because they are the ones that can afford to pay our Senators and Representatives.

Peter,

This is treated as ordinary income

True.

and why so many object to raising marginal rates above 35% because it would tax this income higher than if it were treated as corporate income taxed at 35%.

Not true. Regardless of corporate tax rates, that 'personal income' is taxed at personal income rates - a function of the tax bracket that the individual falls into.

The highest personal income rate in the country is currently 35%. Raising corporate rates will have no impact on this.

I DO see a problem, and a solutions, and no will whatsoever to achieve it.

Tax loopholes should be given for entrepeneurship, newly developing industries, and their ilk. However, we all know that isn't what ends up happening. And I don't want to hear so-called 'conservatives' or 'liberals' harping on the do's and don'ts; nobody wants to pay more in taxes because someone else ran a trick provided for them by that priviledged person's insider congressman.

And if you want to tell me you don't want taxes raised on corporations, I don't want to hear the BS that they then deserve even more breaks if you want to go on screaming about enforcing rules that exist. Its not unlike the governor who is pardoning a murderer because, aw, he worked on his estate.

The problem isn't that we have Democrats or Republicans in congress. The problem is we have Democrats AND Republicans, or more correctly said, politicians bribed by uncompetative companies who put the name of good companies to shame, all in the name of a CEO bonus for failed leadership.

Your currently 'electable' candidates aren't going to provide a solution either. Says something about you and I, doesn't it, that we won't actually put someone in government that would fix the problem? So when are we going to do something about it?

No, the shareholders in these corporations (of which I am one) pay taxes on the profits at ordinary income rates, which can be as high as 35% depending on the tax bracket the individual is in.

They are called "S" corporations and are generally small, family owned companies. The reason the taxes work this way is that it simplifies the tax filing burdens for the owners. Corporate income and personal income is blended together. This is especially true for corporations that are an individual (like an accountant for example) where it would be silly to file 2 returns for the same thing.

"C" corporations file corporate tax returns. For family owners (mine is in this case), the same tax rates as "S" corporations can be attained by paying more in salary to the owners so that the corporate taxes are reduced.

Either way, both federal and state income taxes are paid.

To..madison.."""

You sure are a hoot ...too funny with you're faux outrage this has been going on long time but blame Obama ...silly

from rueters

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

Aug 12, 2008

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.

the tax code was written long before the Obama administration so some blame can be given but taxes are lower now then they have been in recent history and GE has been paying zero tax long before Obama and most of the top 50 Fortune 500 pay little or no tax and some get refunds so your slanted view is just that talk radio inspired OH i forgot Fox news inspired also so their Opinions are like noses everybody has one, one more Parrots view

Where is Occupy Wall Street when we need them? This is outrageous. Thank you internet for revealing these little illegal and unethical movements by corporations.

Most Republicans want to have the capital tax rate droped to 0% only the middle class pays taxes.

To Ernie the Spoon, they are not taxed at the capital gains rate. It is ordinary income and taxed at rates approaching the corporation rates

I believe everyone with a job should be taxed at a certain percent on their gross income: No deductions for anyone even if they have a houseful of kids or whatever. This way everyone would pay their "Fair" share. The percent would apply to those making $200/year or $2B/year. This would eliminate the 40+% that pay no federal tax and get more money to the wealthy taxpayers. I'm not so sure about companies since if we handicap them too much, they will just join the others that were driven offshore in order to stay alive. Maybe based on size, could be divided into perhaps three levels and a certain percent apply to each level.

Sally, there is nothing illegal or unethical about what these corporations are doing. Our politicians made the rules they operate under.

Sorry, shd read "and get more money FROM the wealthy taxpayers.

I agree with you Flowerchild and have been saying the same thing for more than a year now. I also support taxing any income whatsoever, not just income that comes from a job. That would include taxing income from government welfare. Fair is fair and like you said, the rich will automatically pay more because they make more. Problem is, liberals have promised those that expect the government to support them so much in their quest to buy their votes, that it will never fly.

flowerchild-939285... How about a 17% rate for everyone as their fair share?

Why should we tax business? If the money ends up in someone's pocket, they pay income tax. If the money is plowed back into the business, it pays others to produce what the company spent the money on. Thing is - money goes somewhere to get taxed.

The rich on tax welfare claims the poor on food stamp are the problem of this nation. Newt, take note of where to deliver your next speech.

There are multiple issues here, not just the rate (if I can bring my taxable income down to 0, then does it really matter if my tax rate is 90%?).

1) Most large companies that have a multinational presence, even if that presence is a post office box in Ireland and the Netherlands (that is how they do the double dutch), will use something in tax law that is known as transfer pricing. That is, they essentially transfer the profits from business from one country to another, thereby transferring the tax liability to the other jurisdiction. Unless that 'profit' is repatriated to the US home jurisdiction, it will never be taxed.

However, in the US, there is no requirement to disburse profits to shareholders, especially if the entity is actually overseas, so very often, these profits will be tax free. It also becomes even more onerous if the foreign entity 'loans' those profits back to the home company with an interest rate, thereby continuing the problem.

There are two issues here that need to be resolved:

a) The issue of transfer pricing. Now the IRS does have rules for how transfer pricing is accounted for when considering tangible goods (say a GE manufactured jet engine) BUT that same engine when leased to the foreign subsidiary do not have the same rules, therefore, GE can lease the engine to itself at a loss, but since that loss is on the US division, and the profit is being 'double dutched', the tax liability essentially disappears. THIS needs to be fixed.

b) The issue of repatriating profits and being taxed on those profits. If I buy shares on FTSE, and sell them at a profit, I am expected to pay capital gains tax on that profit. The issue of the foreign entities is that those profits aren't being taxed, which in the end raises the tax obligation for those that do not have the ability to play those games, which considering the ease of setting up the double dutch system, is a huge segment.

2) The other main issue is that of the tax rates. Here is where it gets into a personal pet peeve of mine. While the tax rates themselves are not really a structural problem, they can be changed, having the capital gains tax rate significantly below the income tax rate is a HUGE problem (right now it is less than half of the top marginal tax rate).

The reason why it is a problem is that it changes the focus on how a business is to operate. Instead of focusing on earning, which is taxed at a corporate income tax rate, the focus is now shifted to 'shareholder value' which basically means increasing the stock price. Increasing the stock price (so that people can make money on the stock market buying and selling shares) does NOTHING to make a company more competitive, in fact, the actions that are taken to increase that stock price often make the company LESS viable or LESS competitive, because all too often, the actions taken take money away from actions that keep the company viable, all to provide a short term boost in the stock price.

It also makes it much more difficult to justify investing in ventures that are largely manufacturing. Manufacturing companies are generally high investment, long term, lower return ventures. This makes it a different economic prospect from the start, but this is compounded right now with the capital gains rate being so low, because you can make more money through churning your money on wall street (which contrary to what a lot of people say, no longer is a job creation/investment mechanism), and even if you don't make as much profit, you can still net out more because your tax rate is less than half of what you would pay if you are in a high income marginal rate.

Personally, I wouldn't be all that concerned if the higher marginal tax rates stayed the same if the capital gains rate moved to a rate that was the same as income.

It is amazing how little most people know about how a business works and pays taxes yet people like ernie are on here crying about things they know nothing about.

Are these companies part of the 47% that pay no income tax that the GOP is always talking about? I bet not!

harold,

My company pays a LOT of tax. Maybe I should just set up a similar structure to what I described and pay no taxes as well.

Devil's Son...you're right, they are not part of the 47% because the owners of the corp. in this case an S corp, which is limited to the number of share holders as well as partnerships, pay the taxes on an individual level. The 47% is the number of US households that do not pay taxes.

Lovely............

I fail to see the problem here since the profits are simply taxed on individual tax forms instead of corporate tax forms

You might be the only one to not see a problem here, Peter; if there wasn't any advantage in tax rates to conduct pass-thru's, why would we see such a proliferation of them in the past 10-20 years. Somebody is making out like a fat bandit and the rest of us are getting stuck with the bill. Maybe Peter wants to pay the taxes that millionaires/billionaires don't pay, but I sure don't.

A capital gains tax (CGT) is a tax charged on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property. Not all countries implement a capital gains tax and most have different rates of taxation for individuals and corporations.

The level of stupid people that post here is a agregious. No they do not pay the capital gains tax of 15% on the income, they will pay whatever their personal income tax rates would be, probably around 28 to 32 percent depending on their "personal income". It amazes me the do nothings are always out to take from the do somethings. No wonder we have an idiot for president, he was voted in by idiots.

grumpy

There are disadvantages and there are advantages. Not all of these are tax related.

Advantages:

- FAR less complicated administration, making operating costs lower (this will depend on the size of the company and how it is structured).

- Lack of dealing with corporate tax law (again, depends on the size and structure of the company)

Disadvantages:

- Inability to retain earnings within the company, all earnings pass through to the owners every year. This makes long term planning more difficult.

- Less flexibility in terms of taxation (the inverse of the advantage). In some cases, the complexity of the tax laws on the corporate side give you much flexibility in terms of tax planning.

I won't say that one is definitely an advantage over another, it really depends on the situation. Technically my company is two C-corps (well we have a third but that is what is left over from our previous business that we haven't closed up yet). On paper, our operating company should probably be an LLC, with the profits being passed through to our 'holding company'. We don't do that for various reasons but we don't pass our profits up to the holding company at this time anyways.

Another example of that would be something like American Airlines. The trading company is AMR Holdings, the holding company, and it owns American Airlines, the operating company. It doesn't matter if corporate tax is being paid by American Airlines, because it passes its profits up to the parent holding company.

There are many reasons why pass throughs have become much more prevalent though, taxes isn't the only reason to do it. There are many compelling reasons to do so outside of the tax situation. Part of it is also due to the influx of sub contracting out the customer facing jobs to 'self employed' contractors. A company would lay off their service department, and contract it out to the same people, those people would now set up S Corps to perform their work. The article really doesn't break down the numbers that way, which is unfortunate.

Actually, pass throughs are treated as dividends, not capital gains, so they are taxed at the ordinary marginal tax rate of the person receiving them. Capital gains tax rate only applies to equity instruments or other assets that are held for at least one year. Most of those receiving these dividends are paying at least 28% and many pay 33% or higher in federal taxes not to mention any state taxes. They also pay taxes again in sales tax when they spend this money so someone receiving this type of income who spends it is probably paying something around 45% in taxes on this money. I am all for making sure the rich and corporations pay their fair share, but this is not on area where anything is amiss.

Jonathan-1917156 Post # 1.20 Thank you for your post. You have made the standard complete text book for economics 101 very clear to all in a few paragraphs. Excellent job, well done.

Your post needs to be printed out by most teachers and professors across our country. Quick put a copy right on it.

Peter17

Ernie - not true. These pass throughs are not LT Cap Gains, assets that must be held for at least a year. This is treated as ordinary income and why so many object to raising marginal rates above 35% because it would tax this income higher than if it were treated as corporate income taxed at 35%.

I fail to see the problem here since the profits are simply taxed on individual tax forms instead of corporate tax forms - the government still gets the revenue. In fact, one could argue that the government gets more revenue in this manner. Tax loopholes exist primarily in the corporate tax code. If these companies hired an army of accountants they would likely pay less in corporate income tax than the investors pay on those profits on their individual tax returns.

Peter u're missing one very important circumstance. Not all revenue that is considered expenses are there for the investors. Many fortune 500 companies carry huge surpluses of cash in the hundreds of millions to billions that are part of the corp assets that are reinvested and grows each year. This money is neither for taxes or dividends. It is corp cash accts controlled by the executive officers who run the company to purchase.

JS isn SD next time go to school for accounting. As someone who does taxes for a living I know that most people paying taxes INCLUDING those in pass through entities like LLCs and S-Corps don't pay anywhere close to 33% taxes. Also by taking a major portion of their compensation as dividends they avoid the 15.3% payroll taxes the rest of wage earners have and don't start with the crap about employers paying half of that because employers always justify lower pay packages because of payroll & health/retirement payments they make

Jonathon,

That's an excellent explanation, the problem is its too complicated for the haters of the rich to understand.

I am a business owner (LLC) and we function on a pass through, meaning every dime of profit is taxed at ordinary income levels, regardless if I get a penny of it. Last year we did $10 million in revenue and after expenses (TAXES, payroll, equipment and operating expenses) was left with $6.1 million. As a 50% owner of the business, my K1 (a business W2) showed I was paid $3.05 million, WOW I'M A MILLIONAIRE!!!!!

The problem is, I didn't see a single penny of that $3 million and the business paid the tax for me at ordinary income rates, most of which was at 35%. We created 44 jobs last year, all of which are truly middle class positions ($65-$115K), and they paid their taxes on the salary I paid them.

It may not be popular but this is how small businesses function, and WE are the job creators!! Had I not paid over $1 million in taxes last year, we could have bought more equiment and hired another 20 people, who would have all paid taxes. Before anyone else criticizes those dreadful RICH people, make sure you are talking about people that actually got the money they paid taxes on. Several of my employees make more than I do and they aren't working 7 days a week and don't have their entire future riding on the politicians not doing something else stupid.

The so called "Bush tax cuts" that are expiring, also contain incentives for people like me that create jobs which allow us "accelerated depreciation" to write off a portion of NEW equipment. We still have to pay the sales tax on the equiment and the ordinary income tax on the money made from using it but by having more equiment, we hire people to use it. For those of you fuming that I didn't mention the other $2 million, we used it to buy more equiment and will have hired another 40 people to run it this year.

The fact that GE pays NO TAXES on billions in profits is criminal but legal. As long as we have career politicans in Washington DC, this will never change. They own both the democrats and republicans, in fact they are providing the software for Obamacare!

Fixing the problem is really an easy thing to do, eliminate corporate loopholes and make EVERYONE pay tax on the money they get at the appropriate level, if you make more you pay more, PERIOD!!

Back in Oct of 2011, CAT CEO gave an interview where he clearly stated voters should not vote in any individual voting for a person refusing to cut spending, and/or refusing to increase taxes. So like Simpson Bowles, he was stating that both need to be applied at the same time. Sounds like sound advice??????

Except, he then turned around and went to Gov Quinn of IL and threatened that if Il did not reduce the corporate state tax CAT would leave IL. So apparently CAT is not interested in paying more corporate taxes regardless of the financial circumstances this country is in. So Gov Quinn, the true politician, caved and granted tax incentives to all companies in IL in order to keep them

The CAT CEO is a hypocrite. Look, nobody is more business oriented than I am, but who exactly is left to pay taxes in this country? 47 percent of filers do not pay a federal tax. Many corporations do not pay a tax, while others pay the full amount. The rich are paying 40 percent of income taxes for most states and cities. True, they have lots left over, but the dependency on this tiny group to carry the burden is bad news if they see their compensation fall which then blows a hold in many state budgets.

The idea shouldn't be to reduce the rich numbers, but how to increase the number of rich. The only way the average person can do that is to deleverage. I have done it many times in my life when circumstances warranted a big change. It means downsizing and selling stuff until expenses are far less and discretionary income rises. Then that money needs to be invested and that is when it would be a good idea to find out from the rich how to create wealth.

You can make 200,000 and still find yourself unable to pay your bills. It has everything to do with outlays and revenue.

BTW, Apple disclosed in OCT they have 80 billion in cash. Are we about to bash them as we have the banks, and if not why not? Why are they sitting on so much cash?

STLMike: ALL households pay taxes one way or the other. Even the poorest pay taxes when they purchase food, gas (if they have cars), etc. Just because a person doesn't pay income taxes because they don't make enough money doesn't mean they don't pay taxes some other way. I co-partner a catering business, and although we don't make enough and can offset taxes, we still are stuck paying the Franchise Tax Board $800/year, the State Board of Equalization (for the sales tax that we charge for our services), and taxes on the food and equipment we buy for the business. Unfortunately, any income we make from the LLC goes into our K9's, which then adds to our personal income. So, one way or the other we pay taxes as do every other individual who purchases services or products in the U.S.A. Some just pay more (or less) than others. However, I DO believe that corporations get WAAAAY too many ways to get out of paying legitimate taxes on their income. That's what needs to be fixed!!

Hey Dereck there should NOT BE TAX LOOPHOLES, for anybody. Drop all loopholes, and deductions. Everybody, including the rich and poor pay a flat tax on all income. I'd almost bet 5% tax on every type of income. would be enough to run this country. We're talking about Federal income taxes.

And then they will tax my little squat pension that I worked so hard for..I think I will throw-up now..

This is silly. The whole purpose of a Subchapter S Corp is to avoid double taxation. Who in their right mind would start a company if they were going to be taxed at up to 35% on corporate income and then again at up to 35% of the remaining income at the personal level?

If the government wants to discourage job creation (70% by small businesses), doing away with this would be a good place to start.

This is just another example of msnbc promoting Obama's anti-rich rhetoric - no surprise there.

Hey Folks! What are we talking about here? Income tax.. right? Okay so if a "company" does not actually realize net income and the revenue is "Passed Through" to the owner or owners, officers executives or stock holders of the company AND then they pay INCOME TAX what is the actual problem?

I am sure it's safe to assume that the imbeciles on here that say this is a "loophole" and "Corporations pay no taxes" and more inept rubbish... only goes to show how sad it is that the average person has no idea what it takes to operate a business and deal with the IRS and the state and local tax issues. Joe F in las vegas... you're obviously not vested in the free enterprise of the nation or you would have a clue! Regarding the matching social security... how the hell can you make a statement like "Businesses use this as an excuse to keep compensation packages low" or whatever the exact nonsense you said.... it's blithering nonsense!

Some people on here more eloquent than me have already given lucid and intelligent information to try to enlighten some of you that do not know jack squat so I am not going top waste my time trying to educate people about business but I will say this much; for those of you who are unabashedly in favor of taxing entrepreneurs and businesses into the ground and out of business, you're the worst kind of pessimistic parasitic insect there is and with such pathetic attitudes you will always be on the losing end of life. And don't think for one second this government that you're so intent on allowing to STEAL from hard working and smart business people will spare any of you! If you ever had your way eventually this same government would take your last penny and leave you on the street... seriously you all need to get a clue.

bottom line less taxes are being paid....

The people who use this method of "pass-through" taxation are often your local state licensed private practice professionals or the guy/girl living next door who is a small business owner. A good example is the person who installs your satellite dish, the mental health worker who has a private practice, the guy who rents out his boat for fishing trips, or even the persons who cut your lawn. These individuals as a whole are not million dollar corporations and the law limits their number of shareholders and the types of businesses that can become an S corp!!! They incorporate for legal protection and not to avoid taxation, as they aren't eligible for certain tax breaks afforded to large corporate entities.

I'm all for major corporations paying their taxes (Ex: BP shouldn't be able to write off the cost of the oil spill) and yes there are some S Corps that probably shouldn't be allowed, but this article seeks to make it sound as though the many hard working small business owners are not paying their share. The writer should leave business and tax articles to those who have a clue what they are writing about and stop trying to divide up the average Americans.

our founding fathers never wanted or envisioned a government that taxes its citizens labor as those type of taxes are the opposite of a free society.

Section. 8. The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

based on that we are taxed illegally but of course when the fed came around this gem was passed.

Article. XVI.

[Proposed 1909; Questionably Ratified 1913]

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

this is contradictory to the first and where the government enslaves its people via punitive taxation.

it is not ethical or morally acceptable to tax a persons labor, as the tax collector (government) has done nothing to ensure the man has labor and/or continues his labor.

as far as the 47% or so that pay no federal income tax, that is the exact taxes we are all talking about!!!!!!! if 47% pay no fed income tax why should the 53% pay their portion with higher taxes? the 47% include all working people(duh, tax filers)!!!!!! they can pay fed taxes and yes they do make enough. our poorest people in the states are far weather than the avg joe around the world. the government is the ones who say who is rich and who is poor, who gets handout and who gets punishment. the government sets the poverty line!!!!!!!!! so if the government says you are poor then by golly you must be poor right? so if u have a car, TV, cell phone, computer, internet, luxuries and the government says you are in poverty then whos to say the government is wrong? im sure the ethiopian with no car, tv, cell phone, computer, internet or any luxuries will agree your poorer than him because the great all-knowing US government says so.

oh and didi, food product are not taxed and the "poor" receive tons of reduced pricing on lots of acquired debt. it it not the responsibility of no other citizen to pay for the decisions of others. when you have kids you acquire debt, when u buy things on credit you acquire debt, when you take out loans you acquire debt. the debtee is solely responsible for repayment of said debt, not other citizens through punitive and manipulative tax codes.

scrap the current tax codes, get rid of income tax, go back to the gold/silver standard, reduce corp tax to 20% cap gains at 10% and focus most taxes on consumption. the fed gov has gotten to big to powerful and has waaay to much of our money.

but hey you know what guys instead of getting the government to abide by the constitution and get rid of the progressive crap lets instead fight amongst ourselves so the gov can do w/e it pleases while we argue over something the government made-up and feeds us. sounds better right?

Good post Swag. I don't agree with consumption taxes, they are regressive and hurt lower income folks and they "steal" important resources from the economy BUT you are on the right track otherwise.

The word uniform is a loaded word though. The question of apportionment is that of equality on what basis. On the basis of state? then that punishes the lower income states (say North Dakota) and benefits the higher income states (say California) disproportionately, On the bases of person? Then that punishes the lower income individuals and benefits the higher income individuals disproportionately. On the basis of how much a person may benefit from the society? Well that can be difficult to gage, but it is that concept that Adam Smith tried to project in his book the wealth of nations which the radical right like to espouse.

This is why the tax system is the way it is, it tries (not perfectly, but it isn't sure whether it can be done perfectly anyways as perfection is in the eye of the beholder) to balance out competing interests to create an ideal.

As for the gold standard, stupid idea, but hey, if you want the 1%'rs to have even more money and you left with nothing, be my guest, keep proposing that.

thx kyot but the poor should not be consuming more than they can afford, maybe thats why they are poor to begin with. we have become a service/consumer nation, we have nothing else so while there might have been good ideas to "fix" things we are so far gone the only hope is the end. our downfall started even before the constitution was ratified. history has our story already, a common story of mans rise and fall.

hey jon our current money is backed by thin polluted air. we haven't even seen our gold since the 70's so whos to say its still there. when i did training at ft. knox i was told by someone who works at the repository that the gold got shipped to some other facility and that only a few bars remained at knox but hey idk. if u think our current fiat, inflated, manipulated, stolen, backed by a word money is the right course then you are just part of the problem.

so why do you hate people that know how to save money? what you and people like you expose is that you want to seize the 1% 'ers assets, well that is called theft and is illegal. its is not the fault of the rich that the poor cant save and instead spends their money competing with other people. no one told them to have kids or make any decision that cost money. the people who spend more than they need are the problem and you keep using these lazy poor people that cant save a nickle to save their life as an excuse to take from others. nothing but thieves

swagganaut,

so what? money is not wealth, money is a means of conducting commerce. Its value is what people give it.

And my comment isn't about saving money, it is about the accumulation of money, and in a gold standard system, that is severely limited. Just think of this, if the population increases by 5% a year, your money supply needs to increase by the same amount in order for the society to remain at the same level. So you are going to devote whatever resources to try and dig that much gold out of the ground just to stay even?

As for the gold, who cares where it is. It is largely a useless commodity, where the value is based solely on what people are willing to pay for it. Right now, that is a lot, but it won't always be the case.

The headline is meant to mislead. If taxes are being paid on the corporate profits, does it matter if the corporation pays it or the individuals who own the corporation? NO.

So all you screaming ninnies need to get a little education for damn sake.

That, and with revenues down (just like states, where tax revenues, their income, is down 20-30% on average) many "Corporations" are not making any PROFIT. Most corporations are not GE, they are your doctor and dentist.

Look at how stupid people jump to conclusions led on by stupid MSNBC in their greedy desire for more page views, reaping them more ad profits.

How about we focus on income growth? How about we spend 2 or 3 years and concentrate on increasing income to private citizens? Why is it never time to take care of main st, but always time to take care of Unions, Government workers, Wall St, and Corporations that are too big to fail?

The ONLY thing we should be talking about is how to incentivize corporations to pay employees more (via wages, benefits and profit sharing) - and give small businesses (under $100 million annual revenues) real help, not with "programs" but instead with tax incentives to hire and keep employees, and with grants and loans to build and grow. Why is the SBA such a small part of government? Why not a 5 year plan to invest $100 billion in small business? Only $20 billion a year - and these funds would not be for more government employees, but instead, 100% for loans and grants.

"In 1978, the SBA's budget was more than $3.5 billion, which is a far cry from the $569 million allotted to the SBA by the Bush Administration in 2008." In 1978 the federal budget was $446 billion. They spent $478 billion. Deficit was less than 8% of total expenditures.

Now, with a budget approaching $4 trillion, or nearly 900% larger, we spend $994 million.

So we have reduced our investment in the biggest job creating sector by 90% - it should be $32 billion based on 1978 figures.

Our priorities are all screwed up, and so our results are as well. 

what we need is to decrease our wages and reduce prices to bring cost of living to a normal standard but that cant be done anymore so we will only increase cost of living to create more people (according to the goverment) below poverty level.

if the man who made a decision he could not afford ask his boss for a unwarranted raise and the boss gives it to him but at an increased cost to the consumer. now the consumer has to pay more so they in return ask for a raise through their union and so the union threatens the company to give raises to all the workers. now in order to do this and keep a healthy profit margin the company raises prices on its services/product forcing more people to spend more of their money and in return they would want more income from their employers thus repeating the problem over and over and over again.

the more we pay you the more things cost the more you spend the more we pay you the more things cost the more you spend the more we pay you the more we pay you the more things cost the more you spend the more we pay you the more things cost the more you spend the more we pay you........

its a cycle created to keep us slaves to someone. if we stop making decisions that cost us money we dont have then maybe we can actually save money and bring prices down (along with wages). as long as we keep buying swag and making stupid selfish decisions we will be doomed for failure.

Another misleading and inaccurate headline by the liberal press; ho hum (and a bunch of idiot posters that don't mind to learn the real facts).

The fact is that flow-through entities have been around for a long long time and they are generally used only by small businesses, relatively speaking. The Wal-marts, GEs, Microsofts, and Apples of the world are not organized as flow-through entities and thus are not using that part of the tax law to minimize their federal income tax. For the most part, companies that are publicly traded on the NYSE or NASDAQ are organized as corporations that are subjected to a corporate level federal income tax.

Another fact is that the income that flows through to the owners of flow-through entities is taxed at the regular income tax rates and not the capital gains or dividends rates. And, for calendar 2012 the top rate of 35% is for taxable income above $388,350.00 for a filing status of married filing joint, which is very small in relation to even most small companies total income. So, if you want to increase the tax liability for all of the very small companies, then by all means, eliminate the flow-through concept, but it will not have any impact on companies of any size that operate as corporations.

And yes, there is double taxation on corporate earnings. Say a corporation earns $1,000.00 and pays tax of $350.00 on that income. There is $650.00 remaining to pay out as dividends. Suppose the company dividends $500 to shareholders. Given the present tax rates, the individual shareholders would pay a 15% tax on the $500.00 or a total of $75.00 in tax. So there has now been federal tax totaling $425.00 on $1,000.00 of income for an overall tax rate on that income of $42.5%!

There are some companies that are using what many of you might call loopholes to minimize their tax liability and perhaps we should focus on some of those situations instead of following the headline grabbing blabber of so called news organizations like MSNBC that simply distort the truth. Instead of jumping on their bandwagon, perhaps you should be telling them to get the facts straight.

Jim H - if your k-1 listed $3 million in income, and you paid personal taxes on that you still would end up seeing $2 million of it - unless your own company is cheating you out of the profits or you're deciding to invest the money in hiring new people - You do understand, I suppose - that you could lower those nasty taxes by investing that money into your company again? Right? I mean, expenses are deductible, right?

And people you hire will make you more money, right? (Unless you're REALLY doing something wrong)...

Ebeneezer,

Not necessarily. a K-1 may show $3 million of income but that does not mean that the business has $3 million of cash to distribute. Suppose for example that the business purchases new plant equipment for $2,000,000.00 and that expenditure is depreciable (i.e., deducted) over a 7 year period, $2 million of earnings was spend, but the expense deduction for determining the K-1 income is only $285,800.00, so one has the income, but not the cash.

I can haz proof raeding?

DingleB

From "Brigade of Accountants R US"......specializing in CPA's and other impotent bean counters.....

Great post Ding... I mean that. Seriously now I need a brigade of accountants (or at least ONE that is not a democrat hell bent on me paying way more than I should)!!!

Why doesn't President Obama just come out and say, "I'm returning to the Ronald Reagan tax rates?" All the ignorant righties would come out shouting, "Yippie!".....

...and then comes the news that Reagan's tax rate was 50%.

The rest of us can just sit back and watch their heads explode trying to decide whether to say something negative about Reagan, or figure out how to negatively spin Obama's decision.

Have a nice day.

shut yer yap.... shut yer yap!

Yap - keep on Yappin. Because the GOP (and that shill talking about him making $3 million in comment #1.33) keep on flappin' their pious bologna about how they pay too much in taxes and that they really make less money than the working stiffs out there, and that it's just envy for people who do better than we do...

Honestly, it has nothing to do with envy and everything to do with being pissed that the wealthiest classes get to pay NOTHING while the poor pay more than their fair share. Let's be honest - the GOP wants to tax the people flipping burgers at McDonald's and then blames them for not having the education to make themselves wealthy enough to not pay taxes or flip burgers - but they also won't help them get the money they need to get that education so they can become wealthy like them and pay no taxes...

Why? Because SOMEBODY has to pay taxes, and the GOP would rather that be the great unwashed masses out there instead of their own ilk.

Don't get me started on the Paulites. The Gold Standard? Austrian School? Deregulation on top of that? - Call me when the gold mine upriver from you starts dumping Cyanide in your rivers - or when the chemical plant working with heavy metals sells off part of its land to housing developers (Love Canal, anybody?). I mean - hell, what if Ohio decided to pass a state constitutional amendment saying all their sewage systems needed to spew directly into the Ohio river, because they wanted Kentucky and Indiana to deal with their @!$%#? That would be legal, per Paul.

Or how about a more realistic example? Virginia reinstates its old anti-miscegenation laws and arrests me and my wife while driving through because we're married. In an ideal libertarian world - that would be legal.

And don't get me started on the Gold Standard - there's a REASON the entire industrialized world went OFF of it...

This is really a non story. If we really want to get our panties in a twist, we need to look at the large multinational corporations engaging in transfer pricing, engineered losses and strategic capital investments.

There are trillions of dollars sitting offshore through those practices. Fraudulent LLC's are just the small fish.

What "loopholes" are you referring to? The fact is that there is no such thing as a tax loophole. The very concept implies that all money belongs to the government and that we are only allowed to have what the government permits us to have. I find that absolutely revolting and obscene and totally UN-American.

The fact is that Congress determines the rules by which they are going to calculate how much of our money they are going to take from us. I realize that people get upset that companies like GE don't pay taxes, but, in order to get to the bottom line of where they have no taxable income, they have to spend money on other things that Congress, in its infinite wisdom, has determined that they want companies to spend money on, even if it has nothing to do with what the company actually does. Companies buy and trade tax "credits." Can't blame the company, they are merely doing what Congress has encouraged them to do. Without Congress setting up those rules, companies would spend their money doing what is best for the company in terms of what it's purpose is. That being said, the reality is that Corporations don't pay taxes anyway, the customers of the companies do.

This article was really a much ado about nothing anyway. Only the ignorant and the phonies are upset because they don't understand or don't want to understand what goes on.

seriously,

yup, I mentioned that in my other post on this article. It isn't just transfer pricing that is the problem though, it is also the CG tax rate.

witchrunner, YOU ARE the government.

Only the ignorant and the phonies are upset because they don't understand or don't want to understand what goes on.

So which one are you?

Jonathan - You are exactly right. The choice of paying 15% vs 35% is no choice at all.

People in small business do not often understand their tax burden compared to large corporations.

That is exactly why tax and accounting courses are some of the most important classes a person can take.

It becomes more apparent when one understands how many CEO's often have degrees in accounting.

disabled,

Not sure if you read my other post, but in it I explain WHAT the impact of that tax rate disparity is.

@ Jonathan-1917156

Agreed!

I thought I'd stay away from the long-term capital gains tax since this article is simple about pass-throughs and that's more of a discussion of profits and paid-in-capital calculations.

In any sense, the tax-code is ridiculously complex and full of more holes and loops than Swiss cheese

AMoment, nowhere did TIDubai say he didn't like it. He just pointed out thatMSN once again printed this article leading the uinformed to believe corporations are not paying taxes. It's just more liberal propaganda. TIDubai probably makes a very good income. I suspect that comes from typical entrepenarial traits such as hard work and risking what he has to better himself and his family. I suspect that's what really bothers you.

AMomentary....you should apply as an obama spokesperson. Your attitude is perfect!

AMoment, Since I am American, the US is my country too. I was born there and my family has been there since the 1600s... and BTW the IRS will not let me move the IP out of the USA so I can't "get out" (not that I want to in any case). Do you have your own business.. it is not just a cake walk while earning millions as many seem to think.

amomentary sounds like he'd/she'd fit in well on the right/GOP.

AMomentaryLapseOfReason...

Be careful what you ask for. You never know, he might own the company YOU work for.

Wouldn't that be a pisser!!

TIDubai

Sure you can move the IP out. You set up another company outside of the US and you sell the IP to that company. That is how many companies in the US are facilitating the 'double dutch'. As an american citizen however, you still need to pay US income tax on your earnings.

Once again left and right buying the us against them. Koch industries is is not like the standard small S corp. but uses all the same tax credits and diversions. GE is multinational and uses the tax GAME as mandated buy the courts that PROFIT is the only reason for a corporation to exist. The System is set to keep small companies small and big companies growing profits. No SIMPLE fix. The start would Break up Multi-nationals so they exist only in their home country and have to form new companies in each country. Limit the size of an S corp. so companies LIKE Koch are sole proprietorships and the owners pay top tax rates or are public like Microsoft. Limit stock owner ship to a max of 30% on public companies. Then set a 10 year review of the changes. Last make corporate laws federal standard not by states. This ends raiders and assures the ability to collect taxes. .

Hate to break it to you, but there are just as many corporations that support the GOP that also engage in the same disgusting practices to lower their tax rates. This is an industry standard.

The problem isn't specifically Obama or Bush, this crap has been going on for almost 2 decades!

The problem is that we cannot get a politician in power that isn't owned by the large corporate lobbies.

Heck, we can't even get Congress to agree to be held to the same insider-trading laws as the rest of the country!

If you want to be angry at a specific entity, be angry at how corporations are allowed to lobby and essentially bribe politicians as they see fit.

Your anger is a little misdirected here. This story has nothing to do with the "corporate fat cats" you refer to. A lot of hard working small business owners structure their company as a pass through corporation. It's not considered fraud to have an LLC.

Maybe the large multinational corporations need to have regulations that are different from the regulations that govern independent small businesses.

One (Main Street?) helps our economy grow and provides jobs for American citizens. The other (Wall Street?) takes jobs offshore and takes profits from everyone.

Madison """"

You're right how is this fair....

Release: Tax Time? Not for Giant Corporations

Bernie Sanders

March 27, 2011

Sanders compiled a list of some of some of the 10 worst corporate income tax avoiders.

1) Exxon Mobil made $19 billion in profits in 2009. Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS, according to its SEC filings. (Source: Exxon Mobil's 2009 shareholder report filed with the SEC here.)

2) Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion. (Source: Forbes here, ProPublica here and Treasury here.)

3) Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS. (Source: Citizens for Tax Justice here and The New York Times here. Note: despite rumors to the contrary, the Times has stood by its story.)

4) Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009. (Source: See 2009 Chevron annual report here. Note 15 on page FS-46 of this report shows a U.S. federal income tax liability of $128 million, but that it was able to defer $147 million for a U.S. federal income tax liability of $-19 million

5) Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS last year. . (Source: Paul Buchheit, professor, DePaul University, here and Citizens for Tax Justice here.)

6) Valero Energy, the 25th largest company in America with $68 billion in sales last year received a $157 million tax refund check from the IRS and, over the past three years, it received a $134 million tax break from the oil and gas manufacturing tax deduction. (Source: the company's 2009 annual report, pg. 112, here.)

7) Goldman Sachs in 2008 only paid 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion from the Federal Reserve and U.S. Treasury Department. (Source: Bloomberg News here, ProPublica here, Treasury Department here.)

8) Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury. (Source: Paul Buchheit, professor, DePaul University, here, ProPublica here, Treasury Department here.)

9) ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2006 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction. (Sources: Profits can be found here. The deduction can be found on the company's 2010 SEC 10-K report to shareholders on 2009 finances, pg. 127, here)

10) Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent. (Source: The New York Times here)

Nice citation

There's well over 1 trillion dollars offshored by these cheating companies. And every year, they've been lobbying to "repatriate" that money with the promise that it will create more jobs.

It never does. Bush approved the last one and all these companies did was buy back stock and bought up smaller competitors so they could be come even less competitive

@Amunaka

You should definitely be pissed about all the things you listed but they have nothing to do with the article.

In fact, if all the corporations you listed were set up as "pass through" corporations (what the article is actually about) then their investors would be paying taxes at 35% on all profits, every year. There are a lot less loopholes in the personal tax code compared to corporate tax code.

To..Scubasteve""

Really ...

best government money can buy!!!

WAKE UP!!! Our democracy has been hijacked by the top 1%. thanks SCOTUS for Citizens united and thanks revolving door politicians, thanks A.L.E.C. and a special shout out to our elected officials since 1980 that have allowed industry to write legislation and pass it off as coming from congressional staffers.

Our democracy has been converted into a plutocracy... Congratulations on your coup corporate America and top 1%s.

AMF

Amunaka: Your citations are incredible, whether or not they have anything to do with this article. Your citations only substantiate the need for a somewhat graduated flat tax across the board......for EVERYONE! I have not researched your citations....are they really true? I hope you have made a mistake, but I fear you have not.

Notliborcon: I would disagree. The so-called 1% buys the corrupt politicians and both prosper to the point of regurgitation, but the so-called 99% has truly hijacked this country because they will never allow an honest politician (sorry for the oxymoron) to institute a fair tax across the board. When 40 -50 percent of the people in this country already pay no taxes, why would they vote for someone who will change their entitlement???

Someone once said (I think it was a French political philosopher) that once the people in a Democracy realize that they can vote the person in to give them entitlements and a free lunch, then that Democracy is over (rough translation). And the people at the lower end of the income spectrum know and understand this very well and will never vote for a truly fair tax if it means they will have to actually contribute something.

For the love of all that is right, please stop repeating this crap about people not paying taxes. I guess all haven't heard that the analysis was based on seniors and children? Are you idiots for real? And the 99% is the problem? Explain to me how that is possible? Personally, there is already a fair tax system. A progressive based tax system. It is progressive because the ownership of the assets (wealth) in this country is not the same. That is why taxes get higher if you make more. There is an assumption that you have a bigger piece of the pie then those under you. So, let's tax everyone at 50%. Everyone. For a family of 3 making 50k a year, would be devistating. But for someone making 200k a year, they will be perfectly fine. No where is it said that you have to have luxury. You are only afforded the opportunity to live, life, and liberty. So to assume anything else is ridiculous. Again, we already have a fair tax system in it of it self. It is certain practices and tax code injected that cater towards large businesses that are the problem and whom do NOT pay what they should. But yet, living people are expendable and should be completely drained... You all are funny, funny I tell ya.

we are a REPUBLIC!!!!!!!!!!!!!!!!!!!!!! not a democracy, 2 very different things. we never want to be a democracy cause that would be the end of freedom and the enslavement of american citizens.

hey king that notion that 47% of tax filers dont pay fed income does not include children or the elderly, if you have a job/recieve taxable income u file regardless. the tax code is far from "fair" so please go away you progressive follower.

KingJust627

You say that everyone has the opportunity to liberty.

Liberty (definition):

freedom from control, interference, obligation, restriction,hampering conditions, etc.; power or right of doing, thinking,speaking, etc., according to choice.

Sounds to me that your 50% tax suggestion pretty strongly affects the liberty of those with whom you wish to tax.

Madison From NY Sorry Madison. Tax laws haven't been changed in years. Not that your tea/Publicans friends aren't trying desparately to have multi-millionaires and Billionaires pay a LOWER tax rate then LOWER MIDDLE-CLASS tax payers pay now. The money that Romney has now was inherited from his father, who made it when the tax rate was 90%. Those corporate fat cats actually contibuted to the well-being of their employees. Corporate fat cats now, do everything in their power now to make employees lives miserable.

FDJLakers... I find your understanding of the US taxation lacking. 40-50 percent of the POOREST people in this country don't pay FEDERAL INCOME taxes. they pay every other tax (sales, local, state and FICA withholdings). A flat tax scheme would benefit the wealthiest in this country and hurt the poorest and middle/working classes. This idea has been floated by some of the most unqualified of politicians in a vain attempt to appease the upper class.

In addition, I find your comments offensive. You imply that 40-50 % of Americans would rather be unemployed than have a good job. In addition, most of the people we are speaking of in the 99% vote AGAINST their own self-interest due to being duped or by not critically thinking. The politicians use wedge issues (guns, religion, abortion, etc.) to fool these people into voting this way.

The only way to re-establish a government that is TRULY representative of the people (ALL OF THE PEOPLE not just the wealthy) is to institute publicly funded elections and get ALL private money out of politics. Until that happens we are beholden to those who have enough money to contribute (bribe) to our politician's campaigns. Democraps and Repugnicans are both pawns of the wealthy and corp america.

AMF

Technically, businesses only pay the taxes that they cannot first pass onto their consumers through the price of the product/service, and that is determined by the degree of competition in the market.

I agree. This article does nothing but demonize business owners through misleading journalism.

A102ndyh: I have an LLC and pay quite a bit of taxes! I don't know whether this article is trash or not....all I know is that I pay a heck of a lot and do not like it when I see large corporations such as GE paying nothing after making huge profits. But I differ from the liberal mentality because I also don't like the fact that 40-50 percent of the people in this country pay no taxes at all!

It seems that the top .05% and the bottom 50% don't contribute anything in taxes!

A102ndyh You must be doing something wrong. Their are US multi-National construction companies that have Government contracts and thousands of employees all over the world that file as a Sub-Chapter S and pay NO FEDERAL TAX. Someone made a comment in an earlier post about the 47% who pay NO FEDERAL INCOME TAX. I hope you know that in 2007 that 47% included more than 146,000 multi-millionaires, who most likely filed as a Sub-Chapter S.

I feel sorry for Tim.

Cygnus X-1, a stellar mass black hole

You can't argue with the truth, your petty deflection proves your inability to bring forth a valid point

Fitting name though; Black hole: A great void

Cygnus, The Solyndra debacle was an in your face example of the crony capitalism practiced by of the Obama Administration. Before you label me a racist, you should know that I voted for this President.

A black hole in Book I, but returns as 'Bringer of balance' in Book II. In efforts to better understand the person behind the 'I feel sorry for Tim' comment (insult), Rush lyrically embraced the duality of mans being, and Cygnus centered love and reason, heart and mind of man. Many who lack the imagination to be profound themselves, are profound through quotations of others.

Rocinante would be a better screen-name, as Cygnus has left the building.

I think the point you are missing is that people are upset because the company pays the money to their investors who shuttle it off shore so they don't have to pay the taxes either or enjoy special considerations from congress that allow them to pay very little taxes.

Just because someone has money in other countries does not mean they don't have to pay federal income taxes on any profits. Individuals must report ALL income on their individual tax forms. There are no "special considerations from Congress" in the individual tax code. Perhaps you need to check out some facts.

@Iowa Guy

Every company is required to report their distributions to owners. If the owners then shuffle the money off shore to avoid paying taxes then they are committing tax fraud and can be prosecuted.

I think you are demonizing S-Corps for basically no reason.

Iowa - Guy,

That may indeed happen, but I would guess the vast majority of these corporations are small "Mom and Pop" type companies where that does not happen.

It really is a mixed bag for the left here. They complain about something like this (without knowing the facts) but also want high returns (profitability from companies) on the companies that thier pension, and other retirement accounts are tied into... Be very carefull of what you ask for I say

Foreigners are not allowed to own shares in an S Corp. Once 1 foreigner owns a share, the corporation is considered a C corp by the IRS for tax purposes. This is designed to insure that all profits made by the corporation are taxed an cannot be hidden offshore.

STL mike

But an S-corp (actually LLC would be a more likely structure) IS allowed to own a foreign entity, which can then be used to hide profits. And the foreigner restriction is to make sure that the passed through individual pays income tax, a foreigner would fall under a different tax regime.

I don't agree. I tend to lean liberal, am not a fan of most of the GOP talking points and yet, I read the article as it was reported. And I didn't get all bent out of shape. The article mentions the corporations don't pay taxes but it does explain how they are later paid by individuals. I don't agree that it was misleading at all. Anyone that carefully read the article can see that. Granted the headline might be considered inflamatory but I'd think that conservatives would be happy about that. It actually got us liberals to read it thinking we'd have fodder to be up in arms about. But it explains the details which should ease some minds (like it did mine). If the headline read that "Corps don't pay taxes but pass the taxes on to the investors" then it might not get another look.

Those that get upset merely missed that information or chose to ignore it. Call them crazy libs if you like but I've seen it happen on both sides. Stubborn people (both democratic AND republican) read/hear/see only what they want to see. And you certainly won't change that about them if you simply label them as a nut job. That just makes them dig their heals in harder. Just consider how many readers saw the article and actually learned something but simply didn't rant on about their own political agenda. Not everyone that reads the articles actually posts a comment. Some just read, learn and move on...like I normally do.

I disagree!!

This is to insight the middle against needed changes.

A s-corp was designed for small business not companies like Koch ( not left or right statement but the largest example) I had an S corp and it helped my small business. The problem is the perversion of stated intent of many laws and a lack of oversight. The fact that Koch and many other $30 million and more companies fall into small business category is a sham!!! It so clouds the conversations!

You can buy the stock of any company in your Roth IRA and pay no taxes on dividends or capital gains.

Fred, that's pretty risky business. You can't put your closely held small business in any type of IRA without running afoul of the "Self Dealing" Prohibitions. Probably would violate the "Unrelated Business Income" rules as well. Sounds like a great way to get your IRA disqualified by the IRS.

Get some proffessional tax advice, or learn how to read. The reason you can withdraw funds from a Roth IRA without paying taxes is because you paid taxes on those funds when you put them in the IRA. It is not a tax avoidance scam, it is an opportunity (if the situation so warrants) to reduce your bracket when you need the funds.

Right now AMERICAN CORPORATIONS have over $2TRILLION hiding OVERSEAS that IS NOT being TAXED by the US GOVERNMENT.

@ Chuck-2258469

It's disgusting isn't it.

Best of all, these corporations report all of that money on their public filings as cash...even though it would be taxed through the nose if they ever brought it back to US shores.

I think that to stop the transfer pricing and Dutch/Irish sandwiching, we need to just change 1 simple line in the tax code for all corporate filings.

1. All cash must be reported net of encumbrances. For example, if your corporation has a 35% effective tax rate, and you have $20 billion overseas in a few Cayman Islands accounts and others disguised as royalties paid on patents your overseas division owns. You have to declare that cash (that is still constructively part of the company anyway) as $13 billion in assets and $7 billion as a deferred tax liability...NEAT!

There are 2 obvious reasons why companies engage in transfer pricing. It temporarily keeps their tax payments low and allows them to even engineer losses. That's how GE and Exxon both actually got multi-billion dollar tax rebates from the IRS instead of paying anything in federal income tax, while still being able to declare massive profits across the board.

Executives don't care that they're just temporarily monkeying with the numbers to show higher profits today in exchange for greater tax liabilities tomorrow. They've maxed out their bonus packages and will be out of the company before the money needs to come back to actually be of use...that'll be the next executive's problem.

Well, now the companies want to be granted a tax holiday because it is that NEXT executive's problem...and he wants his bonus too!

The "fair" tax is basically a modified VAT tax, or basically an incremental sales tax that travels all the way down the supply chain, taxing at each step of the transaction.

There are a number of problems and unique systematic gaps to this type of taxation as well. Look at how British and French companies structure themselves to avoid the tax at as many junctures as possible, which actually ultimately serves only to raise the cost of living for the poorest among them while the most wealthy import their consumption through unrecorded purchasing arrangements that act almost like smuggling rings while big business skirts the issue by manufacturing elsewhere and buying its own finished inventory from its "vendors" (which are basically constructively controlled by the businesses).

I'm not against a "consumption tax" to replace all taxes, but don't fool yourself into thinking that it's all rainbows and unicorn farts on the other side. It's a highly regressive tax.

The graduated tax system is actually quite equitable, the problem came with the advent of all of these new complexities and specialized deductions that the influential paid to have put in place.

You're right to be disgusted by crony capitalism.

My recommendation for personal taxation is the following.

1. Remove alternative minimum tax and follow the graduated tax system from the Clinton plan.
2. All capital gains (short and long) are taxed at 15% only when one's gross income is less than $250K/year. Above that, all capital gains will be taxed as ordinary income as a ratio of ones gross income in excess of $250K (e.g. if gross =$350K, cap-gains = $200K, then 350-250 = 100/350 = 28% * 200K = 56K of the capital gains is to be taxed as ordinary income, the remaining 144K at 15%)
3. Remove all itemized deductions except dependent care, qualified small business expenses, primary residence mortgage interest and health-related expenses when one's gross income exceeds $500K
4. Remove the income cap on payroll taxes.

There was no SCOTUS ruling that "corporations are people". That was made up by the leftys/progressives.

Google "Citizens United."

Although the wording "corporations are people" doesn't technically exists in the Supreme Court case, it does however, give corporations the same rights by law to fund elections as individuals.

All the Super Pac nonsense that is slinging mud everywhere, is the result of "Citizen's United."

Troy, what a load of crap you spout. I own one S-corp and partially own another one. The only reason for incorporation is to protect against lawsuits. And we pay one heck of a lot of taxes. Only a crook would drain a company dry and then file bankruptcy. I would close my businesses down before filing bankruptcy. For the one company I own, I do not draw any pay of any kind. For the one I partially own, I only make $17,000 a year - so come again with my frivolous lifestyle. Ignorant putz!

"Only a crook would drain a company dry and then declare bankruptcy?" Are you referring to Mr. Romney and his fellow private equity friends?

I have found no SCOTUS or other court ruling that "corporations are people", including the Citizens United. Perhaps you can find it.

To..Peter """

Then why did the SCOTUS bring up the first amendment in their ruling... on Citizens United.

Despite not being natural persons, corporations are recognized by the law to have rights and responsibilities like natural persons ("people"). Corporations can exercise human rights against real individuals and the state,^[2] and they can themselves be responsible for human rights violations. http://en.wikipedia.org/wiki/Corporation

Except for the fact that the penalties for individual who break the law cna include jail time and even life, but no company has ever been sent to the gas chamber....

Perhaps you should take a look at total data on income tax returns from the IRS:

2008 AGI: ...........Bottom 50%...50%-25%...25%-10%...10%-5%...Top 5%....Top 1%

Avg Tax Rate..........2.59%.........6.75%..........9.29%......12.44%.......20.70%.....23.27%

Share of Taxes.......2.70%........10.96%........16.40%......11.22%......58.72%.....38.02%

Min. AGI for Group...................$33.0K..........$67.3K.....$114.0K....$159.6K....$343.9K

You can always find a few returns that for a variety of reasons are variations from the averages. Look at the whole picture and you will find that those in upper income groups are paying a higher percentage of federal income tax revenue than ever in our history. It is the middle class and below who are getting away with paying less. Those in the large group of the bottom 75% of incomes paid only a mere 13.7% of federal income tax revenue in 2008.

To..Peter.."""

Paying less ...?

Corporate taxes are paid for by the consumer...CEO's obscene bonuses are paid for by the consumer...lobbying is paid for by the consumer.. profits are made because of and by the consumer..and we are all the consumers ....no getting around that ...

I took a look at that report and those returns you talked about included folks with extraordinary medical expenses and/or were heavily invested in municipal bonds which have tax exempt interest. Those both seem pretty logical to me as appropriate and not some special favors in the tax code. These S corporations are not giving big bonuses to CEOS. They are structured so that small business owners can pay taxes on their corporate profits on their individual tax forms. Both rates are about the same and the federal government does not loose any revenue as a result.

Peter17: Yes, the rich are paying more taxes due to the extreme more amount of money they are making about 90% of all the U.S. wealth Yes, the poor are paying less due to the extreme less amount of money they are making about 10% of the U.S. wealth. Those who are rich and not paying any taxes must have a new country they are planning to live in because the U.S. will no longer be viable! No country can survive without products to make money and people making money to pay taxes. It is a sad state that this country is in and will continue to spiral down with a "not me" paying taxes attitude.

Amunaka, please divide 10,465 by 4,500,000. That's the percentage of people considered "high income" earners. Here, let me help you, it works out to .0023 or .23% (that's less than 1/4 of 1%). Now google the term "outlier". So you've got your panties all in a knot over a minuscule statistically insignificant number of people that as Peter17 already pointed out were probably people with extreme medical bills.

Considering that they set the bar ridiculously low for being classified as "big money" at $200k, and having to pay for someone to go into a nursing home can easily cost almost half of that before even counting actual medical expenses, I'm surprised that this number is so low.

This is what trash articles like this are all about. Getting sincere, but gullible people to call for major changes to address problems that don't exist to further a political agenda.

How do you think so-called "nonprofits" make their money? Same kind of scam. Err I mean "scheme".

In reality this is how all corporate taxes should be paid. All corporations should be required to pass all profits on to the shareholders. Then the shareholders pay income tax on their income.

This arrangement would severely limit the power of a corporate lobby by making companies "non-taxable" and therefore not deserving of of any of the rights and privileges of a US Citizen. The rule changes that made corporations taxable also gave the same rights and privileges of a US Citizen (see the Citizens United court ruling) and this is why government is bought and paid for by corporations.

Graft is alive and well in Washington only today it's completely legal and doesn't involve any money under the table. Elections are so expensive that once elected a Congress person's main job is raising funds to run for reelection. In order to raise enough funds they all become beholden to the companies that spend huge amounts of money to elect people sympathetic to their cause. It's a bribe by any other name but legal by the laws we have today.

Try and get some perspective please! There is no easy fix and no matter what happens in Washington it will cost you more money. Until the states move to make some changes to the US Constitution you will not see any real solutions coming out of Washington, D.C. because the people you send out there do not answer to you.

It's what we do.

It would also severely limit a company's ability to finance investment in the company to ensure its future viability.

Oh and Koch industries is an LLC, certainly doesn't limit them.

What tax evasion? The tax is still collected at the personal level. Here's an even better idea - you should just sign over your entire paycheck to the IRS and then let them decide how much of your own money they will allow you to keep. That method would also prevent possible tax evasion.

btw, whatever happened to the concept of innocent until PROVEN guilty.