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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#29 – “But back in the 1800s, that cost of accounting for each person’s tax liability would have been untenable (before the age of inter-networked computers).”
1862 – pres. lincoln starts taxing income.
1913 – 16th amendment ratified.
all done before those fancy shmancy computin’ machines allowed us to play tetris and see pr0n online.
#22, Ah Yea,
Once again you show how foolish you are. Try doing a bit of research first.
Site 1
Site 2
Chinese goods cost less for several reasons. Including labor costs are very low, there are very few environmental controls, raw materials are artificially low, the Chinese currency is kept artificially low, and China is not a member of the World Trade Organization and as such does not need to meet regular fair trade standards.
Did the corps pay the sales tax?
#24, Stupid,
You are living up to your name.
If 60 governments want a share of your corporation, there will never be agreement as to how much each country is entitled to
Wrong. Many worldwide companies currently operate in 60 countries and more. The basic principle here is “You earn it in country XYZ, you pay tax on that money. If you don’t earn it in XYZ, you don’t pay tax on it”. If you don’t want to pay tax in XYZ, don’t sell there.
Much easier to tax the income of the employee who lives and works (generally) in one location.
If the company has a presence, than it can be taxed quite easily.
Therefore, to level the field, all corporate taxes on income must be abolished.
Or taxed similarly.
Your numerous red-herring arguments are ludicrous. Road taxes, environmental standards, and all other regulations can easily be imposed on a facility that operates within a region (intra country, or trans country) or by international agreement (such as maritime regulations).
But, but, but, you said no taxes on corporations. If it is easy to “impose regulations” on foreign owned companies, then why can’t they also collect taxes?
It is so easy to see you have no idea what you are talking about.
“ intra country” is commonly called nationally.
“ trans country” is more commonly called international.
“ maritime regulations” are locally made and enforced.
#27, hanahmontana,
Don’t worry, #18 will come right back with even more fatuous twaddle. Bet you a devalued dollar.
Great post there. The wisdom. The intellect. The research. The sifting and balancing of different views to find the truth. The erudite offering of constructive argument.
Moran.
#33 Mr. Fusion.
Good try, I give you credit for that. What you uncovered was a proposal which made it into law for a couple of years before being trashed completely because those tax laws were harming the economy. It was an attempt by communist politicians who didn’t understand economics trying to adjust to Dung xio ping’s economic proposals.
That was over 14 years ago. They got smart in a hurry.
This is where it is at today.
http://tinyurl.com/6yp3u5
So let’s try this again. The numbers I quoted are from the business I helped set up in China last year. I have also lived long enough in China to know that there is no personal or income tax to speak of. When you go to a store, you pay absolutely no sales tax. It does not exist anywhere. They guy on the street doesn’t even know what that is. Most workers don’t pay any income tax either since they don’t make enough to qualify.
And here is the big kicker. By law most if not all large corporatiosn are partially owned by the Chinese government. 45% is the average. What tax the larger corporations do pay is often returned to the corporations in the form of government subsidies and grants.
Which leads me to your next paragraph, which is absolutely correct.
By your own example, China helps their own businesses by:
As as a side note, other countries besides China are following their lead. India, Malaysia, etc.
Don’t we now see how other governments see big business not as the bad guy but as the savior!
Don’t we now see how other governments bend over backwards to help their businesses to be more competitive!
So why are we not doing the same? Instead of hurting our competitiveness, we as a country and government need to back our businesses at every opportunity with everything we’ve got!
Your own arguments prove my point.
It is only our own pride, thinking that we are so much better, that we are invincible, which keeps us from taking action.
Understand this clearly:
The United States has become the new Titanic.
Don’t y’all know that all corporations are inherently evil and must be punished?
And that government is inherently good and is always looking out for the people’s best interests?
And that the sooner we give over all capital and means of production to the central government, the happier we’ll be?
Oh! You mean you don’t subscribe to Mr. Fusion’s world view? Better watch out! He’ll shout you down and call you names!
So much mis-information and very uneducated perspectives. Most probably coming from people who probably have nothing more than a middle class income. The reason you are in the middle class and not up here with the big boys is you are stupid when it comes to money. You think letting corporations get away with paying no tax will somehow benefit you. HINT: IT WONT!!!! You will never be able to take advantage of that privilege for yourself and you will never see a price savings on the things you consume as a result.
The only person that has an inkling of reality is Mr. Fusion. Yet all you “wanna be’s” attack him like he is somehow anti-capitalist. I am glad you think that way because it is dolts like you that makes folks like me rich.
Wrong. The corporations are responsible for paying the tax.
Correct. The corps are responsible for paying the bill, but they don’t take it off their bottom line. They just raise the prices of their goods to compensate. The guy at the very end of the chain ends up with the ultimate bill.
As proof of this, my company (which I own and is a Sub-S) made a metric butt load of money last year. We paid a metric butt load of taxes. Did we cry? No, we raised our rates to compensate. And didn’t hire that 10th person we wanted to. The customers didn’t cry either. They raised the cost of their final goods that YOU bought.
Yes, we paid our taxes on our copiers and desks and computers and the like. The bottom line is that I demand a 20%-25% profit margin each quarter. If our expenses do not allow that, we raise our rates. And taxes do indeed fall in the expense category.
You should be mad at the government for forcing the electric company to raise its rates to me and the oil companies for charging me more for gasoline and the food companies for charging me more money when I take a customer to lunch and Home Depot for charging me more for the electric motor in my AC unit at office and the shoe companies for charging me more for the steel-toed shoes my guys are required to wear to a customer site and the . . .
You should be mad at the government. Not me.
#28, c,
LOL, good comment.
Oh for a rational tax code to put blood suckers like J, who produce nothing, out of business. How much do we consumers pay for tax attorneys and accountants? How easily could they be rendered useless with a simplified tax structure? How many lawyers are there in China?
Of course we keep electing them to “represent” us while they continue to complicate the tax code to ensure full employment.
#29, Stupid,
Back in the 19th century, when companies operated within a country (mostly), it made sense to have corporate income provide the tax revenue (in addition to tariffs, etc). The world has changed.
Yes. Now governments no longer need tax revenue.
/sarcasm
#31, Stupid,
#30 There is only one customer. That person is us. Everything is ultimately created to create something for us.
Are you about to quote something from “The Book of Zen and Motorcycle Repair”?
Obviously Mr Fusion you haven’t left your parents’ home yet, and stopped sucking on their collective teats.
By your own illustration, a company that builds products in country X, and enjoys the infrastructure of country X, shouldn’t be taxed by country X if that company only sells in country Y. Hence, taxation of personal income is the only way to go.
You also purposely ignore that income tax is distinct from user fees. Fees (road tax) are charged for use, tax is levied to redistribute income.
The term national implies distinct government regulations, but this is going away, as adjacent countries homogenize their regulations.
Look up “private international law” on wiki.
#40 – “LOL, good comment.” thanks, mr. fusion.
#30
> Aren’t you the guy that
> claimed he knew economics?
Yes and it would appear you still don’t know squat about economics.
> And every Corporation in the
> world is also a consumer.
Costs due to taxes are transitive. Let’s try a simpler explanation to help you understand. Imagine we have a vertical chain of Corp A,B and C where C sells products to B who sells products to A who sells products directly to consumers (ala TomB’s example). If taxes on Corp C go up, who pays for it? Corp B? No because Corp B raises the price of the product they sell to A. Does Corp A pay them? No because they pass those increased costs to the consumer.
> When the government imposes a tax on
> an American corporation, they
> have three choices: …
If a corporation has to pay more in taxes, from their perspective, it simply means that their costs have risen. Like all cost increases, they deal with it by using the three decisions I suggested. As I have stated before, you would get a far better understanding of what it means to run a business if you had actually run one at some point. If taxes go up and a corporation does nothing, they have decided by default to accept lower profits.
>> Since the goal of a business is
>> to maximize profit, …
> Wrong.
Actually, that *IS* the goal of every business. That’s business 101, Chapter One, Page 1, first sentence. It should be noted that “profit” is measured in many ways, but fundamentally if a business does not maximize profit, it will go out of business to a competitor that did. Whom do you think would buy an unprofitable business?
> The intent of a Corporation is
> to create a product, good, or
> service that a consumer will pay
> more for than it cost to make.
Again, no. The product or service is merely a means to an end. It is no trick to make product or offer services unprofitably.
Cost is not only one way to price a product. A much better way is to determine what it would have cost the consumer had they made an alternate choice. Suppose I make program that automates some aspect of your accounting department. Pricing it based purely on cost is folly. It is far better to price it based on what it would have cost you to do your accounting without my program.
> Maximizing profit is a
> very short term gain with
> long term losses.
It can be. Maximizing profit says nothing about the time frame in question. Everyone wants to maximize profit over the long term. The catch is defining what is meant by the “long term.”
#46, actually I believe Intel Corp is a brilliant example of a company that always maximizes profit across the timeline.
They build a new generation chip after internal investment in production capacity and internal competition have worked out the best design currently realizable. Then they charge as much as the market will bear for the new part. And at the point AMD begins encroaching on the price/performance, Intel slashes prices and cuts off AMD’s food supply. The whole cycle then repeats.
Intel have maximized profit the whole way down the road by producing minimum waste, while pushing technological limits, and charging as much as the customer is accustomed to spending.
Even when Intel fails, they stay in the game and use their reserves to jump start the next generation.
There is no rule that requires profit to be spent; it may be held in reserve.
#48 – all that because i thanked mr. fusion?
There is no rule that requires profit to be spent; it may be held in reserve.
Sigh.
Unfortunately, some of us smaller companies like to think of profit we haven’t realized as operating capital. And if you have too much operating capital at the end of the year, the government considers it profit and takes their 35%.
I like to keep 3 months of operating expenses in the bank to handle slow times. We had no slow times last year so we had three full months in the bank. The looters saw this and took their cut without even blinking. I should have bought a couple of company trucks.
Well, Summer comes and things slowed down and, needless to say, we still haven’t caught back up. Fucking Taxes.
Good to know, growth is the key to stay ahead of the government (ie more trucks/workers/customers/money in an absolute sense). That explains the mantra “Grow or die”.
#36, Ah Yea,
The numbers I quoted are from the business I helped set up in China last year.
The numbers you quoted don’t show up on either link I posted or the link you posted.
I have also lived long enough in China to know that there is no personal or income tax to speak of.
All three links point to an income tax.
Don’t we now see how other governments see big business not as the bad guy but as the savior!
So if businesses don’t pay tax it is because they are the good guys. Yet for all the citizens that do pay tax, does that make them the bad guys?
So why are we not doing the same? Instead of hurting our competitiveness, we as a country and government need to back our businesses at every opportunity with everything we’ve got!
Because America is a member of the World Trade Organization. China isn’t. America is a signature of the North American Free Trade Agreement. China isn’t. Both organizations have limits.
Secondly, you overestimate the role of business in the nation. A country is made up of the people. The people make the laws for what benefit them. When it becomes the Corporations that run the country and for whom the country is run, its called fascism. Its happened several times before in history.
#37, Cum on,
Don’t y’all know that all corporations are inherently evil and must be punished?
You’re an idiot. A moran. And a troll.
And that the sooner we give over all capital and means of production to the central government, the happier we’ll be?
You’re still an idiot. You’re still a moran. And you’re still a troll.
Not to mention you have no intelligent thought to add.
#40, TomB,
So your company must return 20-25% every quarter and if it doesn’t you raise the price?
I call bullpoop.
You should be mad at the government for forcing the electric company to raise its rates to me and …
Nope. I’m not angry with any utility that raised its rates. Unless you can point to a piece of legislation that said a utility must raise its rates for Tom though, again, bullpoop.
Hey, my utilities have raised their rates several times over the past few years; they’re double now what they were. I pay twice what I did for gasoline just three years ago. The government didn’t force them to raise their prices either. Or the Chinese shoe companies. Our local government appointed Utility Board even tried to halt a few increases.
You’re blowing hot air Tom. You make no sense.
#45, Stupid,
By your own illustration, a company that builds products in country X, and enjoys the infrastructure of country X, shouldn’t be taxed by country X if that company only sells in country Y. Hence, taxation of personal income is the only way to go.
Whatever the eff you are trying to say? If a company produces a product in Canada that is only sold in Mexico they can’t be taxed? In fact, you will find the company is taxed by both Canada and Mexico. Either directly or indirectly depending upon the way the product is sold.
You also purposely ignore that income tax is distinct from user fees. Fees (road tax) are charged for use, tax is levied to redistribute income.
Sheet !!! Where do you idiots come up with this crap. While some taxes are dedicated, ie. the gasoline tax, almost all taxes are put into the general account, fund, or treasury.
Look up “private international law” on wiki.
No. You look it up. I’m not doing your homework for you because you’re too lazy to do it. If you have a link or citation you would like me to read then post it.
#47, Thomas,
> The intent of a Corporation is
> to create a product, good, or
> service that a consumer will pay
> more for than it cost to make.
Again, no. The product or service is merely a means to an end. It is no trick to make product or offer services unprofitably.
Read what I wrote again then read your second sentence. Then tell me you don’t have a reading comprehension problem.
Cost is not only one way to price a product. A much better way is to determine what it would have cost the consumer had they made an alternate choice.
So you are more than willing to sell for less than it cost to market.
It is far better to price it based on what it would have cost you to do your accounting without my program.
It is far better to price it to what the value is in the market place. Mass production spreads the development costs over a much wider area than if my own accounting department had to write the software for a one off. But if Software Company “A” sells my package for $3,500 and Software Company “B” sells a very similar package for $2,500, with similar support, guess which I will hardest at?
Maximizing profit says nothing about the time frame in question. Everyone wants to maximize profit over the long term. The catch is defining what is meant by the “long term.”
The proper term would be “maximum sustainable profit”. And it is more than the next quarter.
Well Master Fusion, it is good to know you are as interesting to read as ECA, same level of rhetoric.
I’ll also skip your posts in the future.
#48, Stupid,
Intel have maximized profit the whole way down the road by producing minimum waste, while pushing technological limits, and charging as much as the customer is accustomed to spending.
They also had advantages their competition didn’t have.
They were the sole supplier of chips at first. They signed long term contracts to ensure a customer base and reaped the rewards when chip demand took off. Even today, AMD only owns the after market while Intel owns the OEM market.
But to go against what Thomas has been saying, if Intel maximized their profit, they wouldn’t have had any money to invest in newer technology or advanced chips. So take “maximize” out of your equation because they didn’t maximize.
There is no rule that requires profit to be spent; it may be held in reserve.
As most successful companies do.
OK, that’s it. I’m done arguing with idiot wannabes.
They may not have paid any taxes but think of the money they gave to Congressmen and the White House to get such favorible treatment. It must have been billions!
Nah! Sad to say they’d sell us out for a lot less than that.
what’s interesting is people stating america should get rid of corporate taxes in order to make american companies more competitive – well, that’s pretty much what we’ve had since 1998. the majority of american companies have not paid taxes – has america reaped any benefits from that yet, if so, what benefit? (serious question – no snark)
all i can think of is that after 1998 there’s been a lot of outsourcing, more and more stuff made in other countries and other countries have been kicking our butt economically.
perhaps taxing companies (or not) is not such a big issue anyway? perhaps cheap labor/labor laws/falling dollar is more important?