Maybe we wouldn't have to raise taxes if these corporations payed their fair share...

Report: Most corporations paid no 2005 income tax
BY EMI ENDOAND DANNY TEIGMAN | emi.endo@newsday.com; daniel.teigman@newsday.com
August 13, 2008
Roughly two-thirds of corporations, both domestic and foreign-owned, paid no U.S. corporate income taxes in 2005, according to a federal report released Tuesday.

The Government Accountability Office, an arm of Congress, found that foreign-owned corporations generally reported lower tax liabilities than U.S.-controlled corporations from 1998 to 2005, with a greater percentage of large foreign corporations reporting no liability in a given year. (See the full report.)

In 2005, nearly 67 percent of 1.9 million U.S. corporations paid no federal income tax.

Of those, 3,500 were considered large corporations. Large corporations, with at least $250 million in assets or at least $50 million in receipts, account for more than 90 percent of corporate assets, the study said.



Also in 2005, about 65 percent of 59,000 foreign-owned corporations reported no tax liability.

Corporations can legally avoid tax liability by reporting no income or no net income after expenses, the report and tax analysts said.

The majority of corporations that reported no tax liability in 2005 had more in deductions for salaries and other expenses than they did in income, the study said.

Anthony Sabino, who practices corporate law in Mineola, said the report was not surprising given the complex tax code.

"This is perfectly legal; these are simply people taking advantage of what the law allows," said Sabino, a professor of law at the Peter J. Tobin College of Business at St. John's University. "There's a huge gulf between the money a company makes and what, under the tax code, is deemed to be the actual amount of income subject to taxes," he said.

Two major companies on Long Island Tuesday didn't have much to say about the tax code, except to say that they had paid their share.

CA spokeswoman Jennifer Hallahan, said the Islandia-based software company declined to comment on the report or the business practices of others.

According to a financial filing, CA paid an effective tax rate of about 38 percent in fiscal year 2008.

Arrow Electronics spokesman John Hourigan said, "As a U.S.-based company, we comply with regulation, and we do indeed pay corporate taxes." The electronic parts distributor, Long Island's largest in terms of revenue is based in Melville.

Sen. Byron Dorgan (D-N.D.), one of the lawmakers who requested the study, said in a written statement, "We need to plug these tax loopholes, and put these corporations back on the tax rolls. It's time for the big corporations to pay their fair share."

But William Ahern, a spokesman for the nonpartisan Washington, D.C.-based Tax Foundation, said that of the 14,000 large U.S. corporations, about 75 percent did pay federal corporate income taxes.

"In describing 2005, a year in which corporate income tax collections rose dramatically at the state and federal levels, the GAO report is completely consistent with what you'd expect: almost all firms that were profitable reported paying taxes."

The report said that, while multinational companies may be able to reduce their overall tax liability by manipulating prices they charge on intercompany transactions, it did not address that issue.

DEDUCTIONS ARE LEGAL
About 80 percent of the companies that paid no corporate income taxes in 2005, according to the GAO study, reported that they had zero taxable income. Anthony Sabino, 50, a Mineola-based corporate tax lawyer, said the most common legal deductions include the cost of raw materials, employee salaries, utilities, equipment purchases and office supplies. Additional "credits" further reduce taxable income, he said, chiefly in a company's research and development.

Other common deductions listed in the GAO study include: Travel, meals, entertainment expenses, insurance premiums, legal and professional fees, and dividends paid in cash on stock held by employee stock ownership plans

Absolutely,
This is why when your congressional leaders speak of going after BIG OIL or Pharm. Companies it is just spin.
They know (or I hope they would) that the cost of these taxes on the Big rich companies are passed on to you and I.

Yes, but BIG OIL (and PHARM, and INSURANCE, CREDIT CARD Companies, etc.) have something that you and I, the lowly taxpayer, do not....BIG LOBBYISTS. These are the people who make loads of money off of said non-tax-paying corporations to come up with shifty polity that is foisted upon our elected officials with the promise of monetary compensation.

We can't "play" their game, because as law-abiding, tax-paying citizens, we can't "pay" to get in.

Until we can get said BIG LOBBYISTS and their BIG MONEY out of our politics, our corporations will still continue to enjoy their protected non-taxed status.

Well said. I agree 100%!

Become a little lobbyists.
I am. Already one.
Remember, WE THE PEOPLE

A corporation which doesn't report a profit (i.e., revenue exceeds expenses) doesn't have any income from which to pay taxes?

Stop the presses!

What would some of us suggest? Taxing the total revenue and running our corporations into the ground by doing so? Maybe force them to lay off huge portions of their work force or outsource oversees?

Remember that all of these companies pay salaries and that a large part of the federal tax revenue comes from the personal income tax and that these companies provide all of that personal income.

Do we not think it's okay to capitalize office equipment? Take a deduction for the depletion of a resource one owns (since the asset has lost value)?

As for credits, which credits would we propose to get rid of? Congress uses tax policy to help stimulate certain parts of the economy. Anytime a corporation succeeds and pays salaries and benefits, there's another taxable event.

I can't justify taxing an individual who has no income, so why can we justify taxing a corporation which has no income?

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I agree with Midtowner. If they didn't make any money, what do you want the corporations to do? I have zero problem with corporations legally avoiding taxes.

If your personal accountant told you, you could avoid most of your taxes with legal writeoffs wouldn't you?

When was the last time one of your sour pusses ordered something online and then didn't report it on your taxes? You know, if you didn't that's tax fraud and certainly more illegal than taking a legal deduction.

In most all of those cases, the tax savings realized by the corporation is passed on to the consumer.

While we're at it, instead of spouting a bunch of generalized tripe, which particular tax policies would you do away with?

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I think you need to quit complaining about "Big Oil" and get off your duff and learn some facts. "Big Oil" pays more in taxes than any other industry.

Take Exxon Mobil for example, which recently reported the highest quarterly profit ever. Yet if its profits are at record highs, its tax bills are already at record highs too. Between 2003 and 2007, Exxon paid $64.7 billion in U.S. taxes, exceeding its after-tax U.S. earnings by more than $19 billion. Also, Exxon’s profit margin stood at 10% for 2007, which is hardly out of line with the oil and gas industry average of 8.3%, or the 8.9% for U.S. manufacturing (excluding the sputtering auto makers).

If a profit margin of 10% means they are ripping American's off, what about the aerospace or machinery industries — both 8.2% in 2007. Chemicals had an average margin of 12.7%. Computers: 13.7%. Electronics and appliances: 14.5%. Pharmaceuticals (18.4%) and beverages and tobacco (19.1%) round out the Census Bureau’s industry rankings. The latter two double the returns of Big Oil, though of course government has already became a tacit shareholder in Big Tobacco through the various legal settlements that guarantee a revenue stream for years to come.

Please learn your facts BEFORE you try to point fingers at 'Big Oil.'

It's no secret that there are many tax loopholes. Is it legal? Yes. Is it the right thing to do in some cases? I don't know. I am all for closing the loopholes before raising the taxes on the average Joe.

Which loopholes?

If it's a specific statutory allowance, why is that a "loophole" rather than an informed policy decision made by Congress in order to specifically stimulate a part of the economy which will, in the end affect the prices consumers pay for goods?

The word "loophole" carries with it quite a negative connotation. Use more honest language.

Which credits or deductions (correct language, see?) would you do away with?

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Midtowner you are correct.
Any decent CEO will strive to make a profit. Including using every legal benefit available to them.
You have a responsibility to your partners, and employees, stockholders.
I wish Congress was required to make a profit.

Obviously the people complaining here do not own stock in any of the companies in question. I for one would be irate if I owned stock in a company or worked for a company that did not seek to save money (including taxes) whenever they can.

Heck, I didn't need a new computer, but I bought a $4,000 one just because my accountant said I would be needing more write-offs. Is it legal? You bet. Is it the right thing to do? Yes, yes, yes.

The above is the single most ridiculous post ever on OKCTalk.

There are so many misleading statements it's obviously troll material or incredible stupidity. Profit "margins," when we're talking the kind of whole dollar amounts we're talking about, mean absolutely nothing.

Nobody - and I mean nobody - is capable of defending the Big Five oil profits in the second quarter of this year.

44 billion dollars --- in three months!

Exxon Mobil had a - after tax, and after Valdez penalties - profit of 11.97 billion dollars. In three months. Even the CEO had a hard time explaining that away, he just changed the subject to how much tax they paid. Well, yeah, you make that kind of money and you're going to pay high taxes. With 12 billion dollars in profits in three months - the tax is obviously ridiculously low. That profit is after tax, you know.

We were, as you remember paying over $4.00 a gallon on gasoline at the pumps during this time. Have you forgotten? So, we padded the pockets of the Big Five oil companies to the tune of $44,000,000,000.00 ---- in 90 days.

You can't defend that. Nobody in their right mind can defend that - or even try and keep a straight face.

I'm serious - single worst, most ridiculous, most offensive (do you think we're stupid?) post EVER on this board.

Are all of those profits from Americans paying 4 bucks?
What part of the 44 Billion are from overseas customers?

I don't care how much of it was from overseas - I'm assuming a lot. Surely you're not defending these kinds of profits? You know, you can be conservative without being a Benito Mussolini clone. I can tell from your posts that, while conservative, you're smart enough to know this is outrageous.

Sol.,
I don't enjoy the fascist comparison, I will over look it.
I believe the source of the profit is to be considered.
That determines gouging or not.
Apart from that this goes to something we have discussed before.
What is enough profit? Who determines?
I would like to purchase your car.
I will offer 250k.
Is this over the value?
Are you ripping me off?
Would you still accept it?
just an example.

Pure hyperbole, really. The single most ridiculous post ever? That's a mighty tall order for this BBS.

How much profit is too much profit?

While making record profits, dollar-wise, Exxon has also spent record amounts of money. Their profit margin is only 10% or so which is well below what many industries receive.

The Valdez penalties??? WTF? Sure, the court ruled in maritime law that punitive damages of the magnitude of 100's to 1000's of times the amount of actual damages are excessive and unconstitutional. It was a good ruling. I'm sure some folks are upset that it benefited an oil company. At any rate, that's off topic, and federal common law, so it is really neither here nor there for most of us.

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Also, I must add, the Mussolini comparisons. Great attempt at avoiding violation of Godwin's Law.

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Solitude, who are you to determine that they made too much profit? When did it become a problem for a company to make money? Or are you saying that it is ok for a company to make money, but they have to limit the amount they make? That is like telling a company that they have made too much money and they need to close for a little bit so they do not make any more...

I do remember paying $4.00 for gas. I paid it just like you and everyone else. If you want to drive a gas vehicle, you pay whatever the price at the pump is. There are alternatives, you could buy a hybrid. But those are probably too much since the 'Big Car Industry' is charging more for them than they cost to produce (making a profit...but are they making too much of a profit?).

Mid,

I don't want to get in to discussing all the economics tonight. Maybe somebody else can take up the cause tonight. Long day.

Yes, the Exxon Mobil profits have been reported as being "post taxes and Valdez penalties." They paid almost $300 million in penalties. So, after tax and penalties, the Exxon Mobil profit was 11.68 billion dollars.
http://news.yahoo.com/s/ap/20080731/ap_on_bi_ge/earns_exxon_mobil

I am no tax expert. I am fairly ingnorant in the field. I do know an owner of a fairly large company and he cheats the tax system like you wouldn't believe. I have no doubts that the larger companies do it as well. I'm not suggesting taxing them out of business... but come on. Zero taxes?

BTW - I have zero bias towards big oil, pharma, or whatever. Make em all pay.

Solitude (note to myself),

Remember, this is OKLAHOMA. Nobody (in their right mind) is defending the profits of Big Oil but the Exxon Mobil CEO. But, this is Oklahoma. This is Oklahoma. This. Is. Oklahoma. What can you expect, Sol? This is Oklahoma. You know, these people blasting you think oil companies somehow actually worked for almost 50 billion dollars in profits in 90 days. These people voted for Inhofe, Coburn, Fallin, Cornett (remember his congressional race? nutty), and all the other right-wing fanatics that the rest of the country shake their heads at. This is a reputation that this state has. So, don't be surprised at the defense of big oil plundering. This is Oklahoma! It's just as much your state as it is theirs. When they say, "Move to Cuba," remember they would have been comfortable in Pinochet's Chile or Batista's Cuba or Samoza's Nicaragua. These people have an economic mindset that says, "I've got mine," with little concern about how people will pay Winter heating bills coming up while the big utilities will make out like the capitalist bandits that they are. The far-right in Oklahoma is the epitome of selfishness and greed. And remember - there are a lot of people like you out there - just not in the numbers of the far-right.

Don't leave the state you love and were born and raised (and raised a family yourself). Don't let the nutty unbridled capitalism of Oklahoma conservatives drive you away. It is all a product of decades and decades of Oklahoma newspapers preaching rich=patriotic. One day, when unrestrained capitalist greed has destroyed the country - maybe we can then build a society where people matter.

Remember Eugene Debs. He had the largest vote in the country in 1912 from right here in Oklahoma. The Socialist Party candidate! This state is populist at its core.

Hang in there and remember - this is Oklahoma.

End of note to myself.

Your Friend,
Solitude

I have to agree with Midtowner, NativeOkie and Insider. Excellent posts.

You made a nice post, but you still didn't answer the question.

It comes across as angry posting when you read what I am writing, but I am not angry. I know that I will never be able to change your mind, nor will you ever be able to change my mind. I just want to know when did it become a problem in America to make money? Would you be this upset if the airline industry were making this much money? How about the pharmaceutical industry? The entire point is to make money. But when can we as a society say that any company (or industry) is making too much money?

If high gas is truly a problem, no one is forcing individuals to use gas. You can walk, ride a bike, take public transportation, buy a more efficient car, buy a hybrid, etc. I just do not understand how anyone can say that an industry is making too much money. Do you believe that because someone works hard and makes a good living, they should give all of the excess money they do not need to live from day to day to the government so they can pass it to the individuals that do not work for a living?

I am not trying to pick a fight, just trying to understand (and by the way, I am not from Oklahoma).