WASHINGTON (AP) – 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.
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.
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#86, “No, I call it operating capital. The capitol is Washington, D.C.”
Thank you for correcting my spelling but you too have made an error. Capital is spelled the same way for a city or for accumulated goods. Capitol is the spelling for the building in D.C. Not D.C itself.
You are correct. Unfortunately, there is no recall feature and I didn’t think anyone would notice I forgot the “in.”
As for the rest of your post — 20 years and lose a million a year? You either own a MUCH larger company than I do or you are full of shit because keeping 20 million in reserve for a company of my size is asinine. Hell, if I had $20M in the bank, I’d put my competition out of business and own the market in my area.
Re: Average prices — I’ve found that if I am too low, some customers think our services aren’t good enough (it’s rare but is there). If they are too high, some customers think we are too expensive. All our jobs are bid jobs so the customers know what all the different rates are in the area. It’s worked out since we’ve been in business and we’ve maintained a steady 50% growth rate/year (except last year where we grew 100%).
Needle me all you want about it, but my ideas on profit and how to run my business has worked so far. I haven’t had to go to the bank once for a loan or accepted cash from anybody to keep things going. I’ve grown from me to 9 people on 100% cash flow. I owe no favors except to customers. My employees are happy, they work in a nice environment, have good benefits, and they are trained and certified on the products we represent.
I must be doing something right. And that “right” is trying to squeeze as much profit out of every job as possible. Social Responsibility — WTF is that? Sounds like something some companies worry about to get favors from the looters.
# 93 Thomas
“So, if you start a not-for-profit business and I give you 100K but you spend 20K, you assume the other 80K is operating cost?! ”
WTF are you talking about? The 80k would be used to expand the NFP or used for a community program. How the fuck is that profit? It is being used directly to pay activities that the organization considers part of its business. That is called operating costs.
“I showed you four.”
I didn’t see them. If you don’t mind repost. I want to see the economic book that states that the primary goal of a business is to maximize profit.
” I doubt you could find an economics books that does not discuss profit maximization. ”
I have no doubt it is a topic. It just is not stated a the goal of a business and it most certainly isn’t on page one chapter one. If it is then they are teaching you kiddies poorly about business.
“That is not the same thing as what an economists calls profit. ”
That is why economists make poor business men. Economist are like fortune tellers and charlatans.
“I never said that the “purpose” of business was to maximize profits. ”
Here we go . Just so you know goal and purpose are synonymous. So yes indeed you did! Nice try but you aint getting out of that one.
“I’m not talking about “reported profit” as in what you put on your tax return.”
LOL LOL LOL LOL LOL LOL LOL AHHHHHHH HA HA HA HA HA HA HA HA LOL LOL LOL LOL
“If he had taken his profit and spent it on trucks, technically he would have had reported no profit. ”
You need to go back to school because NOT ONE business man I know would define the money he spent on trucks as profit. That is part of his gross income. Profit would be what he has left after spending on those trucks. The trucks are the cost of doing business.
“Yet, he clearly has gained more than he spent from his perspective. ”
This is the problem with economists. They make piss poor business men. Did he not “spend” on those truck? If at the end of the year he shows no profit he has spent as much as he has earned. You are just trying to find a way to back down from your position but I won’t let you.
“That you have run successful businesses does not imply that you understand the dynamics of economics. ”
You are absolutely correct. It doesn’t BUT I do understand the dynamics of economics and I consider it to be Voodoo. It has no relation to how one should run a business. Especially a profitable business.
“If you strive in increase revenue and minimize cost, you are working towards the goal of maximizing profit as does every business. ”
I already proved you wrong with the example of a local video store. If what you are saying is true they would have raised their prices the minute Blockbuster closed. They didn’t because they are just as loyal to their customers as their customers are to them. THAT IS WHAT A GOOD BUSINESS DOES!!!!
#93 Thomas
“I would agree that it is incorrect because it does not account for opportunity cost which are ignored by accountants and are part of the bedrock of economics.”
But you said the purpose/goal (SAME THING) was to maximize profit. He explicitly says it is not especially with this comment
“I believe that a good successful business is part of society, and exists to meet society’s needs. That is the purpose of business at the highest level.
We need to make money to reward those who have trusted us with their investment, but that isn’t our primary purpose. ”
What about that don’t you understand?
“First, there is no such business as all business involve humans to some degree………………..BLA BLA BLA BLA”
He directly contradicts what you said and that is all you have?
“On contrary, that real world CEO agrees with me but you are too wrapped up in thinking that profit only refers to costs espoused by a CPA. ”
No! He specifically states his views on business and its goal or purpose. It is NOT AT ALL what you have been saying. I will repost it one more time and maybe you can get someone to explain it to you.
“I believe that a good successful business is part of society, AND EXISTS TO MEET SOCIETY’S NEEDS”
Do you see that last part? Not to maximize profit but to meet society’s needs. I think that is what Mr. Fusion has been saying.
You can blather on all day about investments and good work environments and how that is maximizing profit but that doesn’t change the fact that IT IS NOT THE GOAL OF A BUSINESS!!!!!!! It is simply part of doing business but it is not the purpose\goal of the business. The GOAL is to MEET SOCIETY’S NEEDS!!!!!!!!!!!! How you do it is up to you. If you maximize profit good for you but if you use that as your goal you will soon be out of business as all good business men know.
#94, Thomas,
I regret allowing myself to be drawn into an argument with someone who doesn’t know what he is talking about.
Printers are sold below what it costs to produce them including fixed and variable costs. You seem incapable of understanding that a margin over production cost is only one way to make profit.
Ink Jet printers are not sold solely as the printer. They are part of a “system”. Another very similar product are satellite radios. Yes, you may purchase one, BUT you must also purchase the service or your radio (or printer) is useless. Cell phones are another example where the phone is sold below cost but is locked into one provider.
If a printer manufacturer can sell their printer to a heavy user, then theoretically, they should realize a bigger profit that if they only sold to a casual user. The same applies if I use more billable minutes on my cell phone.
Profit remains, the difference between what it cost to produce the product, good, or service and what it sells for. The cost is everything included to get the product to the customer.
You are living proof that liberals don’t “grok” economics.
Maybe not, but I obviously have a far better “understanding” of economics.
# 95 TomB
“You are correct. Unfortunately, there is no recall feature and I didn’t think anyone would notice I forgot the “in.””
Yeah I will use that excuse too. I meant to type an “a” instead of a “o”. lol 😛
Just kidding don’t sweat it man. I never comment on peoples typos or mispellings or grammar because it is a blog. That is unless they lower themselves to do it to me.
“20 years and lose a million a year? You either own a MUCH larger company than I do or you are full of shit because keeping 20 million in reserve for a company of my size is asinine. ”
It isn’t reserve it is operating capital and investments. Large is a matter of perspective. I can drop over 1 million on one piece of equipment or 6 or 7 on a piece of property. It is all about perspective.
“Hell, if I had $20M in the bank, I’d put my competition out of business and own the market in my area.”
The companies in Chicago I will assume are much bigger than you are use to because many of them have much more capital than me. It’s not all in the bank. lol
“I’ve found that if I am too low,………………….”
You sound like a perfectly reasonable business man which is why I am confused about the way you decide to raise prices.
“Needle me all you want about it, but my ideas on profit and how to run my business has worked so far. ”
Yeah that’s great but I still don’t get the logic of adjusting prices to meet a margin. Like I said I think it has the potential to end badly.
“I haven’t had to go to the bank once for a loan or accepted cash from anybody to keep things going. ”
That is the smartest thing I have heard you say.
“My employees are happy, they work in a nice environment, have good benefits, and they are trained and certified on the products we represent.”
You know you could maximize profits more if you cut that healthcare plan. A lot of small business are not offering a health plan at all now. I doubt you would lose employees because you competition probably won’t offer one soon either. (I am just kidding!!!!!!! It is clear to me that you are not on the same wavelength as Thomas. Yet you seem to hold the same position. Too me that is very odd. The system that has allowed you to grow much faster than most businesses is the one where you are paying WAY TOO MUCH TAX. Are you greedy? It doesn’t sound like it to me. So why the position on much bigger corporations paying the same way you do?)
“I must be doing something right. And that “right” is trying to squeeze as much profit out of every job as possible. ”
I never said that wasn’t a good idea. I am just wondering why you adjust your prices to meet a profit margin.
“Social Responsibility — WTF is that? ”
That would be when you in your profit are doing nothing but taking from society and giving nothing in return except your product. A socially responsible company is one that recognizes that it’s success is partly due to the environment it is in and if they suck it dry they will soon lose their business because the environment will not be one that allow such success. You know like an economic depression. Corporations have a huge affect on society and they are responsible for many good and bad things. A smart business knows that for them to sustain their revenue one thing they must do it return some of it in some way. Whether it be a social program or donations to charities or betterment of the community. This is why large corporations are so irresponsible. They have the whole world to feed from and it will be a long time coming before they feel repercussions of their behavior.
#92, Thomas,
I doubt you could find an economics books that does not discuss profit maximization.
Now you just hit something you might have meant all along but did not say. “Maximization” is not the same as “maximum”. The former means to use something to the highest efficiency, implying sustainability. Maximum means as much as possible and does not imply sustainability. As I have said several times already, maximum profits will ruin your company as they do not leave room for your variable costs.
#95, Tom,
As for the rest of your post — 20 years and lose a million a year? You either own a MUCH larger company than I do or you are full of shit because keeping 20 million in reserve for a company of my size is asinine. Hell, if I had $20M in the bank, I’d put my competition out of business and own the market in my area.
Get yourself a better accountant. Who said anything about keeping money in reserve?
The whole entertainment business, not just movies, use this accounting to protect themselves from taxes, investors, angry ex-wives, recording artists, and film stars wanting their cut. And most of it is legal.
Social Responsibility — WTF is that? Sounds like something some companies worry about to get favors from the looters.
Marketing?
I needed some work done for my kid’s Softball Team. I approached a local company and they wanted more than we had budgeted. I then tried someone a little further away. I got a great deal and everyone raved about the quality. Two weeks later I needed something similar done for myself. Guess where I went?
#95, Tom
OOOPPS, damn I cut the comment in half. I meant this to be entirely about Social Responsibility but I cut it too far down. Just attach this to the end of my post #100. Sorry for any confusion.
Foresight.
Several companies make a plasticizer that has been associated with problems in babies and toddlers. The companies are voluntarily withdrawing that chemical from the market. When the class action suits start, these companies will be able to say they stopped making the product when they first became aware of the problem. That is a defense in a civil suit.
Future growth.
Toyoto invested considerable sums in developing their environmentally friendly vehicles. The company is recognized for the effort and is now reaping the profits. They are also leaders in responsible recycling or their waste stream to the point where they now earn a profit from it.
Community.
Several companies lend their managers and executives to mentoring efforts. From Junior Chamber of Commerce to helping build sports facilities go a long way to keeping kids out of trouble. Donating used equipment, space, and money to outreach programs, matching donations to charities etc. all strengthen the community. The stronger the community, the stronger the workforce, the stronger the customer base.
Feel good.
Yup. Social responsibility also has a pride factor in knowing you have done something right.
It is clear the problem here is that J and Fusion haven’t the foggiest idea what is meant by “maximizing” and that comes from a lack of mathematical knowledge. Charging a trillion dollars for a product or service or charging nothing will product zero revenue. Thus, if you graph pricing, it is on a curve. Somewhere in the middle is the “optimal” price balancing demand with price.
Firms, even J’s, and whether they realize it or not, maximize profits by continuing to incur costs where the marginal benefit of incurring that cost exceeds the marginal cost. If you know that hiring another employee will cost the company more than it will make, you won’t do it. If you know that employee A will generate more benefit to the company than employee B, you will hire employee B.
To J’s pedantic point about “purpose” and “goal”, they are not the same. A goal is a set of objectives you strive to achieve. A company’s “purpose” relates to its reason for existence. I never said that the “purpose” of a company was to maximize profits, but rather it is its primary goal. There are many ways of rephrasing that sentence such as “striving to increase revenue and minimize cost” or “continuing to incur cost where the marginal benefit exceeds the marginal cost”. However, the simpler way of saying it, as every book on economics states, is that a firm strives to maximize profits.
#99
RE: Maximum and maximizing
The later is the process by which you strive to achieve the former. It is realistically impossible to know whether you have achieve maximum profits because you would need to quantify the benefit you lost on every opportunity cost you chose against.
> As I have said several times already,
> maximum profits will ruin your company
> as they do not leave room for
> your variable costs.
If your company eliminates variable costs, then the opportunity cost of doing so will reduce profits. In other words, if you chose to not incur a cost that could have given you a marginal benefit that exceeded its marginal cost, then you have not maximized profits. If you chose to fire your workforce, then the opportunity cost of instead hiring them will be enormous. To maximize profits, you always incur costs where the marginal benefit of the cost exceeds the marginal cost. If you choose employee A but employee B would have made the firm more money at the same salary, then you did not maximize profit.
The following sentences should read:
“Charging a trillion dollars for a product or service or charging nothing will produce zero revenue.
“If you know that employee A will generate more benefit to the company than employee B, you will hire employee A. “
“Social Responsibility — WTF is that? ”
That would be when you in your profit are doing nothing but taking from society and giving nothing in return except your product. A socially responsible company is one that recognizes that it’s success is partly due to the environment it is in and if they suck it dry they will soon lose their business because the environment will not be one that allow such success. You know like an economic depression. Corporations have a huge affect on society and they are responsible for many good and bad things. A smart business knows that for them to sustain their revenue one thing they must do it return some of it in some way. Whether it be a social program or donations to charities or betterment of the community. This is why large corporations are so irresponsible. They have the whole world to feed from and it will be a long time coming before they feel repercussions of their behavior.
That’s what I thought you meant. If society doesn’t like the way I do business they can change my attitude by not buying my products. I am in business for one thing and one thing only. To make money.
#101 — I would be willing to bet a shiny silver dollar these companies are not doing it out the goodness of their hearts. They are doing it to make money. That’s not social consciousness — that’s knowing what the market wants and supplying that product. However, if you guys think better of them for doing what they do, great!