I told you…consequences of taxes..

from JoeUser Forums

Great article:  What the Top US companies pay in taxes.

The reader is meant to get fired up by the fact that these hugely profitable corporations aren’t paying Uncle Sam taxes.

Oh, they’re still paying taxes. Billions of taxes. Just not in the United States. That’s because companies liek Wal-Mart, General Electric, AT&T and so forth have overseas divisions and can have the profits show up in any of those countries – countries with lower tax rates.

How did this happen? It's complicated. GE's tax return is the largest the IRS deals with each year--some 24,000 pages if printed out. Its annual report filed with the Securities and Exchange Commission weighs in at more than 700 pages.

Inside you'll find that GE in effect consists of two divisions: General Electric Capital and everything else. The everything else--maker of engines, power plants, TV shows and the like--would have paid a 22% tax rate if it was a standalone company.

It's GE Capital that keeps the overall tax bill so low. Over the last two years, GE Capital has displayed an uncanny ability to lose lots of money in the U.S. (posting a $6.5 billion loss in 2009), and make lots of money overseas (a $4.3 billion gain). Not only do the U.S. losses balance out the overseas gains, but GE can defer taxes on that overseas income indefinitely. The timing of big deductions for depreciation in GE Capital's equipment leasing business also provides a tax benefit, as will loan losses left over from the credit crunch.

I’ve written before on this issue: The people who do stuff are in control.  If the government overtaxes them, they will find another way. 

This is why time and time again we have seen that when you lower taxes you see higher tax revenue. 

Read the whole article: What the Top US companies pay in taxes.

6,939 views 12 replies
Reply #1 from JoeUser Forums Top

I think one of the best examples of avoiding taxes was recently displayed in Great Britain.  There they are going to slap a large tax increase on everyone making over 200,000 pounds a year who also works in banking (I do not pretend to understand the British system).  The banks have offered to move all its top execs outside the country.  So not only will GB not get the revenue from the new tax, but they will lose a lot of revenue those rich guys are pumping into the local economy when they spend their money.

Reply #2 from JoeUser Forums Top

The banks have offered to move all its top execs outside the country. So not only will GB not get the revenue from the new tax, but they will lose a lot of revenue those rich guys are pumping into the local economy when they spend their money.
End of quote

Killing the golden goose. The US does it to some extent too with all the sin taxes.

TouchTasks - Access tasks with ease on Windows touchscreens.
Reply #3 from JoeUser Forums Top

Quoting Nitro, reply 2
Killing the golden goose. The US does it to some extent too with all the sin taxes.
End of Nitro's quote

Yes, and they sure knew how to kill the yacht industry.  reality is no deterrant to those on a mission.

Reply #4 from JoeUser Forums Top

I think one of the best examples of avoiding taxes was recently displayed in Great Britain.  There they are going to slap a large tax increase on everyone making over 200,000 pounds a year who also works in banking (I do not pretend to understand the British system).  The banks have offered to move all its top execs outside the country.  So not only will GB not get the revenue from the new tax, but they will lose a lot of revenue those rich guys are pumping into the local economy when they spend their money.
End of quote

It's a one-off tax which is actually the way to do that sort of thing - by making it 1-off it means people are highly unlikely to move country as a result, since it will only be for 1 year, and likely will already have happened before they have a chance to affect it by moving. The only danger is if the people it affects believe that it won't be a one-off but is a sign of more pain to come. IIRC the tax actually raised about twice as much money as expected.

Reply #5 from JoeUser Forums Top

by making it 1-off it means people are highly unlikely to move country as a result, since it will only be for 1 year
End of quote

We recently had a bozo in this state who was talking about not eliminating a temporary tax that had been instituted for a specific purpose.  Why?  It was only $1.  I have yet to meet a legislator (the one mentioned is a republican) who honored a pledge on taxes .  1 year will become many years.  Taxes are narcotics to politicians.  Once they get them they never let them go.  And if you believe it is for only 1 year, then the saying of a "fool and his money" applies.

I bet the tax is extended.  There will be another "crises" that requires it to be,

Reply #6 from Stardock Forums Top

This is why time and time again we have seen that when you lower taxes you see higher tax revenue. 

 

Somehow I doubt that any company that currently uses the Cayman Islands as its headquarters upon tax season will be inclined to pay more in the United States, even if tax rates are dropped. Many of the tax havens used by corporations are in places with taxation rates at zero percent, or near-zero. I don't think any corporation will want to pay any more taxes than they feel they can get away with, and I am certain the American corporate tax rates will not drop to near-zero or zero.

Reply #8 from JoeUser Forums Top

if you believe it is for only 1 year, then the saying of a "fool and his money" applies.

I bet the tax is extended.  There will be another "crises" that requires it to be,

End of quote

I doubt it will be extended. GB is heavily dependent (more so than most maybe even all other countries) on banking/the financial services. They'd have to be incredibly short sighted+stupid to carry it on in future years because it would virtually guarantee that the people affected would relocate, and unlike the US GB is much more expendable in terms of whether companies need to have a strong presence.

I wouldn't say it's impossible, but I do think it highly unlikely since no-one would benefit (in GB) from such a move.

Reply #10 from JoeUser Forums Top

Quoting aeortar, reply 8
I doubt it will be extended. GB is heavily dependent (more so than most maybe even all other countries) on banking/the financial services. They'd have to be incredibly short sighted+stupid to carry it on in future years because it would virtually guarantee that the people affected would relocate, and unlike the US GB is much more expendable in terms of whether companies need to have a strong presence.

I wouldn't say it's impossible, but I do think it highly unlikely since no-one would benefit (in GB) from such a move.
End of aeortar's quote

Well, this one is an easy one to revisit since it is only a year.  Want to bet a McDonald's shake on it?  We will see who is right: the optimist (you) or the cynic (me).

BTW: I agree with you on GB and banking - but when was the last time a politician did something smart that was also painful?

Reply #11 from JoeUser Forums Top

 

Well, this one is an easy one to revisit since it is only a year.  Want to bet a McDonald's shake on it?  We will see who is right: the optimist (you) or the cynic (me).

BTW: I agree with you on GB and banking - but when was the last time a politician did something smart that was also painful?

End of quote

http://news.bbc.co.uk/1/hi/politics/10374475.stm

Looks like I should've been more cynical - seems you were right about the tax being extended (albeit in a different form, a tax on 'risky assets' from the sound of it)! Interestingly though taxes for companies generally were cut and public spending is set to be cut dramatically (~25% in most areas I think) so I guess it's not quite as damaging as it could have been.

With various other European countries either in the midst of cuts or contemplating them to bring their deficits down it'll be interesting to see if the US follows suit or goes in the other direction.

Reply #12 from JoeUser Forums Top

With various other European countries either in the midst of cuts or contemplating them to bring their deficits down it'll be interesting to see if the US follows suit or goes in the other direction.
End of quote

Not with the current government.  The only thing that will bring sanity back to DC is if the Republicans take control of congress.  Then nothing will get done for the next 2 years - which is good.