Comments on: Two-Thirds of Corporations Don’t Pay Taxes – Nothing More Than Political Hogwash

By: Festive Link Love Carnivality #22 | Free From Broke

Festive Link Love Carnivality #22 | Free From Broke — Sun, 31 Aug 2008 12:17:04 +0000

[...] Two Thirds Of Corporations Don’t Pay Taxes at Genration X Finance. It’s their goal, just like us, to pay as little taxes as possible. [...]

By: » Roundup: McCain vs. Obama, Taxes & Other Good Stuff(tm) on Blueprint for Financial Prosperity

Sat, 30 Aug 2008 13:08:36 +0000

[...] at Generation X Finance has a very good explanation of why the GAO report of 2/3rds of companies paying zero tax is political hogwash. Besides Jeremy’s good points, famous United States Court of Appeals for the Second Circuit [...]

By: Sporty

Sporty — Tue, 26 Aug 2008 02:39:05 +0000

Interesting…. now if we can further lower the the taxes for the rich we can raise the national debt or cut programs for the non deserving…. I am thinking let the corporations pay taxes and lower the taxes for individuals…. I know it isn’t a simple task to figure out…

By: Brip Blap

Brip Blap — Tue, 26 Aug 2008 01:47:27 +0000

@Drew: But in a sense, why not tax revenue and not profits? Again, if you’re an individual in the US you don’t get to write off much in the way of expenses. I used to take clients out for “business dinners” all the time and get those expenses written off for tax purposes. I know it helped the restaurants out, etc., but I still think that the revenue is the key indicator and not profit. Profit can be manipulated. I’m a corporate auditor working as a consultant for Fortune 50 companies and I see “profit” hidden every day.

By: AndyS

AndyS — Mon, 25 Aug 2008 22:12:28 +0000

Like some of the other commentors I think you need to look at the entire financial picture and what these companies contribute to society – directly and indirectly. Just look at one set of figures, like tax receipts can paint a distorted picture.

By: Drew

Drew — Mon, 25 Aug 2008 19:48:45 +0000

Well .. When you made the comment about people not understanding the difference between net profit and net sales – all I can say is look at Exxon. I am not an apologist for the oil industry, but most people are looking to lynch Exxon for having $552.4 billion in net sales, but only $41.6 billion net profit. That is about 7.5% net profit. About standard for business (you mentioned Wal*Mart being 3-4%). Funny that we have people in Washington D.C. calling for a windfall profit tax. They don’t want to tax their profit (as the taxes are setup now – doing something different is what Brip Blap is talking about). They want to tax their revenue.

By: Are You Going to be Lazy Man and Money’s 500,000 Visitor? (and some links)

Are You Going to be Lazy Man and Money’s 500,000 Visitor? (and some links) — Sun, 24 Aug 2008 16:12:07 +0000

[...] Two-thirds of corporations don’t pay taxes – nothing more than political hogwash says Generation X Finance! [...]

By: Weekend Reading: August 24, 2008 | Moolanomy

Weekend Reading: August 24, 2008 | Moolanomy — Sun, 24 Aug 2008 04:32:14 +0000

[...] Two-Thirds of Corporations Don’t Pay Taxes – Nothing More Than Political Hogwash at Generation X Finance — An excellent explanation on why certain corporations do not pay taxes and why you really have to look closer before forming your opinion. [...]

By: Jeremy

Jeremy — Sat, 23 Aug 2008 14:17:34 +0000

You’re absolutely right, JD. I was just counting federal income taxes for an apples to apples comparison in regards to what the articles that talk about corporations not paying taxes are referring to. There are obviously many other taxes on a personal and corporate level that will change the overall amount of taxes paid. Payroll taxes, unemployment taxes, state tax, local tax, etc.

And I completely agree with you about our tax system. It is ridiculous, but I don’t see it changing any time soon, unfortunately.

By: JD

JD — Sat, 23 Aug 2008 13:39:40 +0000

Thanks for the reply Jeremy but when you talk about your 12% effective tax rate you are not including payroll taxes. If you are, as you say, in the middle of the middle class range than you are paying something like an extra 9%, but because payroll taxes are only paid on the first $100k of income the more you earn the lower that tax becomes – its regressive. If you make $500k your payroll tax rate is less than 2% while for the middle class family it is over 9%. If you make a million dollars it is less than 1%. Payroll taxes aren’t talked about in politics too much simply for this reason – it doesn’t effect the rich but instead is the burden of the middle class.

There was an article a few years ago in the New York Times about median incomes in the city and if you look up the statistics anywhere you see median incomes of something like $100k-$150k for nice parts of Manhattan but the fact of the matter is that virtually NO ONE in those areas makes only $100k-$150k. They get those numbers from the AGI listed on tax data and the reason they are so low is simply because when you have high income (especially from a variety of investments, trusts, partnerships, etc) there are a lot of ways to shield them from taxes. I’ve seen the head of my firm’s tax records and his listed AGI a couple years ago was somewhere around $600k even though he technically made several million dollars. But because of the way his pay was structured most of it wasn’t considered income even though it was. And the same applies to businesses. If you’re running a large profitable business you’re going to have way many more options of protecting yourself from taxes than will the guy who is running a small family business. My point with all of this, and saying it as a person who does benefit from the system, is that the progressive tax system is largely nullified by loopholes in the tax code. We have the most complicated tax system on the planet, every other developed country regardless of whether taxes are higher or lower has immensely simpler tax codes. Ours is the only one that has literally thousands of loopholes in it that are almost all geared toward being advantageous to the rich. The fact that I pay the same or even lower tax rate than the average middle class person when my income is 10 times larger than theirs is absurd when we’re made to believe we have a progressive tax system.