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View Diary: 30 Fortune 500 companies paid no federal income taxes over last 3 years (33 comments)

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  •  Several major errors in Study linked to. (1+ / 0-)
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    SquirrelWhisperer

    The study covers corporations deducting the economic value of stock options as one of its tax subsidies.  In these transactions the company deducts the value of the stock options and the employee pays income tax on the stock options when exercised.  This is the same thing as the company paying a cash bonus (funding it by selling some stock shares to a third party) and deducting the bonus as an expense and the employee paying income tax on the bonus.  It is a fiction that this is a tax subsidy.

    The study's assertion of depreciation as done is a subsidy is just overreaching.  No matter what the timing of the depreciation, different depreciation schedules do not change the net tax payment over time just the timing.  If anything, as we very consistently have inflation, the company economically gets cheated by reducing the full expense value of the depreciated asset.  This is moreso a penalty than a subsidy.  If you want to see more manufacturing in the US, discouraging manufacturing equipment in the US is not the way to go.

    When discussing the reduced share of income tax paid by corporations, the study ignores that since the 1980s much business income now goes through "pass through entities" such as LLC.  These business entities pay no income tax but their income gets reported on the personal income tax returns of the owners.  For example, This website is owned by Kos Media, LLC.  It if had a profit of $10 million dollars, it would pay no Federal or State income taxes.  However this profit would be reported on the individual tax returns of the owners.  Much business income that was paid as taxes by corporations in the past is now paid by individuals using these pass through entities.

    The study does cover some outrageous tax policies for which GE should get special credit for.  GE clearly has better tax people than Congress.

    But the study misses the biggest subsidy of all, imported goods don't carry the tax burden of the US as paid by income, payroll and property taxes by employees, investors and vendors while much of the tax burden from the courty or origin is removed by the exporting country.  This subsidy means lost tax revenue, lost jobs and lower pay for those who work.  

    The most important way to protect the environment is not to have more than one child.

    by nextstep on Sat Nov 05, 2011 at 11:18:23 AM PDT

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