The dirty little secret everyone knows about: corporations don't pay much in taxes

[Guest]

Re: The dirty little secret everyone knows about: corporations don't pay much in taxes

Wrong. Corporations pay NO taxes.

Individuals pay taxes. Taxes collected and forwarded to the IRS by a corporation merely reduce dividends and capital appreciation of their shareholders, who are ultimately individuals.

Corporations can own stock in other corporations, but even then, taxes paid by the first reduce the second's earnings, which reduces the dividends and capital appreciation of the shareholders of the second corporation.

Your leftist buddies shrillly complaining about corporate taxes have sold you a bill of goods. You cannot tax a non-entity. It's like trying to tax a brick.

If corporations are such a great way to earn tax free income, then go buy some and quit complaining.

last I heard, Exxon Mobil paid more in US taxes than they earned in US

[Guest]

Re: The dirty little secret everyone knows about: corporations don't pay much in taxes

Wrong. Corporations pay NO taxes.

Individuals pay taxes. Taxes collected and forwarded to the IRS by a corporation merely reduce dividends and capital appreciation of their shareholders, who are ultimately individuals.

Corporations can own stock in other corporations, but even then, taxes paid by the first reduce the second's earnings, which reduces the dividends and capital appreciation of the shareholders of the second corporation.

Your leftist buddies shrillly complaining about corporate taxes have sold you a bill of goods. You cannot tax a non-entity. It's like trying to tax a brick.

If corporations are such a great way to earn tax free income, then go buy some and quit complaining.

last I heard, Exxon Mobil paid more in US taxes than they earned in US income,

[Guest]

Re: The dirty little secret everyone knows about: corporations don't pay much in taxes

Wrong. Corporations pay NO taxes.

Individuals pay taxes. Taxes collected and forwarded to the IRS by a corporation merely reduce dividends and capital appreciation of their shareholders, who are ultimately individuals.

Corporations can own stock in other corporations, but even then, taxes paid by the first reduce the second's earnings, which reduces the dividends and capital appreciation of the shareholders of the second corporation.

Your leftist buddies shrillly complaining about corporate taxes have sold you a bill of goods. You cannot tax a non-entity. It's like trying to tax a brick.

If corporations are such a great way to earn tax free income, then go buy some and quit complaining.

last I heard, Exxon Mobil paid more in US taxes than they earned in US income, due

[Guest]

Re: The dirty little secret everyone knows about: corporations don't pay much in taxes

Wrong. Corporations pay NO taxes.

Individuals pay taxes. Taxes collected and forwarded to the IRS by a corporation merely reduce dividends and capital appreciation of their shareholders, who are ultimately individuals.

Corporations can own stock in other corporations, but even then, taxes paid by the first reduce the second's earnings, which reduces the dividends and capital appreciation of the shareholders of the second corporation.

Your leftist buddies shrillly complaining about corporate taxes have sold you a bill of goods. You cannot tax a non-entity. It's like trying to tax a brick.

If corporations are such a great way to earn tax free income, then go buy some and quit complaining.

last I heard, Exxon Mobil paid more in US taxes than they earned in US income, due to

[Guest]

Re: The dirty little secret everyone knows about: corporations don't pay much in taxes

Wrong. Corporations pay NO taxes.

Individuals pay taxes. Taxes collected and forwarded to the IRS by a corporation merely reduce dividends and capital appreciation of their shareholders, who are ultimately individuals.

Corporations can own stock in other corporations, but even then, taxes paid by the first reduce the second's earnings, which reduces the dividends and capital appreciation of the shareholders of the second corporation.

Your leftist buddies shrillly complaining about corporate taxes have sold you a bill of goods. You cannot tax a non-entity. It's like trying to tax a brick.

If corporations are such a great way to earn tax free income, then go buy some and quit complaining.

last I heard, Exxon Mobil paid more in US taxes than they earned in US income, due to their

[Guest]

Re: The dirty little secret everyone knows about: corporations don't pay much in taxes

Wrong. Corporations pay NO taxes. Individuals pay taxes. Taxes are merely collected and forwarded by corporations to the IRS. That reduces net earnings and hence dividends and capital appreciation of shareholders. Who are, ultimately, individuals.

If someone's commiting tax fraud using creative accounting, enforce the laws. But high income taxes on corporations is not going to help you keep your job in a global environment. They'll simply hire a guy with a name you cannot pronounce in a country with lower tax rates. Global competition comes in many forms. Freedom from taxes is one.

In the desire to "stick it to the man" you may be poking with a very curved pitchfork and giving yourself an unintended prostate exam in the process.

Ask California how that's worked out for them lately.

[dbarberic]

Re: The dirty little secret everyone knows about: corporations don't pay much in taxes

Can you say that again brucec42? I missed the first time you said it.

[c1ue]

Re: The dirty little secret everyone knows about: corporations don't pay much in taxes

Bruce,

Perhaps you are unaware, but corporations do have an income tax.

It is just that not many corporations actually pay it.

From the CBO:

http://www.cbo.gov/ftpdocs/69xx/doc6...rporateTax.pdf

Taxes on corporate income as a percentage of GDP in the OECD countries:

Weighted average: 3.4
Unweighted average: 2.5

United States: 1.8

Only countries lower than the United States: Germany and Iceland

[Guest]

Re: The dirty little secret everyone knows about: corporations don't pay much in taxes

Can you say that again brucec42? I missed the first time you said it.

LOL, itulip went crazy. I only input it once. Or rather, twice, the first time it just disappeared completely.

[Guest]

Re: The dirty little secret everyone knows about: corporations don't pay much in taxes

Bruce,

Perhaps you are unaware, but corporations do have an income tax.

It is just that not many corporations actually pay it.

From the CBO:

http://www.cbo.gov/ftpdocs/69xx/doc6...rporateTax.pdf

Taxes on corporate income as a percentage of GDP in the OECD countries:

Weighted average: 3.4
Unweighted average: 2.5

United States: 1.8

Only countries lower than the United States: Germany and Iceland

Maybe the part of my post where I explained it evaporated in the technical glitch that posted it 11 times. Corporations cannot pay tax. They merely collect it and pass it on to the govn't for shareholders. Think about it.

[vcif]

Re: The dirty little secret everyone knows about: corporations don't pay much in taxes

I agree with bruce. no corporation has ever paid one penny in tax. they just collect it for the government from consumers,investors, or employees.

the federal excise tax on gas is levied on the seller specifically. does anyone think that exxon pays that tax? is it just added onto the price.

just because we call something a "corporate income tax" doesn't change the fundemental truth that it is paid by individuals through the price of the product, wages, dividends.

corporate taxation is a fool's paradise. just another stealth tax on the public like inflation.

[FRED]

Re: The dirty little secret everyone knows about: corporations don't pay much in taxes

I agree with bruce. no corporation has ever paid one penny in tax. they just collect it for the government from consumers,investors, or employees.

the federal excise tax on gas is levied on the seller specifically. does anyone think that exxon pays that tax? is it just added onto the price.

just because we call something a "corporate income tax" doesn't change the fundemental truth that it is paid by individuals through the price of the product, wages, dividends.

corporate taxation is a fool's paradise. just another stealth tax on the public like inflation.

EJ writes in:

As readers know, at any given time we're working on a dozen or so articles. On occasion we like to preview them to get feedback.

The issue of corporate taxation is near and dear, not only because I have and do run companies but because I believe that there are widespread misconceptions about US corporate tax rates compared to other countries and in the US over time. To make a long story short, US corporations pay a lot of taxes on profits compared to other countries, and while taxes as a percentage of profits appear to have declined over the past 20 years, the financialization of the US corporate sector over that period has a lot to do with that trend, and it is reversing with the debt deflation.

We focus our attention on a lengthy analysis that can be summarized with the following chart: US corporations pay a lot of taxes, more than the UK, about the same as in Germany, and only marginally less than in France. The sources of tax burden are different, but they add up.

It's not obvious to me how the US remains competitive if its taxes are so high. There has to be a better way. In my book I suggest a few novel approaches that I won't go into here.

As for the rate of corporate taxation over time, the Fed puts out a report every year on this. Here are the charts going back to 1972.

Three quick notes: One, the tax liability on corporate profits were $400 billion Q1 2008 on profits of $1.75 trillion or a liability of 23% vs 23%. Compare this to a tax liability of $100 billion on less than $230 billion in profits Q1 1979. If you read the charts over time, it is hard to argue that the corporate tax burden in the US has increased over the past 20 years based on these data. Two, corporate profits started to decline Q1 2008 for the first time since the 2001 recession. Three, up to "45% of corporate profits come from financing. Financial stocks account for 23% of the S&P 500’s market cap" (See This time it's value traps).

I foresee a considerable drop in "profits" as the FIRE Economy unwinds and the de-financialization of US corporate sector eliminates the 45% financing profits comes on top of declines in profits due to the recession.

[c1ue]

Re: The dirty little secret everyone knows about: corporations don't pay much in taxes

I agree the theoretical tax burden on US corporations is quite high.

However, what the original article pointed out was that the actual taxes paid are not very high.

The 1979Q1 vs. 2008Q1 profits vs. taxes paid numbers are a good juxtaposition:

1979:
US GDP = $2.5445T
Corporate profits = $230B
Taxes paid = $100B
Corporate profits = 9% of GDP
Corporate taxes = 3.9% of GDP

2008:
US GDP = $13.9T
Corporate profits = $1.75T
Taxes paid = $400B
Corporate profits = 12.6% of GDP
Corporate taxes = 2.9% of GDP

Or in other words, corporate profits are a much higher percentage of GDP than in 1979, but the taxes paid by corporations is a much lower ratio.

Sure, the financialization probably has something to do with it, but I'm still not sure how going financial allows a corporate post tax profit spread of 9.7% of GDP vs. the previous 5.1%.

One mechanism might be the elimination of much of the labor class jobs; this removes a profitability barrier as it reduces GDP.

But it does not explain how corporations are paying LESS taxes with MORE profits, nearly 1/4 less in 2008 vs. 1979!

Is this really all Reagan?