Most companies in US avoid federal income taxes

Discussion in 'Wall St. News' started by dtrader98, Aug 12, 2008.

  1. http://biz.yahoo.com/ap/080812/corporations_income_tax.html

    Report says most corporations pay no federal income taxes; lawmakers blame loopholes

    WASHINGTON (AP) -- Unlike the rest of us, most U.S. corporations and foreign companies doing business in the United States pay no federal income tax, according to a new report from Congress.

    The study by the Government Accountability Office, expected to be released Tuesday, said two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, and about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period.

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    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. It said companies may escape paying such taxes due to operating losses or because of tax credits.

    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. For 2005, for example, it reviewed 110,003 tax returns from among more than 1.2 million corporations doing business in the U.S.

    Dorgan and Levin have complained about companies abusing transfer prices -- amounts charged on transactions between companies in a group, such as a parent and subsidiary. In some cases, multinational companies can manipulate transfer prices to shift income from higher to lower tax jurisdictions, cutting their tax liabilities. The GAO did not suggest which companies might be doing this.

    "It's time for the big corporations to pay their fair share," Dorgan said.

    Government Accountability Office: http://www.gao.gov
     
  2. balda

    balda

    How many employed by 1.2 million U.S. companies that pay Fed taxes?

    What's better, pay bigger salaries to employees to avoid double taxation or pay fed taxes?

    What a stupid study that added no value to US citizens or US economy.

    Our government knows how to spend.
     
  3. Daal

    Daal

    should buildings pay tax?should cars do?corporation arent people, individuals need to pay the taxes not entities that dont live
     
  4. I don't get it. Why should Coporations pay income tax. They already pay the corporate tax rate. Indeed this is campaign season...
     
  5. Pekelo

    Pekelo

    Actually, legally corporations are legal personalities. :)

    http://en.wikipedia.org/wiki/Separate_legal_personality

    "A legal person, also called juridical person or juristic person,[1] is a legal entity through which the law allows a group of natural persons to act as if they were a single composite individual for certain purposes, or in some jurisdictions, for a single person to have a separate legal personality other than their own.[2][3] This legal fiction does not mean these entities are human beings, but rather means that the law allows them to act as persons for certain limited purposes—most commonly lawsuits, property ownership, and contracts. "
     
  6. Here's the corrected link:

    http://apnews.excite.com/article/20080812/D92GGTT81.html

    And this is a textbook case of irresponsible reporting. Reading the article, we find this bon mot:
    Quote:

    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.


    In other words, the business owners paid the companies' taxes. Most small businesses are set up as S corps,
    LLCs or LLPs, in which case there IS NO CORPORATE TAX!!!

    And I can personally assure you, those of us who run our own small businesses pay huge taxes.

    This writer, or his editor, is a freaking idiot.
     
  7. Daal

    Daal

  8. balda

    balda

    There have been studies on this subject.
    And conclusion was that companies do better in a low tax environment.
     
  9. As others have pointed out, corporations simply pass along their increased taxes onto the consumer. Another example of the libs trying to "screw the man" and they wind up "screwing the little guy."
     
  10. Why don't the idiots in Congress blame the idiots who write the tax code for the loopholes.

    Oh, that's Congress.
     
    #10     Aug 12, 2008