What a bunch of sensationalistic crap. Tons of companies exist solely for organizational (as in, keeping things neat and orderly) purposes, and as pass-through entities into other companies. There's nothing shady or tax-evasive about this; it's just something you do.
If this were a statistic about the 1000 largest companies in America, it'd be alarming; when we are talking about all entities that are formed as corporations, it is completely meaningless. Interesting how a harmless GAO statistic can be spun in such a manner.
"Here are the rest of us, from the the family of four having trouble paying for college education to your neighbor just trying to make ends meet, who have to pick up the slack."
I took the one viable example and tested it (The other example, someone who is barely making ends meet, is either spending more than they can afford or is not paying Federal Income Taxes) A familly with 4 dependents making the average salary ($60,0000 each) is only paying 6% of their income in taxes according to H&R Block. While Corporations and their over paid CEOs generally pay close to half their income (provided they aren't cheating)
I'm not saying some rich people and corporations don't cheat. They do and I hope they get caught. But lets not forget the reality which is the high income brackets subsidize the lower ones. Not the other way around.
A corporate tax is a double tax, as any dividends or payroll are also taxed, sometimes twice.
Any profits should be filed as income by shareholder, making the tax system much simpler. If that income were taxed at a flat rate, we could remove huge chunks of the tax code.
This one statistic, taken out of context is kind of meaningless. Do the remaining 34% pay outsize amounts? It is the same thing with personal taxation, the top 10% accounts for over 70% of the tax base. To make a fair judgment you need to consider more information. Are the 66% of companies not paying taxes the LLC's and S-Corps used by most small business people? Are they not paying taxes because they face losses their first years in operations, or are only marginally profitable?
The thing that always concerns me is that the USA is the second most expensive place to do business in the world, just behind Japan.
Yeah, let's increase taxes on corporations. I'm sure that the costs won't get passed on to employees. Plus, the government is so much better at spending money than corporations that actually produce something.
Yeah that extra tax money they save goes into paying their employees more, expanding and creating new jobs and growing our economy...
Oh wait, this is reality. It actually just ends up in their CEO's pocket which then gets passed on to their kids and other friends in high places. I'm so glad they're not paying taxes and forcing our government to 'waste' that money.
Yes, the extra money of _theirs_ that is not taxed does go into growth, or into dividends, or into salaries.
In fact, for a company to be successful, they need to be better at allocating excess cash than their competitors.
CEO salaries are an extremely small subset of the profits companies make.
In fact, since all of the money is so well allocated, it's really impossible to tax a corporation, if you think about it. All you would do is increase their expenses, which would then be passed to their customers. You can't get money from a corporation that doesn't exist in a customer's hands at one point, and taxing companies is just another way of taxing the customers that use them.
I mean really, think this through. Do you really think that the .1% of gross profits that go to a CEO makes one speck of difference in the large picture?
But using common sense (which always isn't so good a guide) can you imagine being a board of directors that approved the CEO making 10 percent of profits? You'd have to be an idiot. (Unless he were also a founder and controlled the board)
Not that boards are very popular right now -- but I don't think they're that dumb.
I came up with that figure using an imaginary $10 Billion company paying their execs in the tens of million range, which seems reasonable to me.
"Plus, the government is so much better at spending money than corporations that actually produce something."
I'm not sure how things work in the US, but in some parts of the world the governments actually use the income from taxes to provide valuable services to their population.
and without competition it is impossible to get accurate prices to see if those services are being provided at...well, competitive prices. Most government programs involve price gouging.
One of the common ways for the government here to provide said services is to buy it from competing companies. So the government decides what to buy, then the fabled "market" decides the price.
government contracting private corporations is different from normal market conditions. observe any corporation that competes for government contracts.
How is it different? The buyer specifies what they're looking for, and companies tell them how much they want to do the job. It's a common practice in any market.
i don't have a good intoductory book to recommend off the top of my head if you're unaware of the insanely corrupt world of government contracting. I thought it was common knowledge as it gets reported on from time to time.
oh, the short answer is that government doesn't behave as a regular customer. with regular customers you don't have such binary outcomes of huge contract or no business at all.
Well, that depends on the size of the contract. There's no natural law that says that governments have to buy everything in vast chunks. And they don't, at least not over here.
Everything that takes place in the vast scale is prone to corruption, regardless if the buyers and sellers are private or public.
> I'm not sure how things work in the US, but in some parts of the world the governments actually use the income from taxes to provide valuable services to their population.
Are those services valuable enough that the folks that use them would pay what it costs to provide them?
I like it when other folks buy things for me as much as the next person. However, doing that on a large scale ends up being a way for middlemen to take from everyone and much of the "free stuff" is a mistake.
In that time period, an annual average of 1.3 million U.S. companies and 39,000 foreign companies doing business in the United States paid no income taxes - despite having a combined $2.5 trillion in revenue.
I'm no financial genius, but I'd guess the key word here is "revenue", which is not the same as "profit". It's possible that most of these companies have no net income, hence no income tax.
Note 'some of them report $0 income before deducting their expenses, and others find deductions equaling more than their reported income.' That's another way of saying they're making a loss. See? They're not paying taxes because they're losing money.
If this were a statistic about the 1000 largest companies in America, it'd be alarming; when we are talking about all entities that are formed as corporations, it is completely meaningless. Interesting how a harmless GAO statistic can be spun in such a manner.