MOST companies in U.S. AVOID federal income taxes

Sales do not equal profits..maybe an accounting course would help.

$2.5 trillion = profits ........{ no accounting course required }

"It's time for the big corporations to pay their fair share,"

I agree.

IndependentVoter - 'Sales do not equal profits..maybe an accounting course would help. '

Maybe that is part of the problem. If you work for wages, taxes are taken out of your paycheck before you ever get it. Not after you've bought the groceries, payed the rent or mortgage, filled up the gas tank, and paid your bills.

So maybe it's not an accounting course we need, but a new accounting system.

$2.5 trillion = profits ........{ no accounting course required }

Please explain how corporate sales = corporate profits. I have seen any successful company that has no indirect expenses and a COGS of $0.

Maybe that is part of the problem. If you work for wages, taxes are taken out of your paycheck before you ever get it. Not after you've bought the groceries, payed the rent or mortgage, filled up the gas tank, and paid your bills.

So maybe it's not an accounting course we need, but a new accounting system.

Taxing individuals on their "profits" or savings rather than their expenses in certainly a novel idea.

Who would determine the maximum deductions for living expenses, and what qualifies as necessities and not luxuries? For example, I think that any costs for air conditioning and water heating are a luxury, not a necessity, and as such should not be a valid deduction.

In my opinion, this would just further complicate the tax code and create more avenues for abuse.

Roan - I really don't know what the solution is but could any system be more complicated or full of abuse than the tax system we have? I just think that what is 'good for the goose is good for the gander'. We just had a report published by the GAO than over 2/3 of the corporations that did business in and made BILLIONS in profits paid ZERO in income taxes. Some even received $BILLIONS in refunds from the taxpayers - this is outrageous! If we can't apply tax law consistently among people and across the various sources of income then maybe it is time to take a new look at tax priorities and systems to accomplish that.

While I know that the 'free-traders' out there might scream to high heaven, maybe it is time to reinstate tariffs as a major source of revenue - it worked pretty well for most of our history, or an income tax based on gross income - for individuals and for corporations. It might even mean a whole lot lower tax rates for everyone if it were apply equally across all income sources and their wouldn't be a need for complicated and arbitrary deductions.

greengal, while I do not pretend to know the solution either, I am certain we can easily create a come complex taxation schedule, which would lend itself to further abuse.

I definitely agree that a more simple and equitable tax system is a step in the right direction.

flat rate tax is the answer. Everyone and I mean everyone pays a 10% tax on the the money they make. This includes business and individuals. Very simple and we would have more money then we need.

I agree no loopholes.

Everyone and I mean everyone pays a 10% tax on the the money they make.

Even the widower with 2 small children living in abject poverty?

yes Her income would be low and her tax would be low but I beleive that everyone should contribute to the running of our country and that is where we got in trouble and now there are fewer supporting the country. If everyone had a stake in the country everyone would care more what happens.

Companies are not taxed on earnings, they are taxed on income.

Do you even know why this is the way it is?

No, you should not have said earned income. In simple terms, corporations do not pay taxes on earned income, they pay taxes on their net income.

When you are getting upset about something you obviously do not fully understand, then perhaps you should not be getting upset.

Your own words and attitude tell us that you do not understand.

Please, Nearing, prove to us that any of these companies did not pay their fair share like you are alleging.

Proof, please. Hard and conclusive proof.

When you have it, you will have a point. Until then you are assuming people to be guilty without proof, without a trial.

Roam I am beginning to think that you are just wanting to be argumentative for the sake of and the definition of net income is after all expenses, let me do that as an individual take my income and deduct all my expenses, electric, gas, travel, etc etc and I wouldn't have to pay taxes either.

MinnieApolis you are so right about Corporate Welfare and Roan is obviously one of them. I am done with this discussion because Roam has reduced this to I am smart and right and everyone else is dumb and wrong. So I will leave now.

No Sally, there is a very big difference between earned income and net income. Understanding the difference is not being argumentative. I thought we are here to get smarter?

If you submit a tax return, you do get to deduct certain expenses Sally. Just as with a corporation though, you cannot deduct every expense.

I see that you now feel entitled to pull the old "if you are not with me, you are against me" attitude. No, you are done with this discussion because you cannot get past your own personal biases and prejudices to get smarter. Sorry.

Hear, Hear !
{Meaning : A shout of acclamation or agreement. Originated in the British parliament in the 18th century as a contraction of 'hear him, hear him'. It is still often heard there although it is often used ironically these days.}

$2.5 trillion = profits ........{ no accounting course required }

That is the problem. People do not know the difference between profit and profit margin. In your case you do not know the definition of profit.

Pity.

When the GAO says they got away with something they shouldn't have {the guys with the accounting degrees} I tend to believe, it's not far fetched and they're lying. It's kinda like, the scientist that say we have to do something about global warming. Here's a nice profit margin calculator for anyone interested in the real numbers.

When the GAO says they got away with something they shouldn't have {the guys with the accounting degrees} I tend to believe, it's not far fetched and they're lying.

Please show us where the GAO reports says that they got away with something they shouldn't have. I have read the entire report, and nothing in it makes that claim. Who's lying now?

Here's a nice profit margin calculator for anyone interested in the real numbers.

Very nice indeed, but how does that in any way refute the fact that sales do not equal profits?

They don't have to say it. The use of the word abuse and manipulation does come up however. No claimed or zero tax liability is an obvious sham. It's not up to them, to change anything or prosecute, only to report what it believes to be happening. It's right there in governmental speak/accounting jargon. Anyone reading it and comprehending what they are seeing and them saying can work out a reason for change in the system and even prosecution if they could figure that out. Whether our government decides to do anything about this clearly blatant abuse of our system will be up to them change and for the rest of us to pay for.

First you said, When the GAO says they got away with something; but now you are saying, They don't have to say it.

First you claimed they said it, now you claim that they don't have to? Sounds like you are a tad confused.

The use of the word abuse and manipulation does come up however.

Yes, in relation to transfer pricing, not saying that they got away with something like you claimed.

No claimed or zero tax liability is an obvious sham.

So, in your esteemed opinion, GM's $39 billion loss in 2007, despite their $181 billion in revenue, is also a sham? Please prove your claims.

It's right there in governmental speak/accounting jargon.

We must have attended very different universities, because all I saw was plain English. Can you provide some examples of this alleged governmental speak/accounting jargon?

They did 'say it ' you're just not 'reading it'. Maybe, when the IRS finishes 'reading it' , they might have something, to 'say' themselves.
As far as transfer pricing is concerned, perhaps everyone should read this and judge again for themselves what they want to believe about the rest of their side of this story.
GM and friends, well there's another kettle of fish for yuh. These guys reeeally, know how to lose money. Let's all, bail them out too. But wait, they have lots of money, lets see now : $180 billion in revenue minus $39 billion loss = $141 billion dollars in PROFIT. Maybe they can make some better vehicles finally. But no, they'll take it at a loss or something and claim no tax liability.

More of everything you need to know, to rip-off the rest of us, transfer pricing website.

They did 'say it ' you're just not 'reading it'.

First they said it, then they didn't need to say it, now they 'said' it? My, my, my; what a story you are spinning. So, if they did 'say' it, please show us where and how they 'said' it?

As far as transfer pricing is concerned, perhaps everyone should read this and judge again for themselves what they want to believe about the rest of their side of this story.

It is very obvious that you had never heard of transfer pricing before this story. Please do educate yourself before attempting to educate others.

GM and friends, well there's another kettle of fish for yuh. These guys reeeally, know how to lose money.

Now here you are admitting that they are losing money; that is not making a profit.

But wait, they have lots of money, lets see now : $180 billion in revenue minus $39 billion loss = $141 billion dollars in PROFIT.

You have to be kidding right? Please.

Let me repeat your claim so that we are clear:

inEden wrote: $180 billion in revenue minus $39 billion loss = $141 billion dollars in PROFIT.

You have just attempted to take then bottom line of an P&L statement and added it to the top line. Seriously, you have no idea what you are talking about. Your statement is not even mathematically correct. A loss is a negative number, and when you subtract a negative number from a positive one, you are adding to it. Simple mathematics really. +180 subtract (or minus) -39 actually equals +219. So your claim is that GM really made a $219 billion profit last year? Really? Care to prove that somehow?

Roan, if you think the GAO accountants didn't do this study correctly, then take it up with them. I am sure theywould be glad to compare credentails with you.

There is nothing in my comment that says I think the GAO accountants didn't do this study correctly. Do you even know why the study was requested?

There is nothing in this article that supports what you are saying.

Correct, but the full GOA report does. Perhaps you should actually read it?

A flash..if expenses exceed income..no profit..no tax...

Have you even read the report Nearing?

45.1% of corporations declared no tax liability in all years.
60.9% of corporations declared no tax liability in 1998.
66.7% of corporations declared no tax liability in 2005.

Declaring no tax liability can mean that they are creatively accounting their income. As a matter of fact, that sounds exactly like what they are doing.

It certainly can, which is why it is one of the flags the IRS uses to determine which returns to audit. However, despite your personal opinion, it it not proof of anything.

If you are trying to tell us that 67% of all companies in the US in 1998-2005 kept going with no profit, I think you a re naive.

You are still claiming that 67% of all companies in the US in 1998-2005 kept going with no profit, which means you are now purposely spreading incorrect information. Why? What is your agenda?

If you are trying to tell us that 67% of all companies in the US in 1998-2005 committed tax fraud conspiracy and/or evasion, I think you are ignorant.

Roan & Nearing: you two are arguing apples and oranges. Roan, you are arguing that this is legal, and it is. that does not make it legitimate, moral, responsible, or anything else; just legal.

Nearing, you are arguing that this is not legitimate nor moral; whether or not it is legal.

Large and Multinational corporations have been able to use loopholes in the tax laws, and get their own deductions / exemptions written in for years. This is nothing new. It is going to continue until someone realizes we need a deductionless, exemptionless, exceptionless but progressive tax system; eliminate the "gaming" whereby companies push either their costs or their profits into other years through accounting tricks; move expenses or income to other countries for tax benefits; etc. And please realize that we do not exist in a vacuum - other countries have specifically written their laws to take advantages of loopholes in ours.

Laws are just another game to them, allowing them to push off their costs to other people. That's ultimately, what needs to be stopped.

Roan, you are arguing that this is legal, and it is. that does not make it legitimate, moral, responsible, or anything else; just legal

I will have to respectfully disagree with that Eriq.

All I am arguing against is the incorrect assumption that the study in question shows that the vast majority of companies are not paying the taxes that they rightfully should. It does not. It is being misunderstood and/or misrepresented.

How can you have, $2.5 trillion dollars in sales {the only thing they end up, having to show} and not have profit from those sales

Ummm... very easily actually. Why can you not understand that sales reenue less COGS and indirect expenses equals profit? When the COGS and expenses exceed the sales revenue, you have no profit.

lIf it's true {which it's not} they should be out of business, like our big three auto manufacturers and a bunch of others.

If it is not true, please prove it.

Take GM last year as an example. Last year GM saw $181 billion in revenue, but posted a $39 billion dollar loss. See, sales do not equal profits. Simple accounting really.

Exactly why have a business if you are not making any money everyone knows this is bull.

Yes, if you think that every business makes a profit every year you are full of bull.

American public already that they can not afford to shop anywhere other than Wal-Mart.

I had a response to this, Nearing, but it is so long it turned into an editorial. Hope you don't mind, but I took the liberty of linking back to your column and also to this thread since this thread was the impetus for the sermon. LOL!

We may just have to make some sacrifices to wrestle our country back away from these people and issue new marching orders to Washington, letting them know there has been a change in the command structure.

Despite your apparent ignorance of simple accounting and mathematics, this is not a political issue.

Yes, numbers can certainly be manipulated, but if that is what you would like to claim; you first need to offer some proof.

Unfortunately, at this time all you have appeared capable of doing is making unsubstantiated allegations and displaying a complete lack of understanding basic accounting principles.

this is not a political issue

This should be a political issue, especially after Enron.

Yes, numbers can certainly be manipulated, but if that is what you would like to claim; you first need to offer some proof.

Fortunately, I don't have to. I'm no accountant, IRS agent or prosecutor. But it's obvious to me and a lot of people {as in the article} that they are hiding behind a loophole in the law, that allows them to abuse and manipulate. Anyone else, can plainly see, that those that prefer to take advantage of the rest of us, or use the system this way are just criminals and liars. If you choose to manipulate, or abuse, or even refuse to understand this example, go right ahead. You can justify their, or your reasons to yourself, but not to me.

On the other hand, if our elected officials choose not to do anything about this, as they are oft. to do,

we are all, left to pay for it.

Fortunately, I don't have to.

Unfortunately, if you expect anyone to take your histrionics seriously; you do need to prove proof for your claims. See, I could allege that you are a blithering idiot; but without proof my claims are rather useless.

I'm no accountant, IRS agent or prosecutor.

Your apparent ignorance of simple accounting and mathematics has made that painfully obvious.

But it's obvious to me and a lot of people {as in the article} that they are hiding behind a loophole in the law, that allows them to abuse and manipulate.

Please explain to us this loophole that you mention.

Anyone else, can plainly see, that those that prefer to take advantage of the rest of us, or use the system this way are just criminals and liars.

Please cite the law that these criminals have broken.

If you choose to manipulate, or abuse, or even refuse to understand this example, go right ahead.

You have not supplied any example, just more unsubstantiated allegations.

Roan Spoken like a true business person that found the loop holes that do not exist.

Found the loop holes that do not exist?

Can you please explain how one can find something that does not exist?

you cannot find what you don't want to find especially if it benefits you. Then is is a benefit not a loophole.

If it exists, please show me what specifically I have missed, loophole or benefit.

As a working person almost all deductions were eliminated from the Federal Income tax code such as deduction of interest paid except for my home, property taxes only allowed on my homestead not my cabin up north, many work related expenses removed, but for every elimination of tax credit for working people things were added to business like credits for hiring immigrants, credits for hiring minorities and deductions for expenses like interest, property taxes on all real and personnel property.

I think that for every 100 dollars made by business they pay less in taxes then the same 100 dollars made by working person, at least that seems to be supported by the article. Those are benefits for business are loopholes as far as I am concerned. Give me back those deductions and credits taken away and I would be less resentful of business breaks. But it appears to me that the people in this country through its government needs to bribe business to be in business and guarantee that they make a profit, but the working class has no guarantees and those few benefits acquired by contract such as pensions and health insurance are fading fast. Violate a contract with business and the business will be protected by the courts, violate a contract with workers and the business will be protected by the Courts.

This goes also to bankrupcy laws that wipe a business clean and they change a name and open the door again. Like K-Marts who was allowed by the bankrupcy courts to cancel thier stocks leaving a lot of people with a lot of wall paper, turned right around and was allowed to reissue stocks thumbing their nose at the world. This is a loophole in my opinion. Take Bankrupcy for individuals and it is a payment plan not a wipe it clean program.

As a working person almost all deductions were eliminated from the Federal Income tax code

As a working person, I take a lot of deductions on my Federal tax return each year. Funny that you claim almost all deductions were eliminated. Reality does not support your claim.

I think that for every 100 dollars made by business they pay less in taxes then the same 100 dollars made by working person

You think?

Violate a contract with business and the business will be protected by the courts, violate a contract with workers and the business will be protected by the Courts.

Do you have any proof of this claim?

Take Bankrupcy for individuals and it is a payment plan not a wipe it clean program.

Perhaps you are no aware of a Chapter 7 bankruptcy which applies to both individuals and corporations. It is not a payment plan. Once again reality does not support your claims.

Nearing,

All I am seeing is idiotic claims without any proof. Do you have some proof to offer?

I see you are unable to cite the law that the alleged criminals have broken.

You also appear unable to explain the alleged loophole.

As such, all you appear capable of doing is continuing to make unsubstantiated allegations. In fact at this point, I strongly suspect you do not have the slightest clue about what you are claiming.

Cite the tax code that they have violated. Simple stuff.

With a loophole in the tax law, it's obvious to everyone else

but,

those who continue to exploit it or are happy with the status quo.

Simple Stuff !

Main Entry: ¹loophole
Pronunciation: \ˈlüp-ˌhōl\
Function: noun
Etymology: ¹loop
Date: 1591
1 a: a small opening through which small arms may be fired b: a similar opening to admit light and air or to permit observation
2: a means of escape; especially : an ambiguity or omission in the text through which the intent of a statute, contract, or obligation may be evaded

The only thing that is obvious, is that you do not have the fainest clue regarding the subject your or ranting about. If you did, you wouldn't be ranting and you be able to answer all the question you have thus far attempted to ignore. If it was such simple stuff as you claim, you would be able to have a normal discussion without having to resort to vague histrionics. Until you can explain the loophole you keep alleging, by specifying the ambiguity or omission that is creating the alleged loophole, you behaviour is nothing more than that of an ignorant troll

Cite the loophole.

yea like Anderson Accounting did for Enron and others. Unfortunately the real world has little in common with what you are learning so be ready when you find a job with a corporation what you will be asked of you.

There is little you will find that is done the way you are bein g taught.

Yes in class we debated the ethics of companies like Anderson, but, you still have to realize we HAVE to obey the law.

Accountants loose their jobs frequently because they would NOT do questionable numbers because the law will come down on them more than just loosing a job.

What is it that you are saying that is wrong with what I am being taught?

Are you an accountant?

I say what you are being taught is right, but is not what you will encounter in the real world. I am not an accountant, but I have work in the business world and at an university for 50 years and I have seen a definite change in the process. I am told that we are changing accountants to one that is more liberal or one that is more conservative and it amounts to the lea-ways or not that they take with the rules.

At the time Anderson was considered the best Accounting firm in the Country until they got discovered and they probably never would have if it hadn't have been for the collapse of Enron.

Remember what you have been taught and go where they want you to use what you have been taught instead of getting involved in creative financing.

Exactly what my instructors say.

Great advise.

KB, yes it does.

But it is food for thought.

We really need to work on the tax code. It's not just business, but individuals that need to pair their fair share....

oops, 'Pay their fair share.....'

Roam,

The only way you can chapter 7 is if you have no job or assets accept a home. I have a family member because of this crazy economy filed and he had a small savings and a job so he didn't qualify for chapter 7 even though he had medical bills several thousand dollars more then his little bit of savings. He is still on the payment plan. If he was a business it would have been his creditors taking 10 cents on a dollar and off the hook. Close the doors close the books and open the next day under a different name can even be the same location if it was not part of the corp.

And since I don't know anything about you its good for you to have all those deductions but wonder how many of them have to do with rental property, in home office, etc. With my income I have been unable to file long form for several years so lose my charitable contributions, my home taxes etc etc. But I still have to pay taxes on my Social Security which for the most part of my working life was considered a tax until the government needed to brough without repayment it for one thing and another then they changed the status so the last few years of my work life it was a contribution to an entitlement. Another loophole.

But what happens if I don't pay that same tax? I go to prison. Sounds fair.

What do you think happens when corporations commit tax fraud conspiracy and tax evasion? The people responsible pay heft fines and/or are imprisoned. Yes, that does sound fair to me.

The only way you can chapter 7 is if you have no job or assets accept a home.

Utter nonsense. Please stop spreading misinformation.

Close the doors close the books and open the next day under a different name can even be the same location if it was not part of the corp.

It is nowhere as easy as you are pretending. You obviously have never taken a corporation through bankruptcy.

With my income I have been unable to file long form for several years so lose my charitable contributions, my home taxes etc etc.

Seriously, you need to speak to a professional tax adviser. Your Social Security income is only taxable if you have other income and your base is in excess of $25K. If that is the case, I cannot for the life of me understand why you think that you are unable to file long form.

They didn't pay any taxes because they did not have any tax liability. That does not necessarily mean they committed tax fraud conspiracy or evasion.

You, erroneously, seem to want to believe they have.

Nearing, why are you declaring these people guilty until proven innocent? I don't understand your view.

How convenient for them.

When you have invested your own money into a business, and incurred no tax liability, you would find it is not at all convienient. Yet you would like to call me naive?

You really need to understand what you are discussing here. You either misunderstand the intent of the study, or you are purposely misrepresenting it. Either way it is not making you look good.

Do you know how many new companies fail within the first 5 years of commencing operations? (~55%)
Do you know how many new companies fail within 10 years of commencing operations? (~71%)
Have you ever owned and ran a corporation that employed other people?
Have you been forced to declare no tax liability for that company?
Have you been forced to take that company through bankruptcy?

I sent you an email Greg.