Taxing yourself in the foot...

[bankside]

The US tax system has always fantasized about taxing earnings and profits from places other than the US. Here's what happens when they try:

http://://www.economist.com/news/le...d-no-substitute-corporate-tax-reform-how-stop

America’s corporate tax has two horrible flaws. The first is the tax rate, which at 35% is the highest among the 34 mostly rich-country members of the OECD. Yet it raises less revenue than the OECD average thanks to myriad loopholes and tax breaks aimed at everything from machinery investment to NASCAR race tracks. Last year these breaks cost $150 billion in forgone revenue, more than half of what America collected in total corporate taxes.

The second flaw is that America levies tax on a company’s income no matter where in the world it is earned. In contrast, every other large rich country taxes only income earned within its borders. Here, too, America’s system is absurdly ineffective at collecting money. Firms do not have to pay tax on foreign profits until they bring them back home. Not surprisingly, many do not: American multinationals have some $2 trillion sitting on their foreign units’ balance-sheets, and growing.

See also:
http://www.economist.com/news/busin...riven-exodus-continues-all-my-bags-are-packed

It is interesting that Republicans would rather see companies continue to flee overseas than allow Obama to spend the same tax money inside the US.

 

[Benvolio]

The US tax system has always fantasized about taxing earnings and profits from places other than the US. Here's what happens when they tr
http://://www.economist.com/news/le...riven-exodus-continues-all-my-bags-are-packed

It is interesting that Republicans would rather see companies continue to flee overseas than allow Obama to spend the same tax money inside the US.

What basis do you have for sayibg the Republicand want to see companies flee overseas? Often companies must send work overseas to survive against competition with fewer legal and financial burdens. To democrats, no burdens on employees could be excessive. As Sanders says, employees are semi slaves.
The US not only has the highest corporate tax rate, but, if any is paid to sharholders, it is taxes all over again.
Democrats want the golden eggs but are determined to kill the goose.

 

[hotatlboi]

if any is paid to sharholders, it is taxes all over again

How is that different from any other economic transaction?

If I earn money, pay taxes on that money, and then buy something at a store with my after tax earnings, that store now has to pay tax on it because my expenditure has become the store's income.

If a company distributes profits to shareholders, that is an expense to the company and income to the shareholders.

 

[Benvolio]

Km

How is that different from any other economic transaction?

If I earn money, pay taxes on that money, and then buy something at a store with my after tax earnings, that store now has to pay tax on it because my expenditure has become the store's income.

If a company distributes profits to shareholders, that is an expense to the company and income to the shareholders.

The difference is that the shareholders own the corporation and its income, but as owners they must pay taxes on the income twice. Worse, the corporation also pays state income tax as well as federal and the shareholders most pay both taxes on any income distributed to them.

 

[evanrick]

Ben already missed the point before he opened his mouth, so i will clarify. corporate profits are like water, except instead of flowing down the water is always trying to find the path of least resistance going up. there is no tax reform and America is basically coprorate tax whores cum rag when it comes to corporate taxes. republicons are always saying lower rates, they are already lower than anywhere in the solar system.
of course they will invent any and every lie to make you think otherwise, thats why its time to confiscate corporate profits where bad business has been done.
john kerry called them benedict arnold companies, and the reason we dont have fair taxes is that they wont give back what they have stolen, you have to steal it back to make them understand.

 

[Kabluey]

It is a weird thing trying to tax income on profits made overseas.
The US is competing for tax to be taken from subsidiaries who might operate with little involvement from US operations.
For example a US chain store might operate in Australia, selling Chinese made goods to Australian customers and be very profitable. The USA would like to tax that profit, in addition to, or instead of the Australian government.
Hence the beginning of strange tax and company setups.

The USA does the same to its own citizens. You'll be taxed on earnings if you move out of the USA for life, and will need to allow the US government access to your bank and investment accounts too.

That's unique.

 

[Benvolio]

Ben already missed the point before he opened his mouth, so i will clarify. corporate profits are like water, except instead of flowing down the water is always trying to find the path of least resistance going up. there is no tax reform and America is basically coprorate tax whores cum rag when it comes to corporate taxes. republicons are always saying lower rates, they are already lower than anywhere in the solar system.
of course they will invent any and every lie to make you think otherwise, thats why its time to confiscate corporate profits where bad business has been done.
john kerry called them benedict arnold companies, and the reason we dont have fair taxes is that they wont give back what they have stolen, you have to steal it back to make them understand.

Federal corporate taxes are the highest among major economies after only United Arab Emirates and Chad, BUT US corporations also pay state income taxes. You babel about something stolen is meaningless unless you can show that corporations have done something illegal. If they do what the law allows they have done something wrong.
Rates are applied to net income after deductions for costs, expenses etc. Liberals babel about deductions, as though the rates should be applied to gross income rather than net income, but gross income is not income. The amount which the corporation has earned is the net income. The amount which goes to pay expenses etc is not income.

 

[frankfrank]

a US chain store might operate in Australia, selling Chinese made goods to Australian customers and be very profitable. The USA would like to tax that profit, in addition to, or instead of the Australian government.

A U. S. chain which has stores in Australia (McDonald's is a good example) shouldn't have to pay USA taxes on its Australian earnings.

But, they also shouldn't be allowed to get away with creative and exotic accounting chicanery which may possibly shift some of the U. S. profit to Australia, and shift some Australian expenses or losses to the USA. (They're not necessarily doing this, and there's probably no need, but I'm using this as an example.

HOWEVER, COMPANIES DOING BUSINESS IN THE USA SHOULD ALWAYS BE SUBJECT TO UNITED STATES CORPORATE TAX LAWS on those monies/profits/losses - and, again, without international trickery to magically turn $1.73 BN of profits (from USA operations) into a loss. (That number doesn't correlate to any company as I know of; just a sample number I grabbed out of my ass, lol.)

This also means that a company should never be allowed to escape USA tax laws, because they are "headquartering" themselves inside a teeny-tiny Post Office Box in Bermuda.

 

[Benvolio]

Some large companies have moved their headquarters out of the country to reduce taxes, including Burger King. The moves are called inversions. Pfizer made an offer to buy British company and move there, but it fell through. http://www.chicagobusiness.com/arti...ompanies can save taxes by moving to Britain.

 

[Kulindahr]

Corporations should pay a flat 10% federal tax; no deductions, no credits, just an even 10%. This should ALL go to transportation until such point as the U.S. is rated as having the best transportation in the world.


Second, corporations should be billed for the federal benefits paid to their employees because their wages aren't high enough to get by without those benefits. That revenue should obviously go to the programs that pay the benefits.


Democrats should offer a bill doing this, plus expanding Social Security. The combination ought to be a slam-dunk.

 

[evanrick]

It is a weird thing trying to tax income on profits made overseas.
The US is competing for tax to be taken from subsidiaries who might operate with little involvement from US operations.
For example a US chain store might operate in Australia, selling Chinese made goods to Australian customers and be very profitable. The USA would like to tax that profit, in addition to, or instead of the Australian government.
Hence the beginning of strange tax and company setups.

The USA does the same to its own citizens. You'll be taxed on earnings if you move out of the USA for life, and will need to allow the US government access to your bank and investment accounts too.

That's unique.

they do its because its easier to go after individuals. the FBI or IRS cannot raid a corporate 'bank account' as easily because the corporation is likely to have many more lawyers and insiders defending it.

 

[Benvolio]

Corporations should pay a flat 10% federal tax; no deductions, no credits, just an even 10%. This should ALL go to transportation until such point as the U.S. is rated as having the best transportation in the world.


Second, corporations should be billed for the federal benefits paid to their employees because their wages aren't high enough to get by without those benefits. That revenue should obviously go to the programs that pay the benefits.


Democrats should offer a bill doing this, plus expanding Social Security. The combination ought to be a slam-dunk.

Notice that Kul gives no thought to the effect of his absurd scheme upon employers and jobs. If corporations have to pay all the freebies to employees the democrats can dream up, they would have a strong, overpowering motive to eliminate jobs and move as many as possible out of the country. I corporations paid for all those benefits, democrats would stay awake nights dreaming up more to buy votes.
A flat tax without deductions is equally stupid. Kul doesn't even understand the concept of income or deductions. Income is what is left over AFTER deduction of costs and expenses. If a business brings in $100, but spends $25 on labor and $25 on materials, those expense must be deducted to arrive at the $50 income. The $100 is not income.

 

[Kabluey]

they do its because its easier to go after individuals. the FBI or IRS cannot raid a corporate 'bank account' as easily because the corporation is likely to have many more lawyers and insiders defending it.

It is a weird thing.
If you move to another country and have a kid there, and do the right thing getting him US citizenship, your kid will be a felon if they don't submit tax returns from age 18 onwards, and they will have to pay tax on all earnings in their home country above $80k to the USA.
Even if they've never visited the USA, or own a current passport.

No other country does that. US citizens get a raw deal from their government when living overseas.

It must harm trade. You'd expect American citizens to do the best job of representing American companies abroad, but the US tax system punishes that. Sorry for the aside.

 

[Benvolio]

Again, the child of US citizens born in another country is a US citizen from birth, and the parents to not need to "get him citizenship." He does not need to file a return until his income exceeds the minimums. But I agree, it is wrong to tax him on income earned outside the US>

 

[thewiz]

The problem is the special interest add-ons to the US Tax Code. As a business owner, we try to maximize our profits just like any other. However, we don't have a great group of lobbyists that wine and dine everyone on Capitol Hill to get preferential tax policy.

The Republicans are fond of saying that our business taxes are the highest of anywhere in the world -- perhaps the universe. What they fail to mention is that after all of the special interest legislation granting various deductions, many of our largest companies such as GE, CBS, JetBlue -- not only didn't pay any federal taxes but in some cases got back rebates!

http://www.thefiscaltimes.com/2015/04/09/15-Fortune-500-Companies-Paid-No-Federal-Income-Taxes-2014

On top of not paying federal taxes, companies shop state-to-state for the best deals possible. In many cases, they receive all of the funding for extending water and sewer lines, new roads to their plant, railroad spurs, and huge tax breaks. Since I'm familiar with Michigan, here are the rates for business and industry (all cheaper than individuals):

While tax rates vary by location, Michigan's property tax system provides automatic exemptions that effectively cut personal property taxes by:

--65% for industrial businesses
--23% for commercial businesses

Michigan's 2012 average non-homestead property tax rate was 49.54 mills, or $49.54 per $1,000 of assessed property, with real and personal property subject to taxation at 50% of current market value. Industrial personal property is automatically exempt from 24 mills for schools, and commercial personal property is automatically exempt from 12 mills.

Additional property tax abatements available to Michigan businesses include:

--locally-negotiated abatements, including 100% new personal property exemptions available in specified communities
--50% abatements for up to 12 years on real and personal property for industrial processors and "high tech" companies
--abatements up to 100% for rehabilitation projects
--more than 100 sites in virtually tax-free Renaissance ZonesTM, which effectively eliminate general property taxes

Michigan is facing a huge deficit (like Indiana, Wisconsin, Illinois and many other states) because the cost of the abatements is now coming due and, in many cases, is far more than the company is paying in taxes. Many companies will be getting millions in federal rebates along with 10's of millions in State rebates.

Insulting as this might be to individuals, I find it more insulting that these same companies were bailed out by US taxpayers during the Bush-Republican Depression and receive millions in "research and development" from the federal and state governments. It used to be these corporations had some semblance of decency and invested their trillions in "community banks" which are different than the large "too big to fail" banks like JP Morgan, Bank of America, etc. Community banks are chartered under different statutes and return the money to the local communities in which they are located. In my former community we used to have two community banks that were then bought up by bank holding companies. One no longer is a community bank but is instead now "too big to fail." The other remains community based and community owned but under a local holding company (that is worth half as much as before the depression).

The community banks lend money to mom-and-pop Main Street; they finance your car, your house purchase; they usually contribute quite a bit of money for local charities and causes such as Little League, Scouts, school PTA's, etc.

Now these companies park the money oversees so they can bypass paying any taxes (taking all of the deductions and costs in the US so as to not pay any taxes while transferring the wealth to the Cayman's or Bermuda). The reason the US taxes these is because of the brazen ability of companies to cheat to the legal extent possible.

Want to lower the business rate? Then let's eliminate all of these abatements, loopholes, and other deductions and compare tax rate to tax rates on other countries. I think you'll quickly find these same corporations and Republicans screaming about how we are mistreating these poor businesses who no longer can take them to The Prime Rib on K Street in Washington, DC or some junket in a pleasant part of the world.

 

[Kabluey]

Again, the child of US citizens born in another country is a US citizen from birth, and the parents to not need to "get him citizenship." He does not need to file a return until his income exceeds the minimums. But I agree, it is wrong to tax him on income earned outside the US>

You have to file whether you exceed the minimum or not. Still a federal offence not to, so yeah, it would be something that would be good for US citizens abroad to abolish.
It makes it almost impossible for American citizens to even open bank accounts in many countries, because of US treaties recently introduced.