Corporate Tax Black Hole?

[Ren]

http://www.reuters.com/article/newsOne/idUSN1249465620080812?sp=true

WASHINGTON (Reuters) - Most U.S. and foreign corporations doing business in the United States avoid paying any federal income taxes, despite trillions of dollars worth of sales, a government study released on Tuesday said.

The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.

More than half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years in that period, the report said.

During that time corporate sales in the United States totaled $2.5 trillion, according to Democratic Sens. Carl Levin of Michigan and Byron Dorgan of North Dakota, who requested the GAO study.

The report did not name any companies. The GAO said corporations escaped paying federal income taxes for a variety of reasons including operating losses, tax credits and an ability to use transactions within the company to shift income to low tax countries.

With the U.S. budget deficit this year running close to the record $413 billion that was set in 2004 and projected to hit a record $486 billion next year, lawmakers are looking to plug holes in the U.S. tax code and generate more revenues.

Dorgan in a statement called the report “a shocking indictment of the current tax system.” Levin said it made clear that “too many corporations are using tax trickery to send their profits overseas and avoid paying their fair share in the United States.”

The study showed about 28 percent of large foreign corporations, those with more than $250 million in assets, doing business in the United States paid no federal income taxes in 2005 despite $372 billion in gross receipts, the senators said.

About 25 percent of the largest U.S. companies paid no federal income taxes in 2005 despite $1.1 trillion in gross sales that year, they said.

Can someone please find me a politician that will LOWER corporate taxes AND close loopholes? Let’s be honest, one without the other is more than likely very pointless.

[Sloth]

Consider it a tax revolt.

[dhickey]

Comsuption tax as a replacement for all other taxes would even the playing field for all american businesses. All Americans for that matter.

[orion]

[quote]dhickey wrote:
Comsuption tax as a replacement for all other taxes would even the playing field for all american businesses. All Americans for that matter.[/quote]

If you exempt food, gas, lodging and medical services I´m for it.

[dhickey]

[quote]orion wrote:
dhickey wrote:
Comsuption tax as a replacement for all other taxes would even the playing field for all american businesses. All Americans for that matter.

If you exempt food, gas, lodging and medical services I´m for it.

[/quote]

I haven’t much about that. I would be little nervous about giving the power of exemption back to them. If there are no ohter taxes other than a consumption tax, I am not sure that any of the things you mentioned would be more expensive.

I also beleive showing a consumption tax on a reciept for essential goods may go a long way to curb gov’t spending. Now every american can see what gov’t spending costs them when they buy milk, bread, baby formula. You give the power of exemption and they can start buying votes again. Campaigns for exempting specific products like TV, Internet, Phone, education (would end up very broad), gym memberships, maybe even product from specific companies, could be the new political power.

I think you have to tax everthing to effectively keep spending down and cripple special interest groups. One would have to run the numbers to see what it would add to a loaf of bread and make assumptions on wether or not that loaf of bread would go down the same amount by repealing other taxes.

It can’t possibly be any worse than the mess we have now.

[Vegita]

How about essential goods get a base tax of 5% These would be things deemed “necessary for survival” It would include Homes, Food and water, and Medical. All set to 5% and any others we could vote for.

The necessities for survival aren’t going to change unless we have some genetic mutation so they should be stable and no new ones are allowed to be added Period.

Then all other products and services are taxed on a variable rate, So in year one you make a prediction, all others need 5% tax. Then if you don’t meet the budget, it has to be raised at least 1% or enough so that it would have covered the budget. Same for each year following.

The tax gets adjusted up if the government goes over budget, no matter the cause. So after a few years when it hits 15% or 20% People will get really pissed and vote in only people who will lower the spending. It should also be mandatory any federal budget include 5% of the federal defecit. That way in 20 years, no more defecit.

V

[dhickey]

[quote]Vegita wrote:
How about essential goods get a base tax of 5% These would be things deemed “necessary for survival” It would include Homes, Food and water, and Medical. All set to 5% and any others we could vote for.

The necessities for survival aren’t going to change unless we have some genetic mutation so they should be stable and no new ones are allowed to be added Period.

Then all other products and services are taxed on a variable rate, So in year one you make a prediction, all others need 5% tax. Then if you don’t meet the budget, it has to be raised at least 1% or enough so that it would have covered the budget. Same for each year following.

The tax gets adjusted up if the government goes over budget, no matter the cause. So after a few years when it hits 15% or 20% People will get really pissed and vote in only people who will lower the spending. It should also be mandatory any federal budget include 5% of the federal defecit. That way in 20 years, no more defecit.

V[/quote]

That makes sense, but I can see the abuse already. Once you give them a list of exemptions they are going to add to the list. If you were going to cap it, i would just say make it zero. The benefit of taxing these items is that every american would feel the pain of increased spending and increase taxation. They couldn’t hide it. A cap would negate this, so I would just say don’t tax those items at all.

Maybe I’ll get bored tonight and run some numbers, but i don’t think the % would be all that outrageous. You also have to remember that there would be no other tax. I would have 40% more money to spend. My employer will have even more when I ask for a raise. No corp tax would have companies flooding here from overseas. This means more jobs, more competition for employees, and higher salaries.