Corporations Denouncing Citizenship

[guido911]

This is a funny-ish article calling out the patriotism of those companies that are taking their show on the road in order to avoid taxation.

http://www.thedailybeast.com/articles/2014/08/04/the-united-states-needs-corporate-loyalty-oaths.html

[RecycleMichael]

Your employees mostly work in America. The majority of your locations are in America. You take advantage of government loan programs and or tax rebates. You sell large amounts of goods or services to American government entities.

You say your headquarters is in a different country to avoid paying American taxes.

How is this not unpatriotic?

[heironymouspasparagus]

There are easy, straightforward solutions to this, just as illegal immigration.  But simple doesn't create the "motion of money" that is required to skim "10%" off the top....

[guido911]

Your employees mostly work in America. The majority of your locations are in America. You take advantage of government loan programs and or tax rebates. You sell large amounts of goods or services to American government entities.

You say your headquarters is in a different country to avoid paying American taxes.

How is this not unpatriotic?

Never equated paying taxes to patriotism. If that's the standard, 47% (or whatever that percentage is) of those in this country not paying federal income tax are traitors. Also, taking any position like this sounds too much like Crazy Uncle Joe...

[RecycleMichael]

Never equated paying taxes to patriotism. If that's the standard, 47% (or whatever that percentage is) of those in this country not paying federal income tax are traitors. Also, taking any position like this sounds too much like Crazy Uncle Joe...

You go from unpatriotic to traitors...quite a leap, but expected from you.

Please try and comprehend what I wrote...I know you can do it.

Individual taxes don't equate, in fact, many non-Americans pay federal income tax...look at international professional athletes.

Secondly, the individual who doesn't make enough money to pay income taxes are not performing any act to get out of taxes, they just don't earn enough. Most of them would be very happy to make enough to pay taxes.

Secondly, Individuals don't sell goods or services to the federal government. That was included in my above statement (you must have skimmed over that point). If they did, they would have enough income to pay and would probably willingly pay federal taxes.

Try and discuss what I wrote if possible.

Your employees mostly work in America. The majority of your locations are in America. You take advantage of government loan programs and or tax rebates. You sell large amounts of goods or services to American government entities.   

I believe if after all that you say your headquarters is in a different country to avoid paying American taxes, you are being unpatriotic.

[guido911]

I believe if after all that you say your headquarters is in a different country to avoid paying American taxes, you are being unpatriotic.

Thanks Crazy Uncle RM. I guess it never occurred to you, or Biden, or the clown that wrote that piece I linked to that maybe, just maybe, corporations would show some "patriotism" and not relocate if this country didn't (perhaps) have the highest corporate taxes in the freakin world. And BTW, did you read the article? It talked about disloyalty. I equate disloyalty and being unpatriotic as "traitorous". Sorry or got wadded up, though. You might want to change your avatar to this:

[RecycleMichael]

I am not offended. Your stance is consistent with your other views.

I am willing to pay to live in a better world. You must want others to pay for your world. If these corporations get out of paying billions, then the rest of us will need to pay more to make up the difference.

But you got yours.

[TheArtist]

Got to hear part of a story about this on NPR.  Some interesting statements.  Our corporate income tax rate is about double most other developed countries, though our effective tax rate is less (loopholes and special interest incentives etc.).  Lot of countries did have corporate taxes in line with ours, but over time have lowered those rates and.... increased the amount of taxes taken in.  Canada for instance, about halved their corporate income tax rate, simplified their corporate tax system, and get this.... now takes in more than the US.   US companies in order to compete globally MUST go after all the loopholes etc. they can which creates a culture of avoidance, otherwise they would be paying more than most other countries in the world, and would fail and or be taken over by companies from other parts of the world.   One complication they have to avoid, that other countries do not have or have to the extent the US does, is that US companies profits overseas are not taxed until they bring them back to the US.  Thus a trillion dollars plus, sits in overseas bank accounts.  The more money each company keeps accumulating in those accounts (again they must seek all the loopholes etc. they can in order to get their over all tax rate down to what their competitors more simply pay) the more incentives there are to not bring it back into the US but perhaps move headquarters as one example, over seas.

The US has one of the highest corporate tax rates in the world, then in order to get it down to competitive rates, they HAVE to avoid those taxes, and in order to do so they HAVE to navigate a super complex mess of incentives and loopholes.  One can see how the "line" on what is fishy or "not patriotic" can become blurred in such a situation.  Especially when corporations do think more globally, even thinking well, in order to be competitive and keep my US workers employed, I may need to merge with a smaller company and move headquarters over seas, lest I remain less competitive and be taken over by a larger over seas company who may not care as much about my US workers. (plus, shareholders, you and me, own some part of companies that are global as well, based here in the US and or and abroad) Would it be more patriotic to not be as competitive and  end up firing your US employees?  Is it unpatriotic to sell your company to a larger over seas competitor ( or immoral on your part as a US company to purchase an over seas company and move headquarters here thus making that company "unpatriotic" via their own country?)  

What Michael has set up is an extremely narrow example in order to perhaps steer the perspective/bias on the discussion in one direction.  What would the solution be?  Set up another loophole or incentive for those particular type companies, while leaving the same situation and mess for others, thus actually making things even more complicated for everyone?

I wonder if some companies overseas may actually have a different perspective on what's going on here.  Is it fair that this US company, now with it's headquarters in my country, can now pay less corporate taxes and still take advantage of US incentives and loopholes that I can not? That's giving this US company an unfair advantage to their US shareholders and workers who can now have more secure or higher income?

[heironymouspasparagus]

Never equated paying taxes to patriotism. If that's the standard, 47% (or whatever that percentage is) of those in this country not paying federal income tax are traitors. Also, taking any position like this sounds too much like Crazy Uncle Joe...

Still trotting out the same old lame lies and distortions....  don't they have some kind of continuing education requirements for lawyers?  Like learning a little something about reality....

Every purchase made by the bottom 47% - as well as subsidizing the upper 1% - pays federal income tax.

[Red Arrow]

Got to hear part of a story about this on NPR. ...  Lot of countries did have corporate taxes in line with ours, but over time have lowered those rates and.... increased the amount of taxes taken in.  Canada for instance, about halved their corporate income tax rate, simplified their corporate tax system, and get this.... now takes in more than the US.  

Get your frequency selector checked.  You must have been listening to FOX.  Either that or they were doing a spoof and the part you missed is when they said that.  Those schemes will never work.  Just ask anyone on this forum except Gaspar.

[AquaMan]

Stop making specious arguments. Puh-lease......Over 140 countries around the world use VAT, http://economix.blogs.nytimes.com/2010/04/19/value-added-taxes-a-primer/?_php=true&_type=blogs&_r=0, we don't. To compare our country to systems like the socialist Scandinavian countries, Korea, China, island nations, countries with thousands of years of development, middle east monarchies, countries with a fraction of our size and obligations, countries whose terrain is mountainous, jungles, etc is pretty ludicrous. But to use it to justify unpatriotic companies avoiding taxes is the worst spin.

Corporations have the same rights as a person, but apparently not the same obligations. If they do they need to pay up instead of hiding in the bushes with their ill gotten pieces of silver.

[cannon_fodder]

Sad fact:  we need tax revenue.  We have failing infrastructure, common education that is lagging our competition, health standards that are below our peer, welfare promises to keep (social security being by far the most expensive one) and a military addiction to pay for.  We consistently fight to keep personal tax low because people who earn money should get to keep it!  We fight to keep corporate taxes low because that's really just taxing people, even though corporations are separate and distinct people.

When we are short on money, we cut taxes.  That's worked out great for Kansas and for Oklahoma (both had budget shortfalls and cut taxes, both are now broke), and in fact just isn't supported by the data ever.  The theory that people will just stop earning money doesn't pan out - turns out if my effective tax rate is raised from 20%-25%... I'm probably going to still try to make as much money as I can.

When we want to cut individual taxes we point to places with low individual tax rates and shout THATS NOT FAIR!!

When we want to cut corporate taxes we point to places with low corporate taxes and cry THEY HAVE AN ADVANTAGE OVER US!

We totally ignore that revenue is revenue.  That Germany has a 50% effective personal tax rate and a 7% effective corporate tax rate...  SOMEONE is paying taxes in Germany and it turns out it's the Germans.

We can't have it both ways and be a modern world leader.  Be prepared, I'm about to use facts and logic...

1) The government needs tax revenue to operate.  

Even people who hate all government still want to fund the military and give billions to Israel every year.  So destroy the department of education, all social service programs, stop funding any infrastructure, destroy public health, and give up on any and all research, weather warning, disaster relief, etc.  We still need to bring in trillions of dollars per year to cover our government.  So we need taxes.

2) There are three principle sources of tax revenue
a) Taxes on people (income or sales tax)
b) Taxes on companies (corporate taxes or VAT taxes); and
c) Other minor revenue sources (use tax [you pay to get a passport], import tariffs, resources, etc.)

It is generally understood that use taxes are not workable in most governmental applications (you want to use our street lights, pay up!) and that tariffs do more harm than good.  Cotton is a great example, to support US Cotton we subsidies our American Cotton farmers and require American textiles to use American cotton or pay penalties.  As a result textiles were more encouraged to move overseas and we lost a WTO case and now subsidize cotton farmers world wide.  Messing with trade is usually bad.

Resource taxes are held steady and fiercely defended by industry - our resource taxes are the lowest in the world.  We dang near give our national resources away (Federally owned oil is extracted at a 16.67% tax rate, in Russia - which is experiencing an energy boom, the tax rate is nearly 66%).  Norway's oil taxes graduate from 22% to 78%... and they have been drilling for and pumping oil there for decades.  Timber.  Minerals.  Oil & gas (which has up to 1/3rd of production from Federally owned resources) is a huge potential for tax revenue from resources owned by Americans... but it would take a few billion in profits from corporations.  So that's out.

So that leaves taxes on PEOPLE and CORPORATIONS.  

PEOPLE:

People in the United States enjoy among the lowest effective tax rates in the developed world. The effective average tax rate, including social security, FICA etc., is just over 25%.  Our true competitors, Germany, England, France, Japan, Brazil India, are more likely over 40% than under 40%.  Germany and Denmark, which have vastly hire levels of wealth and standards of living than the US, have effective AVERAGE tax rates approaching 50%.  Our non-income tax rate caps out at $170,000.  Our income tax rate caps out at 39.6% for dollar one over $432,000.  EXCEPT if the money is from distributions or dividends, then the rate drops to 15% for most people, 0% for a few, and 20% for those earning "ordinary income" over $432,000 per year.  

In the United States the system is progressive for the middle class and the upper middle class.  They pay more taxes than anyone.  The wealthy, those making more than $1mil per year,  pay less than the middle class people - about 25%.  If you make more than $200 million in a year, you pay 20%.  If you are richer than that, you probably pay less than 15%.  The system is almost universally recognized as convoluted, too complex, loaded with special interest, inefficient, and stacked with odd loopholes that do not advance the national interest...  so naturally it will never be effectively changed.
http://opinionator.blogs.nytimes.com/2013/04/14/a-tax-system-stacked-against-the-99-percent/?_php=true&_type=blogs&_r=0

Compared to our peers, we can't argue that our personal income tax rates are too low.  


CORPORATIONS:

In the United States, corporations are people too.  In exchange for limited liability, access to capital markets, and perpetual life - corporations pay double taxation.  Once as the corporate entity, and then again when the profits are funneled to the actual persons who own it.  Like personal taxes our corporate tax code is simply a mess.  Loopholes that allow corporations with billions in profits to pay nothing in taxes, yet sees smaller companies with little profit paying high percentages in taxes.  The actual corporate tax rate has nearly no correlation to what taxes are actually paid.

The average effective corporate tax rate in the United States is 13.4%, the GAO says it is as low as 12.6% (http://www.forbes.com/sites/janetnovack/2013/07/01/gao-big-companies-paid-a-12-6-federal-income-tax-rate/) .  Again, this tax rate is well below most of our peers.  We are below Canada, Denmark, Japan, the UK, etc. etc. etc. for effective corporate income tax rate:

Yes, I linked to Wikipedia, who graphed Treasury Department data.  I'm not graphing it myself.  Data available.

Note than many of the countries below us on the income tax table, noticeably Germany, have effective personal income tax rates TWICE those of the United States. We'll come back to taht.

These tax rates have consistently plummeted over the last 60 years with the promise that lower rates will increase revenue.  That has consistently FAILED to happen:

the effective rate has gone down, down down.


The relative revenue brought in from the tax has also gone down, down down.  If we brought in as much revenue from corporate taxes as we did in the 1950's (in relation to GDP), we'd bring in $1 Trillion in corporate taxes, three times what we currently bring in.  That is an extra $600 billion in revenue.  Incidentally, our budget deficit for 2013 was $600 billion.  Corporate taxes didn't kill American competition in the 1950's or 1960's... in fact, that'st he period in which our brands went out and dominated the globe.

Meanwhile, profits have gone UP UP UP
Since 1990 - Effective tax rate cut nearly in half from 28% to present levels.  Corporate profits more than doubled  (not adjusted for inflation).  Yet Federal revenues only went up 30% (also, not adjusted).  Taxes down, profits up, but tax revenues are flat when adjusted for inflation.


Here is a list of corporations who paid ZERO Federal corporate taxes in 2013:
Verizon
Metlife
Seagate
News Corp (FoxNews)
Regeneron Pharmaceuticals
General Motors

In fact, 10% of US corporations on the S&P 500 list paid zero, in spite of profits.


TAXES ARE BAD.  They are not inherently good.  But they are necessary and SOMEONE has to pay them.  People and corporations are the two sources who pay taxes.  You can shift the burden around, but someone has to pay.  You cannot cry to cut corporate tax rates and NOT at the same time expect higher individual tax rates.

What's more, if individual tax rates rise you MUST expect that they rise on the wealthiest people.  If you take another $1,000 away from a person making $100k a year - he will certainly survive, but he will notice.  That 1% matters to him.  If you take another 1% away from the guy making $500,000,000 - he will not notice the $5mil unless he sees himself drop on the Forbes list.  And you can't take it away from the guy making $15k a year without upping his subsidies.

I have no strong stance on the issue.  The money comes from somewhere.  But I believe:

1) Some form of progressive taxation is the only way to raise revenue. The bottom simply cannot afford to pay as much, even by percentage, as the top.  It is not a matter of redistribution.

2) Corporations benefits from being "citizens" of the United States.  They are "people too."  They should pay taxes.  What's more, it allows the USA to indirectly tax foreign citizens and add to our wealth.

3) Lowering taxes does not increase revenue.  

So... let's talk.  Fix the system.  We need another $600 BILLION in revenue or spending cuts to break even.  Go for it with the fun game:
http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html

[Conan71]

Assuming "effective" corporate tax rates is the average of all corporate tax receipts to the U.S. Treasury, is that not the result of corporations avoiding paying top rates by shifting things like profits, profitable business units, and headquarters overseas and employing other avoidance measures to keep from paying that 35% corporate rate?

Lower it to 25%, get rid of the loopholes and other gimmickry and, using your numbers for the current effective rate, that would double corporate tax revenue into the Treasury's coffers.

That seems to be what Canada did in the NPR story The Artist was quoting:

Canada for instance, about halved their corporate income tax rate, simplified their corporate tax system, and get this.... now takes in more than the US. 

Or did I miss something in the translation?

[heironymouspasparagus]

Assuming "effective" corporate tax rates is the average of all corporate tax receipts to the U.S. Treasury, is that not the result of corporations avoiding paying top rates by shifting things like profits, profitable business units, and headquarters overseas and employing other avoidance measures to keep from paying that 35% corporate rate?

Lower it to 25%, get rid of the loopholes and other gimmickry and, using your numbers for the current effective rate, that would double corporate tax revenue into the Treasury's coffers.

That seems to be what Canada did in the NPR story The Artist was quoting:

Or did I miss something in the translation?

Nice fantasy.  As long as vested interests continue to buy the best Congress they can afford, it won't happen.



You voted for Inhofe in the past didn't you??

[Red Arrow]

PEOPLE:

People in the United States enjoy among the lowest effective tax rates in the developed world. The effective average tax rate, including social security, FICA etc., is just over 25%.  Our true competitors, Germany, England, France, Japan, Brazil India, are more likely over 40% than under 40%.  Germany and Denmark, which have vastly hire levels of wealth and standards of living than the US, have effective AVERAGE tax rates approaching 50%.  Our non-income tax rate caps out at $170,000.  Our income tax rate caps out at 39.6% for dollar one over $432,000.  EXCEPT if the money is from distributions or dividends, then the rate drops to 15% for most people, 0% for a few, and 20% for those earning "ordinary income" over $432,000 per year.  

Compared to our peers, we can't argue that our personal income tax rates are too low.  

Please investigate retirement benefits in those countries.  I believe they are far more generous than our Social Security.  My German friends did not worry about saving for retirement, at least they didn't in the mid 90s.

Social Security payroll taxes alone are 15% when your employer's contribution is counted.  Self employed?  You get to pay it all.  Single, no dependents, good luck with your 25% number.  I'm tired of subsidizing "your" kids with "your" income tax deduction.  I want a deduction for my airplane.