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Many Major U.S. Corporations Pay Less in Taxes Than the Average Family

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Many Major U.S. Corporations Pay Less in Taxes Than the Average Family

Old 09-22-04, 07:44 PM
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Many Major U.S. Corporations Pay Less in Taxes Than the Average Family

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SILVER SPRING, Md., Sept. 22 /U.S. Newswire/ -- Many of the nations largest, most profitable companies are paying little or no federal income taxes, according to a study released today by Citizens for Tax Justice (CTJ) and the Institute on Taxation and Economic Policy (ITEP). Among the major Maryland-base corporations included in the study were Constellation Energy and Marriott. From 2001 to 2003, the study estimates that Constellation had an effective federal income tax rate of 19.7 percent--well below the statutory 35 percent tax rate. Marriott's effective tax rate over the same period was 1.7 percent.

The CTJ/ITEP study examined federal income taxes paid by 275 of the country's largest, most profitable companies and found that the overall effective tax rate on these companies between 2001 and 2003 was 18.4 percent, nearly half the statutory 35 percent rate.

Nearly a third of the companies paid zero taxes or received a rebate in at least one year between 2001 and 2003. For example, Maryland-base Marriott reported earnings of $383 million in 2003, yet received a federal tax rebate of $38 million, for an effective corporate income tax rate of -10 percent.

Similarly, over the three-year period Pepco Holdings reported earnings of $725 million, yet received federal corporate income tax rebates of $432 million, for an effective corporate income tax rate of -60 percent.

"With significant help from Congress, corporations appear to be finding their way around the tax reforms adopted in 1986," said ITEP Director Robert S. McIntyre. "We hope that our findings will encourage lawmakers to reexamine this important area of taxation."

"The data indicate that in 2003, the average American taxpayer paid more in federal income taxes than AT&T, Time Warner, and Disney combined," said Steve Hill of the Maryland Budget and Tax Policy Institute, a local think tank that has examined state corporate tax issues. Together, those companies earned $8.7 billion, but received an estimated $543 million in federal tax rebates.

"These finding have significant impact on Maryland tax collections. The federal tax code is the starting point for determining state corporate income tax payments. If companies can successfully dodge paying taxes at the federal level, then avoiding income taxes at the state level is a slam dunk," said Hill.

According to Hill, the findings suggest that Maryland needs to explore ways to negate the impact of federal tax avoidance on state tax collections.

The CTJ/ITEP study is available at http://www.ctj.org/corpfed04pr.pdf.
Not surprising, but certainly disgusting.
Old 09-22-04, 07:56 PM
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Those evil tax breaks! I bet they swim in vaults of money like Scrooge McDuck instead of passing along the tax savings to their employees and shareholders.
Old 09-22-04, 07:59 PM
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Did those companies actually make money last year?

edit: naturally I am talking net profit, and are they carrying over any losses from previous years?
Old 09-22-04, 07:59 PM
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Corporate welfare at its best

Old 09-22-04, 08:02 PM
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Originally posted by bfrank


Corporate welfare at its best

How many people wouldn't have had an income to pay tax on if those companies were not around. Any tax from corporations is gravy, imo. They paid a bunch of people who made money, who paid taxes. On top of that they provided medical insurance for a bunch of people, and helped them towards retirement.
Old 09-22-04, 08:03 PM
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Those damn_evil corporations! They'll be the ruination of America.
Old 09-22-04, 08:04 PM
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Originally posted by kvrdave
How many people wouldn't have had an income to pay tax on if those companies were not around. Any tax from corporations is gravy, imo. They paid a bunch of people who made money, who paid taxes. On top of that they provided medical insurance for a bunch of people, and helped them towards retirement.

I agree if what they are doing is legal I have no problem with it. Now in a case like World Comm or Enron that is another story.
Old 09-22-04, 08:04 PM
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No, but their dodging of their fair share of taxes may well end up being the ruination of America.
Old 09-22-04, 08:09 PM
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BigDaddy - I agree.
Captain Pike - They have a lot more invasive audits than we do just by being publicly traded. Or are you just talking about the Enron type as well?
Old 09-22-04, 08:16 PM
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I also agree if it is legal but I donít agree that it is correct or fair.

When these guys spend big bucks lobbying for new tax breaks and loopholes who ends up paying for that lost revenue?
Old 09-22-04, 08:22 PM
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Originally posted by bfrank
I also agree if it is legal but I donít agree that it is correct or fair.

When these guys spend big bucks lobbying for new tax breaks and loopholes who ends up paying for that lost revenue?
The same people who make up for your mortgage interest deduction, or the deduction for having kids, etc. I would guess.
Old 09-22-04, 08:24 PM
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The same people who make up for your mortgage interest deduction, or the deduction for having kids, etc. I would guess.
Ah yes!

The HMID - the 'welfare' darling of the middle class.
Old 09-22-04, 08:24 PM
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flat tax!
Old 09-22-04, 08:25 PM
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Originally posted by bfrank
flat tax!
Not no, but hell no!!!!!!!
Old 09-22-04, 08:28 PM
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Originally posted by bfrank
When these guys spend big bucks lobbying for new tax breaks and loopholes who ends up paying for that lost revenue?
Where do you think the money comes from to pay those taxes anyway? It couldn't be the people who buy their products, could it?
Old 09-22-04, 08:30 PM
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Originally posted by kvrdave
The same people who make up for your mortgage interest deduction, or the deduction for having kids, etc. I would guess.

Actually Dave it is paid by customers who pay lower prices, by shareholders who receive higher returns and dividends, and by workers who have a job that they otherwise may not have and are paid a wage they otherwise would not receive. It is so silly to blame corporations.

By the way, corporate share of total tax revenue has been declining since World War II basically.
Old 09-22-04, 08:31 PM
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Originally posted by X
Where do you think the money comes from to pay those taxes anyway? It couldn't be the people who buy their products, could it?

Damn, you always post while I am composing a post.
Old 09-22-04, 08:31 PM
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Corporations don't pay taxes anyway. Ever. Only individuals pay taxes.

It's just a dodge for politicians to suck more money out of the average guy's pocket and do so with his own approval, because they think that money is getting taken from "big, evil corporations".
Old 09-22-04, 08:34 PM
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I thought some of the tax breaks (rebates/credits) were to encourage corporations to keep jobs in this country?
Old 09-22-04, 08:35 PM
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That's the problem X. They divert most of the money to corporate welfare plans, instead of paying their employees a just wage and usually lay them off by the thousands.

These companies also take advantage of employees and their monies in retirement plans. If a company misappropriates monies, and then files bankruptcy (the latest case might be the Interstate thread on Twinkies), you can't go back and sue them for your lost investment because they legally are protected. Sure, a criminal fine will be imposed, but that doesn't mean shit.
Old 09-22-04, 08:44 PM
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I briefly looked through the study. I wonder why no mention was made of payroll taxes, state taxes, and local taxes?

Just asking.
Old 09-22-04, 08:45 PM
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I was about to write why individuals only pay taxes, but I still have pneumonia, and am about to pass out. So here's why somebody else thinks so, cut and paste easy:

...Corporations and businesses do not pay taxes. They collect taxes from individuals and pass them on to the government.

When a business or corporation takes money out of corporate earnings to send off to the government in the form of taxes, that money isn't created out of thin air. If the money had not been paid to the government as taxes, it clearly would have been used for some other purpose. The money could have been used to pay salaries, give employees raises, pay stockholder dividends, pay profits to owners, buy raw materials, have a company barbecue, put new leather upholstery in the corporate jet... you get the general idea. Sending that money to Washington means it isn't going to be spent by that company somewhere else.

Now, if the money paid to the government was going to be used for salaries, just where did that money actually come from? Those dollars came right out of the pockets of the employees who would have received a raise or of the new employees who would have been hired.

OK, so what if no raises or new hiring were in the picture? Then the money might have been paid to stock-holders as dividends, or to the owners as profit. Either way, when the money is diverted to taxes, it has to come out of the pocket of some individual - the individual stockholder or the owner.

Whenever a dollar is spent, it eventually filters down to an individual somewhere. The person who provided the beef or the plastic forks for the employee barbecue. The worker who built the stomach pump used on half the staff the night of the company barbecue. The man who stitched the new leather upholstery in the busines jet. Or the farmer who raised the cow that gave up its life for the cause of hamburgers and comfortable corporate posteriors.

Our economy operates for the benefit of individuals. All profits and earnings are eventually spent to benefit individuals, and all costs of doing business are eventually paid by individuals.

The individual is the basic unit of our economy. This is where all bucks stop.

So, when a corporation pays a dollar in taxes, that dollar ultimately comes from some individual's pocket.

When taxes are raised on corporations or businesses, those taxes are paid by individuals somewhere. The employeee who goes without the raise. The person who doesn't get hired. The stockholder who sees his dividend decrease. The farmer who can't get a good price for his cow.

Somewhere an individual human being pays. The business or corporation collects the money, and off it goes to Washington.
Abridged text from a section of Neal Boortz's book.

Last edited by natesfortune; 09-22-04 at 08:48 PM.
Old 09-22-04, 08:52 PM
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Isn't Kerry calling for corporate income tax cuts?
Old 09-22-04, 08:52 PM
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Originally posted by Pharoh
I briefly looked through the study. I wonder why no mention was made of payroll taxes, state taxes, and local taxes?

Just asking.
You mean like an amount equal to about 7.5% of each employee's salary going to FICA/Medicare (with no deductions until FICA reaches the max of $88K, no max for Medicare)?
Old 09-22-04, 08:57 PM
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http://www.johnkerry.com/issues/economy/

kerry is going to give tax breaks to business and stop corporate welfare. I wonder how he is going to do that?

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