Most companies in US avoid federal income taxes

[DREDIOCK]

"WASHINGTON (AP) — Two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, according to a new report from Congress.

The study by the Government Accountability Office, expected to be released Tuesday, said about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period.

Collectively, the companies reported trillions of dollars in sales, according to GAO's estimate."

Ok.
Whats the deal with this?
Somehow I get the feeling this is being spun.
I figure one of you brainiacs should be able to better explain it.

[trax1]

Yeah that doesn't sound right, how the hell are these companies getting away with having trillions in sales, but no federal taxes?

[Holden McGroin]

Now if I set up say a movie company and then set up another company that distributes movies, set up another one that rents cameras to my movie company, another one that insures my movie company, another that caters, one that processes film, an editing studio, I could conceivably come up with a few dozen companies, all of which I owned.

Then if all of these just broke even, except for one which was highly profitable, I could have say 19 of 20 companies which paid no income tax.

[lyric1]

Yeah that doesn't sound right, how the hell are these companies getting away with having trillions in sales, but no federal taxes?

There called accountants & lawyers. Watched a documentary some years ago about a legal scheme where corporations invested in a sewer system that was built by the ancient Romans & was still functioning. Because they took the money off shore to invest it was written off as a loss & did not have to pay tax.

[CAP1]

(Image removed from quote.)

Now if I set up say a movie company and then set up another company that distributes movies, set up another one that rents cameras to my movie company, another one that insures my movie company, another that caters, one that processes film, an editing studio, I could conceivably come up with a few dozen companies, all of which I owned.

Then if all of these just broke even, except for one which was highly profitable, I could have say 19 of 20 companies which paid no income tax.

a question on this chart?


i thought companies paid taxes on their gross income? just asking?

[Mickey1992]

i thought companies paid taxes on their gross income? just asking?

They do.  Exxon's gross income in 2007 was $70 billion.  They paid $30 billion in federal taxes, leaving a $40 billion profit.

[CAP1]

They do.  Exxon's gross income in 2007 was $70 billion.  They paid $30 billion in federal taxes, leaving a $40 billion profit.

duh........

i interpreted that chart to mean that they paid 28B in taxes on 39.5B profits........

sorry. i would have better understood it if it had shown the gross income, next to the taxes.

<<S>>

[Shamus]

We need to lower the corporate tax rate so we don't loose as much revenue.

shamus

[JoeA]

The overwhelming majority of US owned corporations not paying federal income taxes are small businesses.  If you look at corporations with $50+ million in revenue, the non-paying rate drops to 25-35%.  The non-paying rate goes even lower as company size increases.

The point of the study was to compare taxes paid by foreign owned US corporations (and the inherent transfer pricing) with US owned US corporations.

[ROC]

It used to be, not too long ago, that the State and Feds had to justify why they Took our money, not Us having to justify why we didn't give it away.

[Kuhn]

It used to be, not too long ago, that the State and Feds had to justify why they Took our money, not Us having to justify why we didn't give it away.

Ain't that the truth!!  Kinda like guilty until proven innocent.

[Captain Virgil Hilts]

You should also realize that many "corporations" are just individuals who "incorporated" for various reasons, SOME of them tax related. Many of them are just done to try to limit liability.

[bj229r]

Whether corporations pay actual taxes or not, consumers pay them in the end, as part of the price of their product. Any dumbarse who thinks he/she gonna sock it to corporations is just putting a bigger burden on the back of the buying public

[DREDIOCK]

Oops
forgot to include a link in the original post

http://www.nytimes.com/aponline/business/AP-Corporations-Income-Tax.html

Yes I know the article is printed in the NY times.
But it doesnt matter.
If you do a google search ont he titel of the thread you will see the same article printed in dozens of other news offerings

[Chalenge]

Well the reporter is really being disingenuous when he refers to LLCs as 'limited liability corporations' (or stupid). Thats the first clue. LLCs are a hybrid business entity that has traits of a corporation and a partnership (although some LLCs are closer to being sole-proprietorships) the benefits of which are limited liability and 'pass-through' income taxation. Pass-through in this case means the 'corporation' itself does not pay taxes but instead the owner(s) pay taxes when income is realized. This is a case where an agenda is masked but apparent too. The writer in this case is liberal (obvious) and wants LLCs to be paying double taxes (tax the rich is a common theme).

The political alignment of the current office holders within the Government Accountability Office can easily be surmised.

EDIT: I should also say that since this is an emerging area for new businesses that it is natural that liberals see this as a new source of 'appropriations' for redistribution.