Momentum Builds for Corporate Tax Overhaul

[loosecannon]

Ostensibly, the U.S. federal tax code requires corporations to pay 35 percent of their profits in income taxes.

But of the 275 Fortune 500 companies that made a profit each year from 2001 to 2003 and for which adequate information to draw conclusions is publicly available, only a small proportion paid federal income taxes anywhere near that statutory 35 percent tax rate. The vast majority paid considerably less.

In fact, in 2002 and 2003, the average effective tax rate for all of these 275 companies was less than half the statutory 35 percent rate. Over the 2001-2003 period, effective tax rates ranged from a low of -59.6 percent for Pepco Holdings to a high of 34.5 percent for CVS.

Over the three-year period, the average effective rate for all 275 companies dropped by a fifth, from 21.4 percent in 2001 to 17.2 percent in 2002-2003.

The statistics are startling:

* Eighty-two of the 275 companies, almost a third of the total, paid zero or less in federal income taxes in at least one year from 2001 to 2003. In the years they paid no income tax, these companies earned $102 billion in pretax U.S. profits. But instead of paying $35.6 billion in income taxes as the statutory 35 percent corporate tax rate seems to require, these companies generated so many excess tax breaks that they received outright tax rebate checks from the U.S. Treasury, totaling $12.6 billion. These companies' "negative tax rates" meant that they made more after taxes than before taxes in those no-tax years.
* Twenty-eight corporations enjoyed negative federal income tax rates over the entire 2001-2003 period. These companies, whose pretax U.S. profits totaled $44.9 billion over the three years, included, among others: Pepco Holdings (-59.6 percent tax rate), Prudential Financial (-46.2 percent), ITT Industries (-22.3 percent), Boeing (-18.8 percent), Unisys (-16.0 percent), Fluor (-9.2 percent) and CSX (-7.5 percent), the company previously headed by current Secretary of the Treasury John Snow.
* In 2003 alone, 46 companies paid zero or less in federal income taxes. These 46 companies told their shareholders they earned U.S. pretax profits in 2003 of $42.6 billion, yet they received tax rebates totaling $5.4 billion. Almost as many companies, 42, paid no tax in 2002, reporting $43.5 billion in pretax profits, yet receiving $4.9 billion in tax rebates. From 2001 to 2003, the number of no-tax companies jumped from 33 to 46, an increase of 40 percent.
* In 2001, the Treasury paid corporations $40 billion in tax refunds, a third more than the 1998-2000 average.
* Then in 2002 and 2003, after the law was changed to expand tax subsidies and make it easier for corporations to carry back excess tax breaks to earlier years, corporate tax refunds skyrocketed to an average of $63 billion a year - more than double the 1998-2000 average.

Corporations are now paying the lowest levels of taxes in the post-World War II era. In fiscal 2002 and 2003, federal corporate incomes taxes dropped to their lowest sustained level as a share of the economy since World War II. Only a single year during the early Reagan administration was lower.

The Gap Between Statutory and Real Corporate Tax Rates

 

[loosecannon]

The U.S. corporate tax burden is smaller than average for developed countries.[1] Corporations in 19 of the member states of the Organization for Economic Co-operation and Development paid 16.1 percent of their profits in taxes between 2000 and 2005, on average, while corporations in the United States paid 13.4 percent.

Putting U.S. Corporate Taxes in Perspective — Center on Budget and Policy Priorities

 

[LordBrownTrout]

And again, why are taxes the only solution that's being proffered? That only benefits government. We aren't that devoid of critical thought as to how we can solve our woes....are we?

 

[Soggy in NOLA]

And again, why are taxes the only solution that's being proffered? That only benefits government. We aren't that devoid of critical thought as to how we can solve our woes....are we?

These folks are nitwits. Given their way of thinking, at some point tax rates will reach 100%. Then what?

Don't waste your time. Simply put, a tax rate of 15% (just an example) with a growing economy will produce increasing tax receipts which does allow for some expansion, but only to the extent receipts grow along with the economy.

They blow the whole fucking thing out of the water by increasing taxes to 40%, thus stifling growth, and reducing receipts and then they turn around and increase public sector spending by 20% and then say we aren't paying enough taxes.

They're idiots.

 

[VaYank5150]

Sure....let's give them some more incentive to ship jobs overseas!

Uh... wouldn't reducing their tax burden here in the U.S. do exactly the opposite?

Uh....no. Many of the largest corps already pay next to nothing due to loopholes and foreign holdings.

 

[loosecannon]

And again, why are taxes the only solution that's being proffered? That only benefits government. We aren't that devoid of critical thought as to how we can solve our woes....are we?

These folks are nitwits. Given their way of thinking, at some point tax rates will reach 100%. Then what?

Don't waste your time. Simply put, a tax rate of 15% (just an example) with a growing economy will produce increasing tax receipts which does allow for some expansion, but only to the extent receipts grow along with the economy.

They blow the whole fucking thing out of the water by increasing taxes to 40%, thus stifling growth, and reducing receipts and then they turn around and increase public sector spending by 20% and then say we aren't paying enough taxes.

They're idiots.

posted by the idiot who mistakenly believes this discussion is about proposed tax cuts......

 

[Toro]

Corporate Tax Overhaul Is on Horizon - WSJ.com







The White House and congressional Republicans are moving from different directions toward a consensus that the U.S. corporate tax code needs a fundamental overhaul, a goal high on corporate leaders' agenda.

Specific proposals for retooling the complex corporate-tax system aren't on the table and the debate over the issue is sure to be lengthy and difficult. But President Barack Obama and Republican congressional leaders are separately sounding the same broad theme that corporate tax rates should be lower.

"Tax reform could be a significant boost to our competitiveness," Rep. Eric Cantor (R., Va.), the new House majority leader, said this week. "I'm hopeful and expect the president to put some action behind his statements."

The movement on the corporate-tax issue comes as Mr. Obama and his aides are pushing a broad effort to repair relations with U.S. business leaders. Since Democrats lost control of the House in November, Mr. Obama has met with chief executives to solicit their ideas on job growth, negotiated a free-trade pact with South Korea widely supported by business, and begun searching for figures with strong ties to the business world to take top White House jobs.

I can predict with authority what will happen:

A tax overhaul bill will be hammered out that includes a long, long list of exemptions and exclusions to protect powerful industries, lobbyists will descend on our reps and shower them with positive and negative pressure.

The final bill will look like the world's largest sellout to corporate interests.

All you gotta do is look at the financial regulation that has been adopted since 2008, or look at the health insurance deform bill, to realize that Congress has no teeth and that both parties serve their corporate sponsors first and foremost.

Yup.

Lower corporate taxes, eliminate loopholes.

But that ain't gonna happen.

 

[Old Rocks]

And again, why are taxes the only solution that's being proffered? That only benefits government. We aren't that devoid of critical thought as to how we can solve our woes....are we?

OK, dumb ass, who is 'the government'? Last time I looked, it was "We, the people". So you are correct. Increasing the income of government to help pay the debt is for the good of all of us.

 

[Revere]

Is the EPA "we the people?"

If Cap and Tax gets kicked to the curb by a representative government, and the EPA implements it anway, is the EPA "we the people?"

 

[Revere]

Democrats ran up $5T in new debt in the past four years with no fucking plan whatsoever on how to pay for it.

 

[LordBrownTrout]

And again, why are taxes the only solution that's being proffered? That only benefits government. We aren't that devoid of critical thought as to how we can solve our woes....are we?

OK, dumb ass, who is 'the government'? Last time I looked, it was "We, the people". So you are correct. Increasing the income of government to help pay the debt is for the good of all of us.

So growth, more taxes, and government is the lexicon of your vernacular? Why do you have such faith in government? This really is perplexing to me. It's as if you have substituted your own golden calf as the ultimate form of government. A deity unto itself, if you will.

 

[Dont Taz Me Bro]

Sure....let's give them some more incentive to ship jobs overseas!

Uh... wouldn't reducing their tax burden here in the U.S. do exactly the opposite?

Uh....no. Many of the largest corps already pay next to nothing due to loopholes and foreign holdings.

Your answer does not explain why reducing the tax burden would give them incentive to ship jobs overseas. There is nothing logical about that line of thinking.

 

[Care4all]

Same here. I said something to that affect on tariffs a few months ago. That's a tough one. Bring the companies back, lower tax rates, start hiring millions of unemployed.

I don't care how much they cut corporate taxes, there is no way that corporations are going to bring jobs back to the US when they can hire foreign workers at a fraction of what American workers demand.

The idea is actually to raise the effective corporate tax rate by installing a lower base rate and eliminating the loopholes that allow corps like Exxon to pay zero taxes.

Same basic principle as the flat income tax.

Perhaps the biggest problem with our tax code is that despite the base rates hardly anybody actually pays any tax anymore.

We all pay FICA and half of us pay a low rate of actual income tax, but corps pay very little:

For a pretty long while in our tax history, corporate taxes collected were equal in percentage contributed to our tax base as the Individual taxes collected....my how things have changed!

 

[Revere]

I don't care how much they cut corporate taxes, there is no way that corporations are going to bring jobs back to the US when they can hire foreign workers at a fraction of what American workers demand.

The idea is actually to raise the effective corporate tax rate by installing a lower base rate and eliminating the loopholes that allow corps like Exxon to pay zero taxes.

Same basic principle as the flat income tax.

Perhaps the biggest problem with our tax code is that despite the base rates hardly anybody actually pays any tax anymore.

We all pay FICA and half of us pay a low rate of actual income tax, but corps pay very little:

For a pretty long while in our tax history, corporate taxes collected were equal in percentage contributed to our tax base as the Individual taxes collected....my how things have changed!

It doesn't matter, because many individuals who own corporations file as individuals.

 

[Care4all]

The idea is actually to raise the effective corporate tax rate by installing a lower base rate and eliminating the loopholes that allow corps like Exxon to pay zero taxes.

Same basic principle as the flat income tax.

Perhaps the biggest problem with our tax code is that despite the base rates hardly anybody actually pays any tax anymore.

We all pay FICA and half of us pay a low rate of actual income tax, but corps pay very little:

For a pretty long while in our tax history, corporate taxes collected were equal in percentage contributed to our tax base as the Individual taxes collected....my how things have changed!

It doesn't matter, because many individuals who own corporations file as individuals.

please explain what you mean. We are speaking about corporations that are subject to the Corporate taxes collected right?

and not individuals who own companies and take their profits as dividends or individual earnings and then pays the taxes on that....because in my opinion, individuals as such would not be paying corporate income taxes and then taxes again as individual income?

 

[Revere]

It just doesn't matter what percent of taxes come from which group. It's empty class warfare bullshit.

If you have a corporation that shows no profit, because it pays out your salary (which you pay individual taxes on), they why does it matter if the corporation pays no corporate taxes?

 

[Care4all]

It just doesn't matter what percent of taxes come from which group. It's empty class warfare bullshit.

If you have a corporation that shows no profit, because it pays out your salary (which you pay individual taxes on), they why does it matter if the corporation pays no corporate taxes?

oh, i agree. if the corporation truly takes a loss or truly makes no profit, they should not pay any taxes.

but i believe we have corporations the size of exxon/mobile....our largest corporation in the country, that has gone without paying a penny in federal corporate income taxes....

we definitely need corporate tax reform, when something like that happens regularly....while the tiny corporation or middle corporation is paying through the roof.

 

[Revere]

It just doesn't matter what percent of taxes come from which group. It's empty class warfare bullshit.

If you have a corporation that shows no profit, because it pays out your salary (which you pay individual taxes on), they why does it matter if the corporation pays no corporate taxes?

oh, i agree. if the corporation truly takes a loss or truly makes no profit, they should not pay any taxes.

but i believe we have corporations the size of exxon/mobile....our largest corporation in the country, that has gone without paying a penny in federal corporate income taxes....

we definitely need corporate tax reform, when something like that happens regularly....while the tiny corporation or middle corporation is paying through the roof.

They pay lots of taxes. Payroll taxes. Personal and property taxes. Sales taxes. Use taxes.

Why should the name of a company, or its industry, determine whether they pay Federal corporate income taxes?

 

[loosecannon]

It doesn't matter, because many individuals who own corporations file as individuals.

That is less than a moot point.

Corporations pay nearly nothing in dividends and reinvest most of their earnings into growth. They are also immortal.If they aren't taxed annually on profits they are never taxed at all, ever.

 

[Revere]

It doesn't matter, because many individuals who own corporations file as individuals.

That is less than a moot point.

Corporations pay nearly nothing in dividends and reinvest most of their earnings into growth. They are also immortal.If they aren't taxed annually on profits they are never taxed at all, ever.

So what? Do their reinvestments generate no taxable activity? Purchases of plants, equipment or other taxable transactions?