" study which shows the average effective tax rate for American corporations when it doesn't even compare all American corporations?  How do you get an average by looking at the largest, most taxed corporations?  Am I going to get the average weight of Americans by studying the 2,000 fattest people?  That sounds incomplete to me.

Fair enough...  You're technically correct, but I would still be inclined to take the 2000 largest corporations as an adequate subset of which to compare global corporate taxation.  We're not talking 2000 of the US's corporations compared to all corporations of other countries.  This is an apple-to-apple comparison of global taxation on the Forbes Global 2000 list.  We're not comparing Exxon to Pedro's Tiki Bar. 

Misrepresenting facts?  You're attempting to tell me that American corporations pay an average effective tax rate of X% by using a study which only took into account corporations with the highest tax rates.  And the purpose of the study wasn't even to compare tax rates; it was to look at investment incentives for corporations.  That sounds like a misrepresentation of facts to me, or at the very least a misapplication of a study to prove something that it wasn't meant to prove, nor is it capable of proving because it doesn't use statistics from all American corporations. 

Stop your whining...  Again, it was a comparison of similar-to-similar.  If you can't see that, it's not my problem. 

[GH2001]

On the topic of inheritance tax:

Others wanted to go much further; Thomas Paine, like Smith and Jefferson, made much of the idea that landed property itself was an affront to the natural right of each generation to the usufruct of the earth, and proposed a "ground rent" — in fact an inheritance tax — on property at the time it is conveyed at death, with the money so collected to be distributed to all citizens at age 21, "as a compensation in part, for the loss of his or her natural inheritance, by the introduction of the system of landed property."

And...

The US did not become a global economic dominant force until after WWII and it was due to every other industrialized power being annihilated.

Carnegie, Ford, Vanderbilt and Rockefeller scoff at your last statement.


And ww2, if anything, brought the us of the great depression. Not fdr's utopian policies. He is an example of liberalism turning a recession into a depression. Say it ain't so.

[Vandy Vol]

I'm talking about 2009.  They paid lots of taxes in 2009.  In fact, their taxes exceeded their profits in 2009.

Well, now I'm confused about what year you're talking about then, because you're not being very clear with your wording.  You stated:

Wow...  Now, let's look at the facts pulled from their latest annual report. 

Their latest annual report filed with the SEC was for the 2010 tax year.  My references were to what was paid for the 2009 tax year, and their report which indicated that no income taxes were owed.

So either you're talking about their latest annual report like you initially stated, which would be 2010, or you're talking about their 2009 annual report, but it can't be both.

I generally agree...  But, don't believe for one second that they are still not paying significant taxes.  They may not be paying corporate income tax, but they still paid an exhorbatant amount of taxes compared to their actual earnings.

Sure, they do usually pay an exorbitant amount of taxes in other areas.  But I was more or less focusing on income tax.  And so was the discussion.  The "corporate tax rate," which we've been discussing for the vast majority of this thread, is the income tax rate for corporations.  It doesn't include payroll taxes, sales taxes, use taxes, or anything else; it's an income tax on corporations.

So when you suggested that the effective corporate tax rate of Exxon was 47% based on all of the taxes they paid, you're incorrect.  And when you compare the corporate tax rate of corporations in one country to the average rate of all types of taxes paid by corporations in America, you're comparing two different numbers and types of taxes.

In order to pay no income tax, or even a significantly small amount of income tax, you have to reduce your taxable income.  If you're a multi-million dollar corporation, this means you have to reduce millions (or even billions) of dollars of gross income in order to reach a taxable income of $0 (or reach a significantly small taxable income amount).  Being able to do so just goes to show that the tax code and the vast number of deductions are a little absurd, and far too complex.

No...  If you're going to use pure comparisons of corporate tax rates amongst various countries as a percentage of GDP, you simply cannot make a reasonable comparison with countries that do not recognize or support pass-through entities.  If the vast majority of their economic activity is conducted by corparate structures, those statistics cannot be compared with similar statistics in the United States as the majority of our employers typically fall into pass-through entity structures.

Sure, I see your point there.  But yet again, the second chart reinforces what the first chart concludes.  Even when you go outside of corporate tax rates, the amount of general taxes collected as a percentage of GDP is far higher in other countries than it is here.

Fair enough...  You're technically correct, but I would still be inclined to take the 2000 largest corporations as an adequate subset of which to compare global corporate taxation.  We're not talking 2000 of the US's corporations compared to all corporations of other countries.  This is an apple-to-apple comparison of global taxation on the Forbes Global 2000 list.  We're not comparing Exxon to Pedro's Tiki Bar.

To use your own argument against you, if there are countries that have more corporations because they don't utilize pass through entities, then doesn't that skew the results in your study just as much as it did mine?

Additionally, we have to look at the number of corporations that "represented" each country.  The study used 484 American corporations, and 1,336 corporations from 58 countries.  This means that, on average, the other countries were represented by 23 corporations each.  It's not a "similar to similar" comparison unless you have a similar number of corporations evaluated from each country.

Further, what if many of these other countries have a flat tax rate?  While their top 23 corporations may pay less in taxes than American corporations, their smaller corporations are paying the same tax rate as the big corporations.  But in America, the smaller corporations generally pay less due to the progressive tax structure that we have, so ultimately America's average tax rate for corporations may very well be lower.

Last but not least, were studies done on the other countries to see how corporate tax rates were structured and how they were affected?  Maybe the top four earning corporations in Cambodia paid less in taxes than 300 of America's top earning corporations, but what did the fifth ranked Cambodian corporation pay?  Or the tenth?  Could they have paid higher percentages than those corporations which were ranked higher then them?  With an average of 23 corporations per country, there's simply not a large enough pool to get meaningful numbers regarding average tax rates, especially when you're comparing them to 484 American corporations.

Stop your whining...  Again, it was a comparison of similar-to-similar.  If you can't see that, it's not my problem.

Don't be so grumpy.  It's not my fault you decided to incorrectly use the term "average," and then later corrected your terminology after you were called out on it.

[wreckingball]

Carnegie, Ford, Vanderbilt and Rockefeller scoff at your last statement.


And ww2, if anything, brought the us of the great depression. Not fdr's utopian policies. He is an example of liberalism turning a recession into a depression. Say it ain't so.

Carnegie, Ford, Vanderbilt and Rockefeller would be scoffing themselves due to the Monroe Doctrine, which pretty kept the US isolated in regards to foreign affairs until the Theodore Roosevelt Corollary. The US begin to emerge as a power after the turn of the 20th century and became a hegemony after WWII. Not really sure why you are bringing FDR into this anyways, I never said he brought the US out of the Great Depression. The destruction of every other major industrial power led to the economic dominance of the US.

[GH2001]

Carnegie, Ford, Vanderbilt and Rockefeller would be scoffing themselves due to the Monroe Doctriune, which pretty kept the US isolated in regards to foreign affairs until the Theodore Roosevelt Corollary. The US begin to emerge as a power after the turn of the 20th century and became a hegemony after WWII. Not really sure why you are bringing FDR into this anyways, I never said he brought the US out of the Great Depression. The destruction of every other major industrial power led to the economic dominance of the US.

I brought it up because wwII saved his "legacy" of pulling the country out of the great depression. It was an economic boom for the U.S....you're right though, the U.S. became an elite superpower post wwII. They were already a pretty big power due to the industrial revolution. That was my point earlier.

[DnATL]

Many small-business corporations have a zero balance because their stockholders (i.e. employee-owners) pay out any profit at year-end as bonus to themselves individually.  In lieu of a 35% corporate rate, taxes are paid at the lower marginal tax rate for the individual owners.  Tax avoidance, not evasion.  From a sheer numbers standpoint, I would expect that most incorporated businesses would be considered small, so I am surprised that only 60% are zeroing out.

[Vandy Vol]

Many small-business corporations have a zero balance because their stockholders (i.e. employee-owners) pay out any profit at year-end as bonus to themselves individually.  In lieu of a 35% corporate rate, taxes are paid at the lower marginal tax rate for the individual owners.  Tax avoidance, not evasion.  From a sheer numbers standpoint, I would expect that most incorporated businesses would be considered small, so I am surprised that only 60% are zeroing out.

This is a prime example of why the tax code is far too complicated and most people don't understand some of the minute details contained within it.

You can generally deduct a bonus paid to an employee if you intended the bonus as additional pay for services and the services were performed.  You can't just give an employee a bonus because there were excess profits lying around and you wanted to zero out your business's income; there has to be additional services that they performed, or the employee exceeded expectations, or something "extra" to warrant the extra payment.

This doesn't mean that you can't give bonuses for shits and giggles, like most companies do at Christmas time.  It just means that, according to the tax code, you can't deduct a bonus unless it was paid as additional compensation for additional services.

If you're choosing to distribute excess profits to shareholders, then it's referred to as a dividend, and it's also not tax deductible.  So, whether you classify it as a "bonus" or a dividend, it's simply not tax deductible, unless it actually is a bonus, which would require that those who received the bonus performed additional services.

Of course, I'm not saying that businesses don't get away with paying bonuses and deducting them improperly.  The problem here is that, based on the tax return alone, the I.R.S. doesn't have much of a reason to flag the return and audit the company.  And even if they do audit the company, the company could likely get away with it by making a bullshit excuse about how all of their shareholder-owners put in extra work and earned those bonuses.

The only thing that would be a dead giveaway is if the "bonus" that is paid to each shareholder-owner just so happens to be proportional to the percentage of stock they own.  That would indicate that it's a dividend, but there still could be a bullshit excuse about the fact that each shareholder-owner did perform additional services, and that the company merely decided to calculate the bonus based upon their percentage of ownership.

This is the type of "creative accounting" that I was talking about.  You can make it look correct on your return, and even if the I.R.S. were to audit you, you could probably get away with making up shit about how the shareholder-owners performed additional services.  But just because it passes muster on paper doesn't make it true.

And that, my friend, is tax evasion made possible by a complicated tax code with many provisions that are virtually impossible to enforce.

[GH2001]

This is a prime example of why the tax code is far too complicated and most people don't understand some of the minute details contained within it.

Zack Lee.

[wreckingball]

Zack Lee.

http://rivals.yahoo.com/footballrecruiting/football/recruiting/player-Zach-Lee-64816

[GH2001]

http://rivals.yahoo.com/footballrecruiting/football/recruiting/player-Zach-Lee-64816

Ok, I will admit.....

[GarMan]

Really?  You're keeping this up???

Well, now I'm confused about what year you're talking about then, because you're not being very clear with your wording.  You stated:

Their latest annual report filed with the SEC was for the 2010 tax year.  My references were to what was paid for the 2009 tax year, and their report which indicated that no income taxes were owed.

So either you're talking about their latest annual report like you initially stated, which would be 2010, or you're talking about their 2009 annual report, but it can't be both. 

Ummmm...  Well, if you've ever reviewed a ANY corporation's 10K, 10Q or Annual Report, you'd know that they include the financial stats for prior calendar periods along with the stats of the current reporting period.  Exxon's 2010 annual report includes the stats for 2008, 2009 and 2010.  Their 2009 financials DO NOT indicate that they had no income tax liability in 2009.  As stated, they paid $15B in various income taxes for the 2009 period.  That doesn't necessarily mean that Bernie Sanders is wrong...  It just means that he hasn't shared all of the facts. 

Sure, they do usually pay an exorbitant amount of taxes in other areas.  But I was more or less focusing on income tax.  And so was the discussion.  The "corporate tax rate," which we've been discussing for the vast majority of this thread, is the income tax rate for corporations.  It doesn't include payroll taxes, sales taxes, use taxes, or anything else; it's an income tax on corporations.

So when you suggested that the effective corporate tax rate of Exxon was 47% based on all of the taxes they paid, you're incorrect.  And when you compare the corporate tax rate of corporations in one country to the average rate of all types of taxes paid by corporations in America, you're comparing two different numbers and types of taxes.   

Well, you're wrong again...  In 2009, Exxon's profits were reported as $19B, and their income taxes were reported as $15B.  They also reported their effective income tax rate as 47%.  Doing the math for you, after all other taxes, there was approximately $34B (19+15) left over of which to pay income taxes and report profits.  Now, when I divide $15B by $34B, I only calculate 44% as their effective tax rate, so they likely included something else to arrive at the 47% figure.  Again, this DOES NOT INCLUDE the other taxes that I reported. 

In order to pay no income tax, or even a significantly small amount of income tax, you have to reduce your taxable income.  If you're a multi-million dollar corporation, this means you have to reduce millions (or even billions) of dollars of gross income in order to reach a taxable income of $0 (or reach a significantly small taxable income amount).  Being able to do so just goes to show that the tax code and the vast number of deductions are a little absurd, and far too complex. 

Again, in 2009, Exxon paid $15B in income taxes.  I do know what you mean regarding taxable income, but it's not nearly as ridiculous as you may believe. 

Sure, I see your point there.  But yet again, the second chart reinforces what the first chart concludes.  Even when you go outside of corporate tax rates, the amount of general taxes collected as a percentage of GDP is far higher in other countries than it is here.

Of course, it is...  After merging all of their tax receipts, compared to the US, taxes in Europe are outrageous.  The VAT alone is typically a minimum of 15% on top of EVERYTHING else.  It's crazy. 

To use your own argument against you, if there are countries that have more corporations because they don't utilize pass through entities, then doesn't that skew the results in your study just as much as it did mine?

On the PWC analysis, the answer would be no...  They're comparing global corporations of similar traits without regard to GDP, so the results would not be skewed.  They would tend to be more realistic. 

Additionally, we have to look at the number of corporations that "represented" each country.  The study used 484 American corporations, and 1,336 corporations from 58 countries.  This means that, on average, the other countries were represented by 23 corporations each.  It's not a "similar to similar" comparison unless you have a similar number of corporations evaluated from each country.

That's just silly...  We're talking about corporations that met the standards to be listed on the Forbes Global 2000.  That establishes similarities between the corporations.  You don't need to compare 500 corporations from each country to determine approximate effective tax rates across various countries. 

Further, what if many of these other countries have a flat tax rate?  While their top 23 corporations may pay less in taxes than American corporations, their smaller corporations are paying the same tax rate as the big corporations.  But in America, the smaller corporations generally pay less due to the progressive tax structure that we have, so ultimately America's average tax rate for corporations may very well be lower.

What if...  Are you kidding me?  What are you suggesting?  Should we tax smaller corporations at a higher effective rate, perhaps as much as we tax our larger corporations? 

Last but not least, were studies done on the other countries to see how corporate tax rates were structured and how they were affected?  Maybe the top four earning corporations in Cambodia paid less in taxes than 300 of America's top earning corporations, but what did the fifth ranked Cambodian corporation pay?  Or the tenth?  Could they have paid higher percentages than those corporations which were ranked higher then them?  With an average of 23 corporations per country, there's simply not a large enough pool to get meaningful numbers regarding average tax rates, especially when you're comparing them to 484 American corporations.

Sorry...  This is ridiculous.  As stated above, we're talking about corporations that met the standards to be listed on the Forbes Global 2000.  That establishes similarities between the corporations.  You don't need to compare 500 corporations from each country to determine approximate effective tax rates across various countries.

Don't be so grumpy.  It's not my fault you decided to incorrectly use the term "average," and then later corrected your terminology after you were called out on it.

Don't be such an idiot.  Research some of this stuff for yourself rather than believing the popular rhetorical soundbites used by the moonbat community.  And, I don't know what you mean regarding this "average" term... 

[GarMan]

This is a prime example of why the tax code is far too complicated and most people don't understand some of the minute details contained within it.

...

And that, my friend, is tax evasion made possible by a complicated tax code with many provisions that are virtually impossible to enforce. 

Well after painfully reading your rambling nonsense, in the end, this tax avoidance strategy only shifts the tax burden to the shareholder or employee.  Taxes will still be paid, perhaps at a lower rate. 

[AUTiger1]

[Kaos]

Sort of related to the topic, the tax code needs to be cleaned up.  Tax rates may or may not need to be dropped, but there is a lot of shit in the tax code that is complicating everything.

As an example, corporations have relatively high taxes.  But, they don't necessarily pay the amount in taxes due to a variety of deductions, exemptions, credits, and other useless shit that we really wouldn't need if we'd just lower some of the tax rates.  A few years ago, I think it was a little more than 50% of American companies didn't have to pay anything in taxes due to the absurd number of tax breaks.

Ultimately, the tax system needs to be simplified.  In addition to cutting spending, of course.

You may be educated, but that doesn't prevent you from being an idiot. 

Don't pay the taxes?  Yeah.  That's what's happening.  Wish my accountant would get on board with all these deductions, exemptions and credits...

That's all I care to say on this subject. 

[Godfather]

Just an FYI random statistic for those that think the wealthy should pay more taxes.

45% of Americans didn't pay taxes last year. 45%

[Godfather]

Tax reform does need to happen but that is only one small section of the problem.

[Kaos]

Tax reform does need to happen but that is only one small section of the problem.

Don't disagree that tax reform MUST happen, but it's not because businesses are piling up deductions and credits to avoid paying taxes. 

That's idiotic. 

Yeah, we try to find every bit of assistance we can get because the fucking government is chewing up 30% or more of gross revenue.  That's unacceptable. 

[Godfather]

Don't disagree that tax reform MUST happen, but it's not because businesses are piling up deductions and credits to avoid paying taxes. 

That's idiotic. 

Yeah, we try to find every bit of assistance we can get because the fucking government is chewing up 30% or more of gross revenue.  That's unacceptable.

Oh I totally agree.  I was just pointing out that taxes are only a part of a larger scale issue.