Probably very few. Do you think Australia does not benefit from the general peacekeeping that the USA does around the world? Who do you think makes all the military hardware that most western countries (in geography and philosophy) use? As another poster pointed out, the USA provides soldiers who are dying and being injured around the world in peacekeeping efforts that the rest of the world is not willing to participate in.
Again, you're welcome.
I think you should ask yourself some hard questions before rattling off why the whole world should be thanking the US for its "peacekeeping" efforts. Such as : Why is it that the vast majority of the times that the US military gets sent on its "peacekeeping" duties it always seems to be somewhere where oil is an issue ?
Why does the military hold such "influence" in policy decisions that a former president, #34 ... Dwight D. Eisenhower, a former US Army General, found it necessary, in his departing speech, to try and warn American citizens about the unhealthy amount of power and control of the Pentagon? To no avail, I might add.
what they are saying on plain English is "Do you want 5% of $1 Trillion or not?"
Any whining about how much they should or should not have been paying in taxes is irrelevant as they are only playing by the rules the assholes we voted into congress made for them. Making stipulations and conditions isn't going to work. The only question on the table is does the government get $50 billion or not? if the answer is "no" then don't ever whine about a damn thing concerning the budget again or come to me asking for more taxes or complain about the stuff we can't afford to fund becuse some business won't pay their fair share of taxes.
Gee, why are companies not hiring in the US, could it be 2nd highest taxes in the world that you think are too low? Inflated wages and labor costs? Highest risk of employee lawsuits? Burdensome regulations from the DOL and states? A president who blames businesses for everything government has done wrong? A president and his minions who promise to raise taxes in the future, increase benefits costs and make it even more expensive to have an American employee? The better question is why have corporations not laid more of us off and replaced us with off shore employees in countries that LIKE employers?
Why should any company keep more than a minimal staff in the US if they can do things cheaper and better with less risk in other countries? After you make every business pay what you have decided is their fair share, or leave, who is going to provide jobs and pay salaries? Where is the money for everyones retirement going to come from? Where will we get the money to buy all our imported goods? Who will the government tax to pay off the debt? Who will they tax to pay for wefare, medicare etc. for all the people who lost their jobs when the corporations left?
You want to stick your hands in someone elses pockets and take a chunk of their money, and you call THEM greedy when they try to stop it? Get a mirrror and get a clue.
I'll just respond to your first "fact".
According to you, the US has the "2nd highest taxes in the world". According to this link: http://en.wikipedia.org/wiki/List_of...centage_of_GDP .... there are over 50 countries that have higher taxes. If you're this far out on your first "fact" ..... there's no sense in responding to the rest of your "facts" .... unless you're willing to post links that back you up.
?Our philosophy is simple?You make money, we take a 30 percent share; when you make nothing, you keep 100 percent and we get nothing,? said Barak Obama, America's CEO.
Is that his new tax reform plan? I thought it was more like, "Our philosophy is simple?You make money, we take 100 percent; when you make nothing, we pay you as a disincentive to work."
According to you, the US has the "2nd highest taxes in the world". According to this link: http://en.wikipedia.org/wiki/List_of...centage_of_GDP .... there are over 50 countries that have higher taxes. If you're this far out on your first "fact" ..... there's no sense in responding to the rest of your "facts" .... unless you're willing to post links that back you up.
The US has the 2nd highest corporate tax rates. CORPORATE as in employers, your stats include individual taxes, VATs, tarriffs and other taxes. Since nearly half the US does not pay any federal taxes as an individual, yes the total taxes in the US are not near the top, but the combined federal and state statutory rate of roughly 40% is higher than any country other than Japan.
EDIT: Ooops, I was wrong, Japan has droped their federal rate in 2011, so the US is now #1
This study lists the effective tax rates, taking into account deductions and so forth. Worth a read if you think the current US system is letting companies off easy. The key point is a lower rate would INCREASE federal tax revenue, not lower it. The pie is not a fixed size!
The US has the 2nd highest corporate tax rates. CORPORATE as in employers, your stats include individual taxes, VATs, tarriffs and other taxes. Since nearly half the US does not pay any federal taxes as an individual, yes the total taxes in the US are not near the top, but the combined federal and state statutory rate of roughly 40% is higher than any country other than Japan.
This past year, ExxonMobil, Bank of America, and GE paid no federal income taxes, and they are hardly alone. Put that in your political pipe and smoke it.
You have no clue. If Apple sells products in your country they pay yopur government 32% tax on the profits earned in your country. This seems fair to most people and most countries. The US gov does not think so. They think Apple should pay Aussie taxes on Aussie profits AND US taxes on Aussie profits. Other countries do not do this, and for good reasons. It is insanely stupid.
Now Apple can leave their Aussie profits down under, or they can bring them back to the US and pay the US taxes on the already taxed profits. They have chosen to keep the money overseas. That is good for you in Australia, it is bad for the US.
Actually this is untrue.
The US has reciprocal tax agreements with almost every country including Australia.
If Apple leaves it's earnings in Australia it pays taxes to Australia.
If Apple brings those earning to the US it pays taxes to the US and doesn't pay Australian taxes.
No, it's isn't fair. Everybody (including corporations) should pay the same flat tax. And yes, these corps should pay the same amount when they bring the money back to the States even if they paid local taxes elsewhere. I wish I was saddled with 1/2 to 2/3 of 60 billion dollars. Greedy pricks won't bring the money back to the U.S. out of greed and nothing more.
In order to pay the current expenditures of the federal government a flat tax would have to be about 23%.
So in other words, a massive, destructive blow to 70% of the working population, virtually no difference to 28% and a huge benefit to 2%.
This past year, ExxonMobil, Bank of America, and GE paid no federal income taxes, and they are hardly alone. Put that in your political pipe and smoke it.
which year? 2009 or 2010? Durring a massive downturn companies can accrue losses that impact their tax bills for the current and future years. According to their 10Q's GE owed $1.6 billion in taxes through 9/30/2010 where they did not owe any through 9/30/2009. I wont bother looking up your other examples since I am sure I am not the one whose judgment is impaired by smoking stuff and reading too many factually inaccurate political blogs.
which year? 2009 or 2010? Durring a massive downturn companies can accrue losses that impact their tax bills for the current and future years. According to their 10Q's GE owed $1.6 billion in taxes through 9/30/2010 where they did not owe any through 9/30/2009. I wont bother looking up your other examples since I am sure I am not the one whose judgment is impaired by smoking stuff and reading too many factually inaccurate political blogs.
In order to pay the current expenditures of the federal government a flat tax would have to be about 23%.
So in other words, a massive, destructive blow to 70% of the working population, virtually no difference to 28% and a huge benefit to 2%.
The current tax rates don't come close to covering the current expenditures so that is not a fair comparison. Besides most flat tax proponents include a floor below which you do not owe tax so the poor and working poor would still not pay any tax. Under most plans we would have less than the current 47+% who owe nothing or get paid, but personally I find it completely indefensible to have a system where half the population can vote on spending but not contribute a penny in taxes. That is theft IMHO.
You also need to factor in the fact that many of the 2% are actually business profits passed through to the individual rates through S-corps, LLC's and other structures to avoid the double tax on earnings and dividends. Fixing the corporate tax code could take many of them out of the equation (or add more). Either way, tax cuts to businesses tend to benefit employees, customers and shareholders (401K's and pension plans) and therefore far more than the 2% would benefit.
Not to say I am a huge flat tax fan. I would propose a flatter tax system with fewer tiers, lower base rates but virtually no deductions (retirement savings and healthcare costs would be the only two I would allow). A lower rate with no deductions would hit the wealthy much harder since they are currently the best equiped to evade taxes by taking advantage of the loophole filled deduction system.
OK, so what exactly did Forbes say? Company financials are public on the SEC's web site. If they lie about or distort their tax expenses in their filings the CEO and CFO face jail time. Forbes can publish pretty much whatever they want to sell magazines and face no penalty, and people like you can misread or misinterpret what Forbes said based on your own bias with no penalty (not saying that happened but I don't know what you read so I don't know if what you believe they said matches). Hmm what source is most reliable?
Yes many companies go years without paying taxes, some because of special interest deductions, others because they have losses and NOL carry forwards, or because they are using techniques to DEFER the taxes to later years. You can carefully pluck a few companies at the right time and say they pay no tax, but I have a feeling if you look at the past 10 years, on average GE, BOA and most other companies did pay taxes when they were profitable.
Even Obama's debt commision said the corporate tax structure was a mess. They recomended a lower base rate and less deductions. Funny how fiscally educated people from both parties come up with the same answers but the uneducated partisans will fight the obvious truth tooth and nail because of idiotic political philosophies that are completely disconected from economic reality in a competitive global environment. You can stick to your political bias and ignorance, I stick with reality.
The US has reciprocal tax agreements with almost every country including Australia.
If Apple leaves it's earnings in Australia it pays taxes to Australia.
If Apple brings those earning to the US it pays taxes to the US and doesn't pay Australian taxes.
No, this is not how it works. The foreign tax paid is deductible up to the US tax rate, Australia still collects their taxes, and the company by treaty does not have to pay the same tax to the US as well, they only pay the difference.
The following is from a Harvard business professor (Mihir A. Desai) who knows what he is talking about
Q: Rhetoric aside, how do the U.S. tax rules for corporations work? And how do U.S. rules compare to how other countries tax their corporations on foreign profits?
A: While the overall picture is somewhat complex, there are several underlying principles that help explain it.
First, every country must decide whether it wants to tax its citizens, including its corporations, on their domestic or worldwide income. The United States taxes its citizens and corporations on worldwide income. As a result, when engine maker Cummins, for example, makes profits in Germany, its subsidiary pays German taxes, and the U.S. government retains the right to tax those profits as well.
Second, when the United States imposes its taxes on Cummins's German activity, the government provides some relief for the foreign taxes paid by Cummins to avoid double taxation of overseas profits. In particular, Cummins would receive credits for foreign income taxes paid, up to the U.S. statutory rate. In effect, this means that Cummins will ultimately pay a total of the U.S. statutory rate on its overseas activities in lower tax countries and pay the local rate in higher tax countries. One way to understand this is to say that the United States tries to top up the tax bill on lower tax country profits to the U.S. statutory rate and doesn't do this for profits earned in higher tax countries. This system is known as the foreign tax credit system.
Third, the United States only imposes this additional tax on foreign profits when those profits are returned to the United States, not when those profits are earned. This resembles the treatment of capital gains for individuals where capital gains taxes are only due when gains are realized rather than when they're accrued. As with individual capital gains, there is value in this ability to defer taxes, and this effectively reduces the tax burden on foreign profits. But, to receive the benefits of deferral, Cummins must reinvest the profits in active businesses as opposed to passive portfolio assets.
Finally, a number of significant corporate expenses that Cummins undertakes in the United States and that might otherwise offset its U.S. tax liability?such as interest expenses and some HQ expense?are allocated abroad so that they cannot be used to lower the firm's U.S. taxes. Because foreign governments, unsurprisingly, don't recognize these expenses, these deductions are effectively lost to Cummins. One way to analogize this is to imagine if a fraction of your mortgage interest deduction was disallowed, and that fraction reflected the number of days you spent abroad. Such a disallowance would increase your taxes and effectively puts a tax on you going abroad.
So, in effect, the United States operates a mishmash of a system that taxes worldwide income, provides partial relief for foreign taxes paid, imposes those taxes only upon repatriation, and forces firms to allocate expenses on a worldwide basis.
The major other alternative out there is to simply exempt foreign income from taxation or, said another way, simply tax corporations on their domestic income. Interestingly, the United States is increasingly an outlier in the way it tries to tax overseas income of corporations. The United Kingdom was the only really other significant country that tried so hard to impose taxes on foreign income; it is undertaking a serious reexamination of that now.
In terms of the political debate, the ability to defer U.S. taxation until profits are repatriated is often framed as providing an incentive to ship jobs overseas. On the other hand, the current worldwide system is often derided as making American firms uncompetitive relative to their foreign competition. So, there are easy ways to take political potshots at the current system from both sides.
OK, so what exactly did Forbes say? Company financials are public on the SEC's web site. If they lie about or distort their tax expenses in their filings the CEO and CFO face jail time. Forbes can publish pretty much whatever they want to sell magazines and face no penalty, and people like you can misread or misinterpret what Forbes said based on your own bias with no penalty (not saying that happened but I don't know what you read so I don't know if what you believe they said matches). Hmm what source is most reliable?
Yes many companies go years without paying taxes, some because of special interest deductions, others because they have losses and NOL carry forwards, or because they are using techniques to DEFER the taxes to later years. You can carefully pluck a few companies at the right time and say they pay no tax, but I have a feeling if you look at the past 10 years, on average GE, BOA and most other companies did pay taxes when they were profitable.
Even Obama's debt commision said the corporate tax structure was a mess. They recomended a lower base rate and less deductions. Funny how fiscally educated people from both parties come up with the same answers but the uneducated partisans will fight the obvious truth tooth and nail because of idiotic political philosophies that are completely disconected from economic reality in a competitive global environment. You can stick to your political bias and ignorance, I stick with reality.
Your first insult didn't work, so now you're trying another? Nice debating technique.
Yes, the corporate tax structure is a mess. That's precisely the point. A company can report substantial profits and pay far less than the book rate, nothing at all, and even have the government owe them money, because the tax code is full of special interest dodges and loopholes. At the beginning of this thread, I called this the dirty little secret of corporate taxes that nobody wants to discuss. I can see how true that turned out to be.
No, this is not how it works. The foreign tax paid is deductible up to the US tax rate, Australia still collects their taxes, and the company by treaty does not have to pay the same tax to the US as well, they only pay the difference.
The following is from a Harvard business professor (Mihir A. Desai) who knows what he is talking about
Q: Rhetoric aside, how do the U.S. tax rules for corporations work? And how do U.S. rules compare to how other countries tax their corporations on foreign profits?
A: While the overall picture is somewhat complex, there are several underlying principles that help explain it.
First, every country must decide whether it wants to tax its citizens, including its corporations, on their domestic or worldwide income. The United States taxes its citizens and corporations on worldwide income. As a result, when engine maker Cummins, for example, makes profits in Germany, its subsidiary pays German taxes, and the U.S. government retains the right to tax those profits as well.
Second, when the United States imposes its taxes on Cummins's German activity, the government provides some relief for the foreign taxes paid by Cummins to avoid double taxation of overseas profits. In particular, Cummins would receive credits for foreign income taxes paid, up to the U.S. statutory rate. In effect, this means that Cummins will ultimately pay a total of the U.S. statutory rate on its overseas activities in lower tax countries and pay the local rate in higher tax countries. One way to understand this is to say that the United States tries to top up the tax bill on lower tax country profits to the U.S. statutory rate and doesn't do this for profits earned in higher tax countries. This system is known as the foreign tax credit system.
Third, the United States only imposes this additional tax on foreign profits when those profits are returned to the United States, not when those profits are earned. This resembles the treatment of capital gains for individuals where capital gains taxes are only due when gains are realized rather than when they're accrued. As with individual capital gains, there is value in this ability to defer taxes, and this effectively reduces the tax burden on foreign profits. But, to receive the benefits of deferral, Cummins must reinvest the profits in active businesses as opposed to passive portfolio assets.
Finally, a number of significant corporate expenses that Cummins undertakes in the United States and that might otherwise offset its U.S. tax liability?such as interest expenses and some HQ expense?are allocated abroad so that they cannot be used to lower the firm's U.S. taxes. Because foreign governments, unsurprisingly, don't recognize these expenses, these deductions are effectively lost to Cummins. One way to analogize this is to imagine if a fraction of your mortgage interest deduction was disallowed, and that fraction reflected the number of days you spent abroad. Such a disallowance would increase your taxes and effectively puts a tax on you going abroad.
So, in effect, the United States operates a mishmash of a system that taxes worldwide income, provides partial relief for foreign taxes paid, imposes those taxes only upon repatriation, and forces firms to allocate expenses on a worldwide basis.
The major other alternative out there is to simply exempt foreign income from taxation or, said another way, simply tax corporations on their domestic income. Interestingly, the United States is increasingly an outlier in the way it tries to tax overseas income of corporations. The United Kingdom was the only really other significant country that tried so hard to impose taxes on foreign income; it is undertaking a serious reexamination of that now.
In terms of the political debate, the ability to defer U.S. taxation until profits are repatriated is often framed as providing an incentive to ship jobs overseas. On the other hand, the current worldwide system is often derided as making American firms uncompetitive relative to their foreign competition. So, there are easy ways to take political potshots at the current system from both sides.
I'd have to look into this.
I haven't done work for foreign clients outside the US, but I have been paid by foreign clients for work done in the US and for US clients for work done outside the US and in both cases I filled out IRS forms which absolved me of having to pay taxes to those countries because I was paying US taxes.
The current tax rates don't come close to covering the current expenditures so that is not a fair comparison. Besides most flat tax proponents include a floor below which you do not owe tax so the poor and working poor would still not pay any tax. Under most plans we would have less than the current 47+% who owe nothing or get paid, but personally I find it completely indefensible to have a system where half the population can vote on spending but not contribute a penny in taxes. That is theft IMHO.
You also need to factor in the fact that many of the 2% are actually business profits passed through to the individual rates through S-corps, LLC's and other structures to avoid the double tax on earnings and dividends. Fixing the corporate tax code could take many of them out of the equation (or add more). Either way, tax cuts to businesses tend to benefit employees, customers and shareholders (401K's and pension plans) and therefore far more than the 2% would benefit.
Not to say I am a huge flat tax fan. I would propose a flatter tax system with fewer tiers, lower base rates but virtually no deductions (retirement savings and healthcare costs would be the only two I would allow). A lower rate with no deductions would hit the wealthy much harder since they are currently the best equiped to evade taxes by taking advantage of the loophole filled deduction system.
If you set a floor at say $15,000, you'd need to raise the rate to about 28% to remain revenue neutral.
As far as S corps go, individuals using S corps generally pay themselves as low a salary as possible and take the residual business profit as dividends on which they pay their base rate, but DO NOT pay FICA which results in a savings of about 15%
If you set a floor at say $15,000, you'd need to raise the rate to about 28% to remain revenue neutral.
As far as S corps go, individuals using S corps generally pay themselves as low a salary as possible and take the residual business profit as dividends on which they pay their base rate, but DO NOT pay FICA which results in a savings of about 15%
Fica is capped at $107k no matter how you structure so there isn't really that much savings for most. The savings comes from paying one income tax rather than corporate income tax plus the dividend tax.
Comments
Probably very few. Do you think Australia does not benefit from the general peacekeeping that the USA does around the world? Who do you think makes all the military hardware that most western countries (in geography and philosophy) use? As another poster pointed out, the USA provides soldiers who are dying and being injured around the world in peacekeeping efforts that the rest of the world is not willing to participate in.
Again, you're welcome.
I think you should ask yourself some hard questions before rattling off why the whole world should be thanking the US for its "peacekeeping" efforts. Such as : Why is it that the vast majority of the times that the US military gets sent on its "peacekeeping" duties it always seems to be somewhere where oil is an issue ?
Why does the military hold such "influence" in policy decisions that a former president, #34 ... Dwight D. Eisenhower, a former US Army General, found it necessary, in his departing speech, to try and warn American citizens about the unhealthy amount of power and control of the Pentagon? To no avail, I might add.
Any whining about how much they should or should not have been paying in taxes is irrelevant as they are only playing by the rules the assholes we voted into congress made for them. Making stipulations and conditions isn't going to work. The only question on the table is does the government get $50 billion or not? if the answer is "no" then don't ever whine about a damn thing concerning the budget again or come to me asking for more taxes or complain about the stuff we can't afford to fund becuse some business won't pay their fair share of taxes.
Gee, why are companies not hiring in the US, could it be 2nd highest taxes in the world that you think are too low? Inflated wages and labor costs? Highest risk of employee lawsuits? Burdensome regulations from the DOL and states? A president who blames businesses for everything government has done wrong? A president and his minions who promise to raise taxes in the future, increase benefits costs and make it even more expensive to have an American employee? The better question is why have corporations not laid more of us off and replaced us with off shore employees in countries that LIKE employers?
Why should any company keep more than a minimal staff in the US if they can do things cheaper and better with less risk in other countries? After you make every business pay what you have decided is their fair share, or leave, who is going to provide jobs and pay salaries? Where is the money for everyones retirement going to come from? Where will we get the money to buy all our imported goods? Who will the government tax to pay off the debt? Who will they tax to pay for wefare, medicare etc. for all the people who lost their jobs when the corporations left?
You want to stick your hands in someone elses pockets and take a chunk of their money, and you call THEM greedy when they try to stop it? Get a mirrror and get a clue.
I'll just respond to your first "fact".
According to you, the US has the "2nd highest taxes in the world". According to this link: http://en.wikipedia.org/wiki/List_of...centage_of_GDP .... there are over 50 countries that have higher taxes. If you're this far out on your first "fact" ..... there's no sense in responding to the rest of your "facts" .... unless you're willing to post links that back you up.
Also, I pay well over 40% of my income to taxes, is it fair that I pay 45% while you pay 26%?
I wouldn't mind.
But seriously, a flat tax (the flatter the better) is probably in order. No deductions... at all.
?Our philosophy is simple?You make money, we take a 30 percent share; when you make nothing, you keep 100 percent and we get nothing,? said Barak Obama, America's CEO.
Is that his new tax reform plan?
I'll just respond to your first "fact".
According to you, the US has the "2nd highest taxes in the world". According to this link: http://en.wikipedia.org/wiki/List_of...centage_of_GDP .... there are over 50 countries that have higher taxes. If you're this far out on your first "fact" ..... there's no sense in responding to the rest of your "facts" .... unless you're willing to post links that back you up.
The US has the 2nd highest corporate tax rates. CORPORATE as in employers, your stats include individual taxes, VATs, tarriffs and other taxes. Since nearly half the US does not pay any federal taxes as an individual, yes the total taxes in the US are not near the top, but the combined federal and state statutory rate of roughly 40% is higher than any country other than Japan.
EDIT: Ooops, I was wrong, Japan has droped their federal rate in 2011, so the US is now #1
http://www.taxfoundation.org/files/c...1-20110117.pdf
This study lists the effective tax rates, taking into account deductions and so forth. Worth a read if you think the current US system is letting companies off easy. The key point is a lower rate would INCREASE federal tax revenue, not lower it. The pie is not a fixed size!
http://www.cato.org/pubs/tbb/tbb_62.pdf
The US has the 2nd highest corporate tax rates. CORPORATE as in employers, your stats include individual taxes, VATs, tarriffs and other taxes. Since nearly half the US does not pay any federal taxes as an individual, yes the total taxes in the US are not near the top, but the combined federal and state statutory rate of roughly 40% is higher than any country other than Japan.
This past year, ExxonMobil, Bank of America, and GE paid no federal income taxes, and they are hardly alone. Put that in your political pipe and smoke it.
You have no clue. If Apple sells products in your country they pay yopur government 32% tax on the profits earned in your country. This seems fair to most people and most countries. The US gov does not think so. They think Apple should pay Aussie taxes on Aussie profits AND US taxes on Aussie profits. Other countries do not do this, and for good reasons. It is insanely stupid.
Now Apple can leave their Aussie profits down under, or they can bring them back to the US and pay the US taxes on the already taxed profits. They have chosen to keep the money overseas. That is good for you in Australia, it is bad for the US.
Actually this is untrue.
The US has reciprocal tax agreements with almost every country including Australia.
If Apple leaves it's earnings in Australia it pays taxes to Australia.
If Apple brings those earning to the US it pays taxes to the US and doesn't pay Australian taxes.
No, it's isn't fair. Everybody (including corporations) should pay the same flat tax. And yes, these corps should pay the same amount when they bring the money back to the States even if they paid local taxes elsewhere. I wish I was saddled with 1/2 to 2/3 of 60 billion dollars. Greedy pricks won't bring the money back to the U.S. out of greed and nothing more.
In order to pay the current expenditures of the federal government a flat tax would have to be about 23%.
So in other words, a massive, destructive blow to 70% of the working population, virtually no difference to 28% and a huge benefit to 2%.
This past year, ExxonMobil, Bank of America, and GE paid no federal income taxes, and they are hardly alone. Put that in your political pipe and smoke it.
which year? 2009 or 2010? Durring a massive downturn companies can accrue losses that impact their tax bills for the current and future years. According to their 10Q's GE owed $1.6 billion in taxes through 9/30/2010 where they did not owe any through 9/30/2009. I wont bother looking up your other examples since I am sure I am not the one whose judgment is impaired by smoking stuff and reading too many factually inaccurate political blogs.
which year? 2009 or 2010? Durring a massive downturn companies can accrue losses that impact their tax bills for the current and future years. According to their 10Q's GE owed $1.6 billion in taxes through 9/30/2010 where they did not owe any through 9/30/2009. I wont bother looking up your other examples since I am sure I am not the one whose judgment is impaired by smoking stuff and reading too many factually inaccurate political blogs.
I read it in Forbes. Try again.
In order to pay the current expenditures of the federal government a flat tax would have to be about 23%.
So in other words, a massive, destructive blow to 70% of the working population, virtually no difference to 28% and a huge benefit to 2%.
The current tax rates don't come close to covering the current expenditures so that is not a fair comparison. Besides most flat tax proponents include a floor below which you do not owe tax so the poor and working poor would still not pay any tax. Under most plans we would have less than the current 47+% who owe nothing or get paid, but personally I find it completely indefensible to have a system where half the population can vote on spending but not contribute a penny in taxes. That is theft IMHO.
You also need to factor in the fact that many of the 2% are actually business profits passed through to the individual rates through S-corps, LLC's and other structures to avoid the double tax on earnings and dividends. Fixing the corporate tax code could take many of them out of the equation (or add more). Either way, tax cuts to businesses tend to benefit employees, customers and shareholders (401K's and pension plans) and therefore far more than the 2% would benefit.
Not to say I am a huge flat tax fan. I would propose a flatter tax system with fewer tiers, lower base rates but virtually no deductions (retirement savings and healthcare costs would be the only two I would allow). A lower rate with no deductions would hit the wealthy much harder since they are currently the best equiped to evade taxes by taking advantage of the loophole filled deduction system.
I read it in Forbes. Try again.
OK, so what exactly did Forbes say? Company financials are public on the SEC's web site. If they lie about or distort their tax expenses in their filings the CEO and CFO face jail time. Forbes can publish pretty much whatever they want to sell magazines and face no penalty, and people like you can misread or misinterpret what Forbes said based on your own bias with no penalty (not saying that happened but I don't know what you read so I don't know if what you believe they said matches). Hmm what source is most reliable?
Yes many companies go years without paying taxes, some because of special interest deductions, others because they have losses and NOL carry forwards, or because they are using techniques to DEFER the taxes to later years. You can carefully pluck a few companies at the right time and say they pay no tax, but I have a feeling if you look at the past 10 years, on average GE, BOA and most other companies did pay taxes when they were profitable.
Even Obama's debt commision said the corporate tax structure was a mess. They recomended a lower base rate and less deductions. Funny how fiscally educated people from both parties come up with the same answers but the uneducated partisans will fight the obvious truth tooth and nail because of idiotic political philosophies that are completely disconected from economic reality in a competitive global environment. You can stick to your political bias and ignorance, I stick with reality.
The above is the kicker. These corporations are claiming a 'social good' while keeping their options open. I wouldn't buy into that.
And isn't the purpose of paying taxes for the "social good"?
Actually this is untrue.
The US has reciprocal tax agreements with almost every country including Australia.
If Apple leaves it's earnings in Australia it pays taxes to Australia.
If Apple brings those earning to the US it pays taxes to the US and doesn't pay Australian taxes.
No, this is not how it works. The foreign tax paid is deductible up to the US tax rate, Australia still collects their taxes, and the company by treaty does not have to pay the same tax to the US as well, they only pay the difference.
The following is from a Harvard business professor (Mihir A. Desai) who knows what he is talking about
Q: Rhetoric aside, how do the U.S. tax rules for corporations work? And how do U.S. rules compare to how other countries tax their corporations on foreign profits?
A: While the overall picture is somewhat complex, there are several underlying principles that help explain it.
First, every country must decide whether it wants to tax its citizens, including its corporations, on their domestic or worldwide income. The United States taxes its citizens and corporations on worldwide income. As a result, when engine maker Cummins, for example, makes profits in Germany, its subsidiary pays German taxes, and the U.S. government retains the right to tax those profits as well.
Second, when the United States imposes its taxes on Cummins's German activity, the government provides some relief for the foreign taxes paid by Cummins to avoid double taxation of overseas profits. In particular, Cummins would receive credits for foreign income taxes paid, up to the U.S. statutory rate. In effect, this means that Cummins will ultimately pay a total of the U.S. statutory rate on its overseas activities in lower tax countries and pay the local rate in higher tax countries. One way to understand this is to say that the United States tries to top up the tax bill on lower tax country profits to the U.S. statutory rate and doesn't do this for profits earned in higher tax countries. This system is known as the foreign tax credit system.
Third, the United States only imposes this additional tax on foreign profits when those profits are returned to the United States, not when those profits are earned. This resembles the treatment of capital gains for individuals where capital gains taxes are only due when gains are realized rather than when they're accrued. As with individual capital gains, there is value in this ability to defer taxes, and this effectively reduces the tax burden on foreign profits. But, to receive the benefits of deferral, Cummins must reinvest the profits in active businesses as opposed to passive portfolio assets.
Finally, a number of significant corporate expenses that Cummins undertakes in the United States and that might otherwise offset its U.S. tax liability?such as interest expenses and some HQ expense?are allocated abroad so that they cannot be used to lower the firm's U.S. taxes. Because foreign governments, unsurprisingly, don't recognize these expenses, these deductions are effectively lost to Cummins. One way to analogize this is to imagine if a fraction of your mortgage interest deduction was disallowed, and that fraction reflected the number of days you spent abroad. Such a disallowance would increase your taxes and effectively puts a tax on you going abroad.
So, in effect, the United States operates a mishmash of a system that taxes worldwide income, provides partial relief for foreign taxes paid, imposes those taxes only upon repatriation, and forces firms to allocate expenses on a worldwide basis.
The major other alternative out there is to simply exempt foreign income from taxation or, said another way, simply tax corporations on their domestic income. Interestingly, the United States is increasingly an outlier in the way it tries to tax overseas income of corporations. The United Kingdom was the only really other significant country that tried so hard to impose taxes on foreign income; it is undertaking a serious reexamination of that now.
In terms of the political debate, the ability to defer U.S. taxation until profits are repatriated is often framed as providing an incentive to ship jobs overseas. On the other hand, the current worldwide system is often derided as making American firms uncompetitive relative to their foreign competition. So, there are easy ways to take political potshots at the current system from both sides.
OK, so what exactly did Forbes say? Company financials are public on the SEC's web site. If they lie about or distort their tax expenses in their filings the CEO and CFO face jail time. Forbes can publish pretty much whatever they want to sell magazines and face no penalty, and people like you can misread or misinterpret what Forbes said based on your own bias with no penalty (not saying that happened but I don't know what you read so I don't know if what you believe they said matches). Hmm what source is most reliable?
Yes many companies go years without paying taxes, some because of special interest deductions, others because they have losses and NOL carry forwards, or because they are using techniques to DEFER the taxes to later years. You can carefully pluck a few companies at the right time and say they pay no tax, but I have a feeling if you look at the past 10 years, on average GE, BOA and most other companies did pay taxes when they were profitable.
Even Obama's debt commision said the corporate tax structure was a mess. They recomended a lower base rate and less deductions. Funny how fiscally educated people from both parties come up with the same answers but the uneducated partisans will fight the obvious truth tooth and nail because of idiotic political philosophies that are completely disconected from economic reality in a competitive global environment. You can stick to your political bias and ignorance, I stick with reality.
Your first insult didn't work, so now you're trying another? Nice debating technique.
Yes, the corporate tax structure is a mess. That's precisely the point. A company can report substantial profits and pay far less than the book rate, nothing at all, and even have the government owe them money, because the tax code is full of special interest dodges and loopholes. At the beginning of this thread, I called this the dirty little secret of corporate taxes that nobody wants to discuss. I can see how true that turned out to be.
No, this is not how it works. The foreign tax paid is deductible up to the US tax rate, Australia still collects their taxes, and the company by treaty does not have to pay the same tax to the US as well, they only pay the difference.
The following is from a Harvard business professor (Mihir A. Desai) who knows what he is talking about
Q: Rhetoric aside, how do the U.S. tax rules for corporations work? And how do U.S. rules compare to how other countries tax their corporations on foreign profits?
A: While the overall picture is somewhat complex, there are several underlying principles that help explain it.
First, every country must decide whether it wants to tax its citizens, including its corporations, on their domestic or worldwide income. The United States taxes its citizens and corporations on worldwide income. As a result, when engine maker Cummins, for example, makes profits in Germany, its subsidiary pays German taxes, and the U.S. government retains the right to tax those profits as well.
Second, when the United States imposes its taxes on Cummins's German activity, the government provides some relief for the foreign taxes paid by Cummins to avoid double taxation of overseas profits. In particular, Cummins would receive credits for foreign income taxes paid, up to the U.S. statutory rate. In effect, this means that Cummins will ultimately pay a total of the U.S. statutory rate on its overseas activities in lower tax countries and pay the local rate in higher tax countries. One way to understand this is to say that the United States tries to top up the tax bill on lower tax country profits to the U.S. statutory rate and doesn't do this for profits earned in higher tax countries. This system is known as the foreign tax credit system.
Third, the United States only imposes this additional tax on foreign profits when those profits are returned to the United States, not when those profits are earned. This resembles the treatment of capital gains for individuals where capital gains taxes are only due when gains are realized rather than when they're accrued. As with individual capital gains, there is value in this ability to defer taxes, and this effectively reduces the tax burden on foreign profits. But, to receive the benefits of deferral, Cummins must reinvest the profits in active businesses as opposed to passive portfolio assets.
Finally, a number of significant corporate expenses that Cummins undertakes in the United States and that might otherwise offset its U.S. tax liability?such as interest expenses and some HQ expense?are allocated abroad so that they cannot be used to lower the firm's U.S. taxes. Because foreign governments, unsurprisingly, don't recognize these expenses, these deductions are effectively lost to Cummins. One way to analogize this is to imagine if a fraction of your mortgage interest deduction was disallowed, and that fraction reflected the number of days you spent abroad. Such a disallowance would increase your taxes and effectively puts a tax on you going abroad.
So, in effect, the United States operates a mishmash of a system that taxes worldwide income, provides partial relief for foreign taxes paid, imposes those taxes only upon repatriation, and forces firms to allocate expenses on a worldwide basis.
The major other alternative out there is to simply exempt foreign income from taxation or, said another way, simply tax corporations on their domestic income. Interestingly, the United States is increasingly an outlier in the way it tries to tax overseas income of corporations. The United Kingdom was the only really other significant country that tried so hard to impose taxes on foreign income; it is undertaking a serious reexamination of that now.
In terms of the political debate, the ability to defer U.S. taxation until profits are repatriated is often framed as providing an incentive to ship jobs overseas. On the other hand, the current worldwide system is often derided as making American firms uncompetitive relative to their foreign competition. So, there are easy ways to take political potshots at the current system from both sides.
I'd have to look into this.
I haven't done work for foreign clients outside the US, but I have been paid by foreign clients for work done in the US and for US clients for work done outside the US and in both cases I filled out IRS forms which absolved me of having to pay taxes to those countries because I was paying US taxes.
The current tax rates don't come close to covering the current expenditures so that is not a fair comparison. Besides most flat tax proponents include a floor below which you do not owe tax so the poor and working poor would still not pay any tax. Under most plans we would have less than the current 47+% who owe nothing or get paid, but personally I find it completely indefensible to have a system where half the population can vote on spending but not contribute a penny in taxes. That is theft IMHO.
You also need to factor in the fact that many of the 2% are actually business profits passed through to the individual rates through S-corps, LLC's and other structures to avoid the double tax on earnings and dividends. Fixing the corporate tax code could take many of them out of the equation (or add more). Either way, tax cuts to businesses tend to benefit employees, customers and shareholders (401K's and pension plans) and therefore far more than the 2% would benefit.
Not to say I am a huge flat tax fan. I would propose a flatter tax system with fewer tiers, lower base rates but virtually no deductions (retirement savings and healthcare costs would be the only two I would allow). A lower rate with no deductions would hit the wealthy much harder since they are currently the best equiped to evade taxes by taking advantage of the loophole filled deduction system.
If you set a floor at say $15,000, you'd need to raise the rate to about 28% to remain revenue neutral.
As far as S corps go, individuals using S corps generally pay themselves as low a salary as possible and take the residual business profit as dividends on which they pay their base rate, but DO NOT pay FICA which results in a savings of about 15%
If you set a floor at say $15,000, you'd need to raise the rate to about 28% to remain revenue neutral.
As far as S corps go, individuals using S corps generally pay themselves as low a salary as possible and take the residual business profit as dividends on which they pay their base rate, but DO NOT pay FICA which results in a savings of about 15%
Fica is capped at $107k no matter how you structure so there isn't really that much savings for most. The savings comes from paying one income tax rather than corporate income tax plus the dividend tax.