Another BHO Tax Myth

[Chris]

McCain's Economic Adviser is ex-Texas Sen. Phil Gramm. On Dec. 15, 2000, hours before Congress was to leave for Christmas recess, Gramm had a 262-page amendment slipped into the appropriations bill. It forbade federal agencies to regulate the financial derivatives that greased the skids for passing along risky mortgage-backed securities to investors. And that, my friends, is why everything's falling apart. That is why the taxpayers are now on the hook for the follies of Fannie Mae, Freddie Mac, Bear Stearns and now the insurance giant AIG to the tune of $700 billion.

 

[Red Dawn]

I agree it contributed. But the underlying problem was and continues to be loan defaults that have devalued the mortgage backed securities.

Gramm's bill had nothing to do with that.

People were given loans they could not afford. This traces back to the Community Reinvestment Act.

Government injected itself into the housing market and we are now paying the price for that.

Private sector loans, not Fannie or Freddie, triggered crisis

Conservative campaign that blames the global financial crisis on a government push to make housing more affordable to lower-class Americans has taken off on talk radio and e-mail.

Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.

Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.

Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006.

Federal Reserve Board data show that:

* More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

* Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

* Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.

The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets reported Friday.

Conservative critics claim that the Clinton administration pushed Fannie Mae and Freddie Mac to make home ownership more available to riskier borrowers with little concern for their ability to pay the mortgages.

"I don't remember a clarion call that said Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster," said Neil Cavuto of Fox News.

Fannie, the Federal National Mortgage Association, and Freddie, the Federal Home Loan Mortgage Corp., don't lend money, to minorities or anyone else, however. They purchase loans from the private lenders who actually underwrite the loans

McClatchy Washington Bureau | 10/12/2008 | Private sector loans, not Fannie or Freddie, triggered crisis

 

[The Paperboy]

Fannie, the Federal National Mortgage Association, and Freddie, the Federal Home Loan Mortgage Corp., don't lend money, to minorities or anyone else, however. They purchase loans from the private lenders who actually underwrite the loans

From Wikipedia:

In 1999, Fannie Mae came under pressure from the Clinton administration to expand mortgage loans to low and moderate income borrowers. At the same time, institutions in the primary mortgage market pressed Fannie Mae to ease credit requirements on the mortgages it was willing to purchase, enabling them to make loans to subprime borrowers at interest rates higher than conventional loans. Shareholders also pressured Fannie Mae to maintain its record profits.

And the rest, as they say, is history.

 

[Chris]

From Wikipedia:



And the rest, as they say, is history.

More lies....

F and F only made about 20% of the loans.

It was the derivatives that Warren Buffet called "instruments of mass financial destruction" that cause the collapse. This was the direct result of Phil Gramm's last minute budget shenanigans.

 

[The Paperboy]

More lies....

F and F only made about 20% of the loans.

It's always lies when it doesn't fit the story you want to peddle.

 

[Skull Pilot]

America has one of the lowest effective corporate tax rates in the world. Quoting stated rates of taxation is meaningless.

BHO wants to raise corporate taxes, does he not?
If corporations are taxed more the economy will not prosper as BHO seems to think it will.

 

[Chris]

BHO wants to raise corporate taxes, does he not?
If corporations are taxed more the economy will not prosper as BHO seems to think it will.

How's the economy doing now under the Bush "tax cuts?"

Honestly, you guys just don't get it. The borrow and spend policies of Reagan and Bush have failed.

We have to start paying our bills.

 

[The Paperboy]

America has one of the lowest effective corporate tax rates in the world. Quoting stated rates of taxation is meaningless.

It has one of the highest: Link here

 

[Chris]

WASHINGTON (Reuters) - Most U.S. and foreign corporations doing business in the United States avoid paying any federal income taxes, despite trillions of dollars worth of sales, a government study released on Tuesday said.

The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.

More than half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years in that period, the report said.

During that time corporate sales in the United States totaled $2.5 trillion, according to Democratic Sens. Carl Levin of Michigan and Byron Dorgan of North Dakota, who requested the GAO study.

Study says most corporations pay no U.S. income taxes | U.S. | Reuters

 

[Skull Pilot]

How's the economy doing now under the Bush "tax cuts?"

Honestly, you guys just don't get it. The borrow and spend policies of Reagan and Bush have failed.

We have to start paying our bills.

Disagreeing with BHO is not agreeing with Bush or McCain.

And do you really think it was tax cuts that caused this mess?

Whether you want to believe it or not, we are reaping the whirlwind of Bill Clinton.

Dissent Magazine

 

[The Paperboy]

WASHINGTON (Reuters) - Most U.S. and foreign corporations doing business in the United States avoid paying any federal income taxes, despite trillions of dollars worth of sales, a government study released on Tuesday said.

The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.

More than half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years in that period, the report said.

During that time corporate sales in the United States totaled $2.5 trillion, according to Democratic Sens. Carl Levin of Michigan and Byron Dorgan of North Dakota, who requested the GAO study.

Study says most corporations pay no U.S. income taxes | U.S. | Reuters

OK so 57% of US corporations don't pay tax in at least one year of seven.

Fair enough.

So what percent pay in six of those seven years?

That would be nice to know. Don't ya think?

And what percent had a net loss?

Totally biased headline.

Time for Libs to knock off the class warfare. It's bad for America.

 

[Skull Pilot]

WASHINGTON (Reuters) - Most U.S. and foreign corporations doing business in the United States avoid paying any federal income taxes, despite trillions of dollars worth of sales, a government study released on Tuesday said.

The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.

More than half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years in that period, the report said.

During that time corporate sales in the United States totaled $2.5 trillion, according to Democratic Sens. Carl Levin of Michigan and Byron Dorgan of North Dakota, who requested the GAO study.

Study says most corporations pay no U.S. income taxes | U.S. | Reuters

Jesus Christ

You guys love to haul out that Reuters article.

Since most US corporations are S corporations and S corps. by definition pay no federal income taxes of course most US corps. pay no federal income taxes.

The reason S corps pay no federal income taxes is that by filing sub chapter S, the shareholders of the corporations claim the profits of their S corp on their individual tax returns and not a corporate tax return.

S corps are called a pass through tax entity.

look it up

 

[The Paperboy]

Jesus Christ

You guys love to haul out that Reuters article.

Since most US corporations are S corporations and S corps. by definition pay no federal income taxes of course most US corps. pay no federal income taxes.

The reason S corps pay no federal income taxes is that by filing sub chapter S, the shareholders of the corporations claim the profits of their S corp on their individual tax returns and not a corporate tax return.

S corps are called a pass through tax entity.

look it up

Good point. I have an "S Corp" and we've never paid a dime in corporate tax. But I've paid many, many dimes on my personal returns

 

[Chris]

Jesus Christ

You guys love to haul out that Reuters article.

Since most US corporations are S corporations and S corps. by definition pay no federal income taxes of course most US corps. pay no federal income taxes.

The reason S corps pay no federal income taxes is that by filing sub chapter S, the shareholders of the corporations claim the profits of their S corp on their individual tax returns and not a corporate tax return.

S corps are called a pass through tax entity.

look it up

The truth hurts doesn't it.

 

[Skull Pilot]

The truth hurts doesn't it.

God you are a moron.

You pull an article out umpteen times to prove a point that US corps pay no taxes on profits.

I tell you why you are being disingenuous. Because the truth is that taxes on S corp profits are paid not by the corp but by individual shareholders. The tax IS paid it's just not paid on a corporate tax return.

And there's more. If an S corp shareholder doesn't take his share of the profits, he is still responsible for the tax. So don't worry Uncle Sam still takes his big fucking wet bite out of the ass of S corps.

The more you try to spin this the more you show how ignorant you are

 

[Toro]

I agree it contributed. But the underlying problem was and continues to be loan defaults that have devalued the mortgage backed securities.

Gramm's bill had nothing to do with that.

People were given loans they could not afford. This traces back to the Community Reinvestment Act.

Government injected itself into the housing market and we are now paying the price for that.

Of course, Gramm wasn't the sole problem, but yes Gramm's bill does have a lot to do with it.

The mortgages that are deteriorating were housed within derivative structures. In fact, without the CDOs vacuuming up all the crappy subprime mortgages, the housing bubble would not have gone as far as it did. By decreasing transparency and allowing firms to keep many of these loans of their books, financial firms leveraged themselves up to insane levels. Now, the rotten edifice is collapsing on itself, and those firms that participated are dead, credit is contracting and the government is engaged in a $700 billion bailout.

The CRA has almost nothing to do with this and is merely a conservative talking point. Very little of the GSEs loan book was in such loans. The problems weren't so much in the conforming loans and low-income loans but in subprime and jumbo mortgages, almost all of which were outside of the GSEs.

 

[Toro]

It has one of the highest: Link here

I'll repeat - there is a difference between nominal rates of taxation and the actual rate of taxes paid.

The Tax Foundation is busy again pushing its latest propaganda idea--that the US has such high corporate taxes that it stifles competition and hurts our economy--with a new "competeusa.com" organization.

Wrong. Fact is, though our tax laws include statutory rates that are fairly high (35% for corporations earning about $18 million or more annually) but generally in the same ballpark as those of other developed western nations, the actual tax rates paid by US corporations are extraordinarily low, around 6%. Remember the latest GAO report (reported elsewhere on ataxingmatter) that shows that two-thirds of US corporations pay no federal income tax. That's not just the ones that are losing money, but also many corporations that have record high profits (including some Big Oil companies) that end up paying next to nothing in taxes.

That's because the statutory rate of 35% is only on paper. Corporations engage in aggressive tax planning that cheats the system, and they take advantage of a bountiful number of lucrative loopholes built into the system under the four decades of Reagan-style corporate favoritism and deregulation, including items such as accelerated depreciation, various expensing provisions that let corporations deduct before they really have an economic cost, and the lucrative research & development credit that lowers taxes dollar-for-dollar for R&D expenditures that corporations have to do anyway (so they do not serve as an incentive to greater development) and that corporations have often already done prior to the enactment of the one-year "extensions" of the credit that have been taking place as transitions to no-credit for years.

As a result, the US is actually a corporate tax haven, with the lowest effective corporate tax rates of almost all the countries that participate in the OECD. That's a little fact that the Tax Foundation apparently doesn't want the American public to understand, since all its hype is in terms of statutory rates and not in terms of effective tax rates.

ataxingmatter: Tax Foundation and Competitive Environments: more bunk!

 

[Toro]

BHO wants to raise corporate taxes, does he not?
If corporations are taxed more the economy will not prosper as BHO seems to think it will.

I have no problem with low corporate tax rates. Lower is better than higher most times IMHO.

But saying that America has one of the highest rates of corporate tax in the world as a reason to cut corporate taxes when they are already amongst the lowest is a disingenuous argument. Its the type of spin that comes from the Right that drives me crazy because it is completely misleading.

If someone wants to say "Corporations in America pay amongst the lowest levels of taxation in the world, but that's good because it creates jobs so let's cut taxes more," fine. That wouldn't get me so riled up, and I would be inclined to agree if the Republicans hadn't already screwed up the budget. But this spin machine from the GOP which distorts truth to advance a political agenda is garbage.