Corporations Don't Pay Taxes

[sluggish]

What is so hard to understand about that?  The ONLY people in this country that pay taxes are end users.  If you tax an industry they pass it on to their customers and their employees through higher prices and lower wages.  If you tax an industry to the point where they can no longer do business, they will move somewhere else.  Any "windfall profit tax" is just a tax on the end user.  Can anyone explain to me how a redistribution of wealth will help this country?

[Donzo]

Can anyone explain to me how a redistribution of wealth will help this country?

No, because it will not help at all. 

The only thing it accomplishes is it buys votes for the candidate promising such...and those stupid enough to fall for it end up looking for this kind of thing more often.

[rabbidrabbit]

There are those who argue that you should take money from those who have more of it to give to those who have less.  Personally, I believe in merit.

[bj229r]

As Obama said in an interview some months back, it's not so much about income for the gov't as it is about fairness. I don't agree with that point of view, but a lot of folks on his side of the aisle do, apparently. (AND, it plays well to the uneducated masses )

[sluggish]

There are those who argue that you should take money from those who have more of it to give to those who have less.  Personally, I believe in merit.

The fact of the matter is, if you take from the corps and they raise their prices, then the people who benefit give the money right back to the corps...

[eagl]

What do you mean, Corporations Don't Pay Taxes?  That makes no sense.

Look at any major corporation's SEC filings, and you can see right on their balance sheet what their tax liability is.  Every single company I profiled for my MBA had a nice fat tax liability every quarter they made a profit.  Every single company, every single quarter and year.  Profits to investors and retained profits were counted after taxes, not before.

Not only that, several companies that had been writing off assets in the past that are currently disallowed according to the latest standard accounting practices are having to pay back taxes.  In some cases, they're coughing up an awful lot of money.  When they originally filed making these loss claims, *everybody* including the IRS agreed that they were legit losses and expenses.  But now they're going back and paying up after re-calculating their balance sheets using a new set of rules.

The average person would revolt if the govt released a new set of tax laws and made every private citizen re-file their taxes for the last 10 years, but that's what these companies had to do.

Stating that companies pay no taxes is utter nonsense. 

For that matter, you have things exactly backwards.  Corporate earnings are taxed at least 3 times.  First, when the company makes the money. Second, through employee salaries.  Third, through both employee and corporate profits on investments.  You might say they're even taxed a fourth time through sales tax, which both individuals AND companies pay.

So companies pay taxes on earnings 4 times, not zero times like you say.  And sales taxes are also taxes on EXPENSES (or cash flow), not EARNINGS.  That's a bit like the govt taxing people extra for having a child instead of providing a credit like they really do...

[Donzo]

It's been posted before, but here's a good analogy about taxes and "fairness"

Suppose that every night, ten men go to their favorite bar for beer. The tab for all ten
comes to $100 for ten pitchers. If they paid their bill the way we pay our taxes, it would go something like
this:

    * The first four men (the poorest) would pay nothing.
    * The fifth would pay $1.
    * The sixth would pay $3.
    * The seventh $7.
    * The eighth $12.
    * The ninth $18.
    * The tenth man (the richest) would pay $59.

So, that’s what they decided to do. The ten men drank in the bar every night and seemed quite happy with the
arrangement, until one day, the owner threw them a curve.

“Since you are all such good customers,” he said, “I’m going to reduce the cost of your nightly tab by $20.”

So, now drinks for the ten only cost $80. The group still wanted to pay their tab the way we pay our taxes.  So, the first four men were unaffected. They would still drink for free.

But what about the other six, the paying customers?

How could they divvy up the $20 windfall so that everyone would get his ‘fair share’?

The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being ‘PAID‘ to drink beer!

So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:

    * The fifth man, like the first four, now paid nothing (100% savings).
    * The sixth now paid $2 instead of $3 (33% savings).
    * The seventh now paid $5 instead of $7 (28% savings).
    * The eighth now paid $9 instead of $12 (25% savings).
    * The ninth now paid $14 instead of $18 (22% savings).
    * The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once drunk and outside the bar, the men began to compare their savings.

“I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth man “but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than me!”

“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only $2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up at the bar, so the nine sat down and drank without him. But when it came time to pay the tab, they discovered something important. They didn’t have enough money  between all of them for
even half of the tab!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up to pick up the tab anymore.

[rabbidrabbit]

What do you mean, Corporations Don't Pay Taxes?  That makes no sense.

Look at any major corporation's SEC filings, and you can see right on their balance sheet what their tax liability is.  Every single company I profiled for my MBA had a nice fat tax liability every quarter they made a profit.  Every single company, every single quarter and year.  Profits to investors and retained profits were counted after taxes, not before.

Not only that, several companies that had been writing off assets in the past that are currently disallowed according to the latest standard accounting practices are having to pay back taxes.  In some cases, they're coughing up an awful lot of money.  When they originally filed making these loss claims, *everybody* including the IRS agreed that they were legit losses and expenses.  But now they're going back and paying up after re-calculating their balance sheets using a new set of rules.

The average person would revolt if the govt released a new set of tax laws and made every private citizen re-file their taxes for the last 10 years, but that's what these companies had to do.

Stating that companies pay no taxes is utter nonsense. 

For that matter, you have things exactly backwards.  Corporate earnings are taxed at least 3 times.  First, when the company makes the money. Second, through employee salaries.  Third, through both employee and corporate profits on investments.  You might say they're even taxed a fourth time through sales tax, which both individuals AND companies pay.

So companies pay taxes on earnings 4 times, not zero times like you say.  And sales taxes are also taxes on EXPENSES (or cash flow), not EARNINGS.  That's a bit like the govt taxing people extra for having a child instead of providing a credit like they really do...

Hes not saying they don't pay taxes.  He's saying they effectively pass that burden on to the customer via higher prices.  He is pretty much right however there is more depth to it than that.

[dmdchief]

Eagl
I think what he was getting at was the raising of the corporate tax rate, in that he said if you raise their taxes they will just pass along that tax to the consumer, which corps have done since the start.

[Carrel]

The current corporate tax rate maxes out at 35%. Under Obama's tax proposal it would remain at 35%...under McCain's tax proposal it (the maximum rate) would drop to 25%.

The statement "Corporations Don't Pay Taxes" is untrue...some of you need to educate yourselves before you make statements like that. Then again, because some of you DO make statements like that I always get a chuckle when I visit here.

 

[eagl]

Eagl
I think what he was getting at was the raising of the corporate tax rate, in that he said if you raise their taxes they will just pass along that tax to the consumer, which corps have done since the start.

Ah.  I didn't get that from his post...  Maybe the thread title led me to read his post from a different point of view.

The problem with not taxing corporations is that even in the absence of corporate taxes, companies will still charge as much as the customer will pay.  In the end, the entire market will charge just a tad more for basic necessities than the very lowest income people can pay.  That maximizes profit.  The poorest people declare bankruptcy or suffer degrading quality of life (or step up to the challenge and change their lives to earn more money), but the extra profit earned by selling stuff to the remaining 95% of the populace more than makes up for losing profit from that 5% who really can't make ends meet.

Increasing corporate taxes does result in shifting the tax burden right back to the population, however it gives the govt some cash to toss back to that 5% who couldn't afford to buy necessities no matter what the corporate tax burden is.

The problem in the US of course, is that not only are the bottom 5% (or whatever the poverty line is) getting welfare, about 20% of people ABOVE the true poverty line feel entitled to redistributed wealth so the tax rates creep upwards so the govt has enough money to throw to the entire bottom 25%.  Then special interests weigh in, with more than half of the country claiming some right to free money or services paid for by *someone else* (they don't really care who pays, as long as they get their free schwag).  What they don't realize is that they're paying for it themselves and dragging down the country, because the companies are still transferring the cost to, you guessed it, every single person above the true poverty line.

But in a capitalist society, there still must be some way to take care of the poorest people in the country, since product pricing schemes will always see maximized profit if they charge more than the poorest customers can pay.  Taxing the corporations theoretically passes the burden to people above the poverty line, but in practice we see people who have plenty of money to live on who claim a right to other people's money.  And the politicians get into, and stay in, office by promising to get everyone the slice of other people's money that they claim they deserve.

[Rash]

How fun would it be, If everyone had to write their own check each week for federal and state income tax?

[bj229r]

The current corporate tax rate maxes out at 35%. Under Obama's tax proposal it would remain at 35%...under McCain's tax proposal it (the maximum rate) would drop to 25%.

The statement "Corporations Don't Pay Taxes" is untrue...some of you need to educate yourselves before you make statements like that. Then again, because some of you DO make statements like that I always get a chuckle when I visit here.

 

You're not grasping the point that in the end, taxes to a corporation which creates things to sell to US, are an expense like labor, oil, delivery, etc to be figured in to the final cost of the product. SURE, they pay quarterly taxes, but only after WE give that money TO them by buying their product. Raise taxes on evil Exxon/Shell/Citgo...and gas will go up enough to cover that hit on their net

[Bronk]

How fun would it be, If everyone had to write their own check each week for federal and state income tax?

It would be great. People would actually feel the hit.

[Carrel]

You're not grasping the point that in the end, taxes to a corporation which creates things to sell to US, are an expense like labor, oil, delivery, etc to be figured in to the final cost of the product. SURE, they pay quarterly taxes, but only after WE give that money TO them by buying their product. Raise taxes on evil Exxon/Shell/Citgo...and gas will go up enough to cover that hit on their net

No, that is not true- business taxes are a tax on the profit a business makes, not the costs of doing business. Among those costs are labor, oil, and delivery but also stock dividends and bonuses- none which are currently taxed at the business level. Look at a balance sheet of most corporations and you will see a zero balance between credits and debits- it would be double taxation for a business to pay taxes before it pays a stock dividend as the stock dividend is the profit, and is taxed at the individual level. Profit is what's left after all expenses have been paid, including dividends, and most corporations make every effort to have a zero balance between credits and debits to limit their tax liability.

For a corporation like Standard Oil or Exxon the problem seems to be business has been too good, so much so they can't balance out at zero, so they pay taxes at a 35% rate (that's the maximum BTW) on what they can't write off- Obama's proposal is to keep the maximum corporate rate at 35%, McCain wants to drop it to 25%.