Corporations that don't pay taxes - What is the solution?

[chrisisvacant]

I brought this up in the thread about communism, but I suppose I should stay on topic there and just bring this up here.

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From the NY Times:
The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.
Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

From Berkshire Eagle:
GE is also able to avoid U.S. taxes by focusing its profitable ventures offshore, which is also not an option for most taxpayers. Again according to The Times, GE's accumulated offshore profits have risen from $15 billion to $92 billion in the past 10 years. Over that same period of time, GE has eliminated 20 percent of its American work force. At a time when America desperately needs jobs and investment, GE is providing both in foreign countries and not even paying U.S. taxes. (Ironically, GE CEO Jeffrey Immelt heads President Obama's newly formed Council on Jobs and Competitiveness.)

From CNN Money:
GE had plenty of earnings last year -- just not in the United States. For tax purposes, the company's U.S. operations lost $408 million, while its international businesses netted a $10.8 billion profit.

That left GE with no U.S. profit left for Uncle Sam to tax. Corporations typically face a 35% federal income tax on their earnings. Thanks to its deductions and adjustments, GE reported an actual U.S. federal income tax rate of negative 10.5%. It got to add a "tax benefit" of $1.1 billion back into its reported earnings. "This is the first time in at least decades that GE has reported negative U.S. pretax income and it reflects the worst economy since the Great Depression," Anne Eisele, GE's director of financial communications, said via e-mail. But what about the $10.8 billion profit overseas? GE is "indefinitely" deferring income tax payments on those profits, Eisele said.

It may seem like accounting magic, but it's completely legit. GE isn't the only "Top 5" company on this year's Fortune 500 list that owed no income taxes. Bank of America (BAC, Fortune 500), which suffered major losses in 2009, included a tax benefit of $1.9 billion in its annual profit.

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Essentially, in order to continue upward mobility, megadollar corps manipulate the Capitalist nation it originates from and then moves all its operations and money offshore to benefit from less-stringent tax laws in smaller countries. Now, Americans do not benefit from the money supposedly being put back into the economy via retail sales because the cash is being funneled through several hands before being given to foreign nations. With no taxation, these companies can claim a loss of $408m, but as you can see they claim a refund/credit of up to 5 times that.

Usually the first response from people is to raise the taxes. It sounds, without a whole lot of thought devoted to it, like the logical step. If they don't pay enough, make them pay more, they have tons of money, they are good for it. So, under the current system the government could hike the corporate tax up as high as they wanted to but big nationals like WalMart, GE, BofA, etc will continue to defer their incomes to escape our shitty economy's flimsy taxation laws. Hell, even if they WERE taxed, the money comes directly out of your pocket. Yes yours! How? The companies jack up the prices of things, firstly. That's right. If your gas, cigarettes, bananas, cherries, crackers, lotion etc feels too expensive - IT IS! In our "free market" set up, all business can pretty much determine their own prices but those 2-5 dollar differences you might balk at add up to big bucks on the bottom line.

Lots of people are seduced by companies like WalMart (who also has its own brand of corporate vampirism) who offer cheaper prices and continue to proliferate the nooks and crannies of the country with more stores. How do they do it? Tax breaks like mentioned earlier - deferring their incomes, avoiding taxes by creative declaration of losses. Hell, even our own government will take similar steps to manipulate the income as many programs (specifically ones like the military) will burn up their surplus on things like televisions and other useless crap to justify their government benefits. Yikes.

How does a system so woefully broken and bloated get fixed again? I'm asking for your serious opinion on this stuff so plz keep trolling and bitchery to a minimum. TY!

[Zyzzyx]

Don't their oversea ventures require them to pay taxes of some kind to the country they are based in? Would be great if they found a way to tax that income over here as well, to prevent this junk.

[Valanna]

This is pretty much what happens. They make money off of it, and they can. Why not do it? I won't argue for US taxes being to high. In Sweden though, we have absurdly high taxes, then big companies move outside of the country to avoid the tax. Then socialists who voted for the high taxes cry at the corporations, even though they're the ones that caused the companies to move in the first place. Basically, you can't have the best of two worlds. You either have low taxes so companie stay and you get their huge amounts, or you have high taxes and rip the individuals off, while companies move out.

[Orly]

In b4 "Conspiracy theory! America is fine as it is"

[chrisisvacant]

This is pretty much what happens. They make money off of it, and they can. Why not do it? I won't argue for US taxes being to high. In Sweden though, we have absurdly high taxes, then big companies move outside of the country to avoid the tax. Then socialists who voted for the high taxes cry at the corporations, even though they're the ones that caused the companies to move in the first place. Basically, you can't have the best of two worlds. You either have low taxes so companie stay and you get their huge amounts, or you have high taxes and rip the individuals off, while companies move out.

Well, sure. But then we get into the cyclic discussion of how much is too much and for whom. Surely GE should not pay the same amount of taxes as the mom and pop record shop or the cannabis club down the street which are making much less money.

---------- Post added 2011-03-30 at 07:50 PM ----------

In b4 "Conspiracy theory! America is fine as it is"

lol. It's not a conspiracy theory. They really didn't pay taxes. That's why I cited my sources. This is real life.

[Orly]

lol. It's not a conspiracy theory. They really didn't pay taxes. That's why I cited my sources. This is real life.

I take it as real life too, but tell it to the average american (and i say that because you mentioned USA there in particular, could have been any other country) and they will look at it as some sort of made-up gibberish

[chrisisvacant]

I take it as real life too, but tell it to the average american (and i say that because you mentioned USA there in particular, could have been any other country) and they will look at it as some sort of made-up gibberish

Truth. Maybe one day, North Americans will realize why Africans and Asians are in serious hot water right now. Does the news of revolution in Egypt, Libya, Tunisia, and other countries fall on deaf ears? I can't be anything but COMPELLED to give a shit. Perhaps its the audience being too spaced out on twinkies and WoW.

[Orly]

Truth. Maybe one day, North Americans will realize why Africans and Asians are in serious hot water right now. Does the news of revolution in Egypt, Libya, Tunisia, and other countries fall on deaf ears? I can't be anything but COMPELLED to give a shit. Perhaps its the audience being too spaced out on twinkies and WoW.

Not just twinkies and WoW unfortunately....but it's quite strange....i'm more and more compelled to NOT give a shit each day, which i guess it's kind of sad, but that's where my feelings tend to go :[

[Deleted]

Not that I suspect that this is false information, but please post your links so that we can check the articles for ourselves.

You are right about the fact that information such as this should be known by more people.

Capitalism is about how great competition is and how it maximizes utility. There is now a competition between countries. They need to have lower taxes, forgiving laws, soft environmental regulations, etc. And in that games, multinationals are the players. Some populations are the losers. Some would say it's about liberty. What you identity as a problem is one of equity.

No easy answer to be honnest. Those companies (and people behind them) that profit the system are also the ones that we work for, buy from etc.
You ask for a way to "fix the system". I think that for a large part, we are the system we live in. Changing it means changing our values, our ways of living. That means, if you live in a northern country, accept to stop "wanting more".

[Gaspode]

Personally, I think we ought to dump baseball as the national sport and take up a new sport...taking crooked CEO's out to the middle of the Rub al Khali and leaving them there with a toothbrush, a hankerchief, and a change of underwear. See how far they get before expiring of thirst...

[Valanna]

Personally, I think we ought to dump baseball as the national sport and take up a new sport...taking crooked CEO's out to the middle of the Rub al Khali and leaving them there with a toothbrush, a hankerchief, and a change of underwear. See how far they get before expiring of thirst...

Because CEOs just slacked through their lives like the people you describe, right?

[Gaspode]

Because CEOs just slacked through their lives like the people you describe, right?

Sigh. Operative word being "crooked", as in criminal...

[chrisisvacant]

Not that I suspect that this is false information, but please post your links so that we can check the articles for ourselves.

Let us google "GE no taxes" and we get the results I posted plus so much more.

http://www.google.com/search?rlz=1C1...&q=ge+no+taxes



To the rest of your post: SPOT ON!

[Grignartoht]

They are too worried about overpaid teachers who are living high off the hog. I see teachers driving BMW's and Audis all the time, school parking lot is full of em. Corporate welfare? What could be more unAmerican? Oh I'm sorry, they are too big to fail. Wish I was too big to fail.

[Pumps]

The problem is we need a whole new way of life, all of these companies just think about their earnings and not about anything else or humans in general. They will always avoid trying to act responsible towards society.
Ie, we make new laws.

Law number 1: Nobody is allowed to make more than 10000$ a month - if they do that money will be taken and given to build a better world for the rest.

[morbidjbyrd]

This is pretty much what happens. They make money off of it, and they can. Why not do it? I won't argue for US taxes being to high. In Sweden though, we have absurdly high taxes, then big companies move outside of the country to avoid the tax. Then socialists who voted for the high taxes cry at the corporations, even though they're the ones that caused the companies to move in the first place. Basically, you can't have the best of two worlds. You either have low taxes so companie stay and you get their huge amounts, or you have high taxes and rip the individuals off, while companies move out.

We have low taxes, points to OP, and they still ship all the jobs overseas.

And GE isnt the only one doing this kind of stuff....they are just the best at it.

PS: I totally agree with pumps...there should be an exponential increasing tax rate depending on your income and have a maximum earnings cap.
ie.
If you make 10k a year, you pay 0% taxes.
If you make 20k a year, you pay 5% taxes.
If you make 30k a year, you pay 10% taxes.
If you make 45k a year, you pay 20% taxes.
...
...
...
If you make 200k a year, you pay 60% taxes.
Anything about 250k is defaulted to govt.

[davesurfer]

Not that I suspect that this is false information, but please post your links so that we can check the articles for ourselves

Here is a link: http://tinyurl.com/6jy5g2b

What is interesting is GE CEO Jeffrey Immelt who is responsible for "Over that same period of time, GE has eliminated 20 percent of its American work force" (quoted from OP) now sits on the President’s Economic Recovery Advisory board

http://washingtonexaminer.com/blogs/...#ixzz1I7KUrq2v

[Orly]

The problem is we need a whole new way of life

That got me thinking of the Zeitgeist movies, but I came to realize that most of the people who watched them consider them to be total bullshit....not that I support them fully or something, but they should be a good food for thought (the movies i mean)

[electrikfuzz]

Law number 1: Nobody is allowed to make more than 10000$ a month - if they do that money will be taken and given to build a better world for the rest.

I've read a lot of stupid shit on these forums, but this really takes the cake.

You don't have any idea how the economy functions, do you? You know how Detroit looks? Picture the rest of America looking like that.

[ZeroWashu]

How does a system so woefully broken and bloated get fixed again? I'm asking for your serious opinion on this stuff so plz keep trolling and bitchery to a minimum. TY!

By being honest.

The first fact we must dispense with is that corporations pay any tax at all. No corporation pays taxes, they collect them and pass them on to the government. This is called indirect taxation.

I already know that first paragraph probably has a few people screaming at their monitors. That is the result of many many years of demagoguery and training.

Answer these two questions.

1) Who pays for the products of services of a corporation?

2) Where does the corporation get the money it pays in taxes?

The answer is the same, the consumer. Who is the consumer? We are the consumers. Whether we purchase directly from a company or not we all pay their taxes. This is because even if you don't buy from a particular corporation someone you interact with, whether another corporation, small business, or individual, will.

So not only do you get hit with income taxes for every dollar you make you also pay the taxes assessed to every corporation through increased costs of goods and services. It is embedded in the cost of every service and item you buy. To top it off some states hit you up with sales taxes on items and some hit services too.

See, we are conditioned by both political parties to see only what they want us to see. Some are masters of misdirection, usually in the form of class warfare. Pitting you versus someone else or some corporation. They show you some numbers and don't give you all the information or they take them completely out of context. Corporations have to have hundreds of people just to work the tax law to keep from paying too much of these indirect taxes. GE has over nine hundred people just to deal with tax laws. Think about this, what if those nearly thousand people were producing products and services instead. Then think, if GE has so many how many do all corporations have altogether?

So how do you fix this? Simple, you show the consumer the full tax they actually pay. This is done with a consumption tax. Why isn't this done? Two reasons, first being people would FREAK if they saw just how much they truly pay in taxes from combining income, sales, fees, and indirect taxes. Second it would take power away from Washington which uses the tax law to dole out favors. Who do they dole out favors too? Corporations, unions, and the very rich. Why? To get campaign contributions to keep them in power.

This won't change by vilifying corporations or those richer than you. It will only change by not voting for representatives based on their party. You must vote for those who will change the system regardless of party affiliation.

What would the change entail. Well there are two good options on the table, a flat tax and the fair tax. Both have advantages and both have disadvantages. I won't cover them here, you can go read up on them but use the knowledge of who really is paying taxes when you do.