Loopholes and American Companies

Jackie22

Jackie22

Well-known Member
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Northeast Texas
[h=1]Obama Is Going After The Loophole That Sends American Companies To Cheap Tax Countries[/h]http://www.businessinsider.com/r-obama-presses-to-close-corporate-tax-loophole-inversions-2014-24

President Barack Obama will call on Thursday for an end to a corporate loophole that allows companies to avoid federal taxes by shifting their tax domiciles overseas in deals known as "inversions," White House officials said.

Obama will make the comments during remarks about the economy at Los Angeles Technical College. The president is in California on a three-day fundraising swing for Democrats.

So-called inversion deals occur when a U.S. company acquires or sets up a foreign company, then moves its U.S. tax domicile to the foreign company and its lower-tax home country.

Nine inversion deals have been agreed to this year by companies ranging from banana distributor Chiquita Brands International Inc to drug maker AbbVie Inc and more are under consideration. The transactions are setting a record pace since the first inversion was done 32 years ago.



Read more: http://www.businessinsider.com/r-ob...tax-loophole-inversions-2014-24#ixzz38Nhr7rge


I think this is something that most would want to happen, it will be interesting to see how it pans out.
 

Now he's going to "call" for an end to the inversions? This has been known for years.

Something has to be done though. When Goldman Sachs pays 1% and GE pays nothing in income tax and individuals are paying 10-30% yes loopholes like the inversion need to be closed.
 

Companies do not pay taxes. They have to charge higher prices for their goods to cover the cost of taxes and still make a profit. Therefore it's te consumers who pay the taxes.

It doesn't end there. The higher prices companies have to charge makes it hard to compete with foreign companies so they either go out of business or move to another country. Either way it means a loss of jobs for American workers. And that means instead of those workers paying income and social security taxes they are now drawing money from the government.(taxpayers who still have jobs).

When are the democrats going to wake up and see what they've done to this country?
 
I think it's the wise thing to do...

Unfortunately, there's a growing trend of corporate "inversion" -- which is the opposite of patriotism. Inversions occur when U.S. companies buy out usually smaller, foreign corporations and reincorporate in another country to avoid U.S. corporate taxes.

For example, Walgreens, the uber-American drugstore with deep roots in Illinois, has begun the process of merging with a Swiss company, Alliance Boots, and may reincorporate in Switzerland, a well-known tax haven.

Inversions are basically a tax avoidance maneuver since domestic corporations use them to gain the appearance of becoming a foreign company, while still having most ownership and business activities in the U.S.

The current law allows as little as 20 percent of an inverted company's stock to be held by foreigners in order to be able to opt-out of paying U.S. corporate tax.

If Walgreens was to complete an inversion and reincorporate in Switzerland, it's estimated that it would drain the U.S. of $4 billion in tax revenue over five years, leaving you and I to cover that loss.

What's worse is that Walgreens gets a significant portion (about one-quarter) of its business from taxpayer funded programs like Medicaid and Medicare.

And, Walgreens is not the only multinational corporation to contemplate renouncing their status as an American company. It's time to stop companies from using tricky accounting gimmicks like inversion to avoid paying their fair share of the costs of keeping up our roads and other essential government services which allow goods to get to the market.

Speaking of roads, the U.S. is facing a practically empty fund for highway infrastructure repair and transit construction projects. Experts at the U.S. Department of Transportation estimate that the Highway Trust Fund (HTF) will run dry in a matter of weeks.

In order to make the roads safer for drivers, to allow much-needed mass transit projects to move forward, and to help reduce climate-change causing pollution, we must find a solid source of funding for the HTF.

Luckily, Congress is paying attention to the pressing issues of corporate inversions and depleted highway funds as well. Rep. Van Hollen (D-Md.) and Rep. Sander Levin (D-Mich.) have introduced the Stop Corporate Expatriation and Invest in America's Infrastructure Act (H.R. 4985.)

H.R. 4985 solves two problems at once. First, it would treat an inverted company as domestic for tax purposes if more than 50 percent of the newly formed "foreign" corporation's stockholders are the same as the previous U.S. company's, or if the company continues to be managed and controlled in the U.S. and has significant business activities in our country. Secondly, it would use that saved revenue to reinvest it in our roads and transit infrastructure, creating more jobs here in the U.S.

Reducing the ability of companies to perform corporate inversions would raise $19.5 billion in revenue according to the Joint Committee on Taxation.

It's not a permanent solution, since the bill's sponsors estimate the regained revenue would only shore up the HTF's coffers for the next 18 months, but it has enormous appeal from the viewpoint of increasing fairness in our tax code and decreasing the incentive for companies to shift profits offshore for tax purposes.

Now that's an idea that will make a truly stronger America.

So, to those members of Congress who have not yet signed-on to H.R. 4985, wouldn't you like to do the right thing and hear, "GO USA!" for your patriotism? The choice is yours.

http://www.huffingtonpost.com/lisa-gilbert/inverted-patriotism_b_5564231.html
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rkunsaw said:
Companies do not pay taxes. They have to charge higher prices for their goods to cover the cost of taxes and still make a profit. Therefore it's te consumers who pay the taxes.

It doesn't end there. The higher prices companies have to charge makes it hard to compete with foreign companies so they either go out of business or move to another country. Either way it means a loss of jobs for American workers. And that means instead of those workers paying income and social security taxes they are now drawing money from the government.(taxpayers who still have jobs).

When are the democrats going to wake up and see what they've done to this country?
Click to expand...

Taxes aren't the reason why companies charge higher prices, but I'm sure they appreciate people believing it is.

Companies charge higher prices based on what the market will bear. The more people are willing to pay, the more they'll charge. Automation is making it so that they can operate with fewer employees than ever before & as such, are making record profits. CEO's & their staff are making astronomical salaries & bonuses, yet they still cry poor mouth when it comes to paying their fair share of taxes.

The culprit is corporate greed, not taxes.
 
The taxes paid by corporations today are near record lows as a percentage of the United States’ total tax bill, even as they are recording massive profits. Yet the unemployment rate is still high. However, if we turned back the clock on corporate tax rates and returned to Nixon-era levels and closed loopholes, millions of American jobs would be created, according to The Disappearing Corporate Tax Base, a new report released today.
The study, produced by the Center for Effective Government and National People’s Action, highlights the damage done by hewing to a central conservative tenet, that “cutting corporate taxes will stimulate job creation and grow the economy.” The report shows the aftermath of a lower corporate tax rate on state budgets, and argues that a slight increase in the corporate share of federal revenues would restore cuts to education and public services and add an additional 3.2 million jobs.
With the onset of the Great Recession came budget cuts in the states. While states were buoyed somewhat by the American Reinvestment and Recovery Act, those dollars have stopped flowing, based on the belief that the one shot of stimulus in 2009 would be enough to kickstart our economy. For a few people it was; looking to Wall Street, the stock market has never been healthier. Corporate profits are booming and executives are receiving huge bonuses for the success of their products. Yet 10 million Americans remain jobless. A new Washington political class forced caps and cuts on the budget, but shielded corporate loopholes. This has led to decreased spending in many areas, including education, in the years after the stimulus was enacted.
As federal aid to states declined, many Republican-led states have rolled back taxes, on the theory that doing so would benefit their state’s economy and create jobs. One such state, Kansas, has been considered to be a model for business-friendly tax policy, with Governor Sam Brownback receiving an “A” from the Cato Institute on his bold tax cut initiative in 2012. Fast-forward two years and the impact of these cuts can be seen more clearly.
Among these cuts was a tax exemption on corporate profits that are passed directly to individual owners – an extreme measure not done by any other state. According to a report by the Center for Budget and Policy Priorities, the cuts to revenues have acted as a mini-recession for the state of Kansas, and prevented it from moving away from the recession-era cuts to services as quickly as it could have without this tax cut.
As tax cuts for corporations gained more steam, another revenue mechanism had to pick up the slack, and as detailed in the NPA report, taxes on working Americans more than filled in that hole. What that essentially means is hard-working American employees were stuck with the tax bill as corporations were free to use loopholes to their advantage to keep money from government coffers. The report points out the seemingly infinite loop of agreeing to close tax loopholes for a decreased corporate rate, only to introduce new loopholes that must be closed in the future by decreasing the corporate tax rate, of course.
National People’s Action and the Center for Effective Government argue that by returning to an Eisenhower-, or even a Nixon-era level of what corporations paid as a percentage of America’s bills, corporations could smooth over the scars of the Great Recession and fill in the gaps of lapsed services by increasing tax revenues by $464 billion (Nixon) to $683 billion (Eisenhower).
National People’s Action proposes to raise $200 billion in corporate taxes to close the funding gaps created since the recession. They do this by closing three loopholes:

  • Offshore tax havens, which loses $90 billion a year in U.S. tax revenues,
  • The executive pay loophole that allows corporations to deduct “performance bonuses” from their tax receipts,
  • The stock-based pay loophole that allowed companies to deduct billions from their tax bill in 2012 alone.
The $200 billion raised through this program would be the salve to losses that occurred in the Great Recession. Under their estimates, a $36 billion-dollar increase would allow America “to refill the 667,000 jobs school teachers, first responders, librarians, highway crews, caretakers of public parks, and other state and city workers lost to budget cuts.”
Using the American Society for Civil Engineers’ number of $125 billion a year over the next eight years to improve U.S. infrastructure, an estimated additional 2.5 million jobs would be created, and America’s waterways, bridges, roads and schools would be updated to modern standards.
It is time to give up on the nonsense of cutting corporate taxes to increase jobs, because we have seen that this is not working. If it did, where are all the jobs? Why are 10 million Americans without work? It clearly isn’t working in Kansas. Millions of Americans could be put to work if these proposals were eliminated, and cuts to our state and local budgets would be reversed, allowing for a higher American quality of life. All that is standing in the way is a nonsensical conservative tenet.
http://ourfuture.org/20140327/more-proof-corporate-tax-cuts-have-done-more-harm-than-good
 
I'll never understand how people can fall for that old lie that if you cut taxes for the wealthy & big corporations, they'll go out & create jobs. Companies only create jobs when they need more help. They only need more help when the demand for their product or service goes up. Corporate tax rates have nothing to do with consumer demand.

Bush cut taxes for the wealthy in 2005. By 2008, we were sliding into a recession with high unemployment & rising gas prices. But still we're told that cutting taxes for the wealthy & corporations will magically create jobs.

Big business is good at spinning the truth to get well intentioned, willing tools to carry their water for them.
 
Just to do some math.

GE pays no taxes on a 50,000 page plus tax return. Even if GE was taxed 30%(for example only) on that 5 billion profit they still would have 3.5 billion dollars in profit left.

http://www.weeklystandard.com/blogs...-paid-no-taxes-14-billion-profits_609137.html

Goldman Sachs effective income tax rate is 1%. These returns are from the bubble collapse and they still profited to the tune of 1.9 billion dollars after selling their crap to other investors. Again even a 30% tax rate for Goldman would still have over a billion dollars in profit left over.

http://tullycast.com/2009/02/02/goldman-sachs-tax-rate-drops-to-1-from-6-billion-to-14-million/

Although past years if their current rates are close they are in effect paying very little.

Goldman and GE own a lot of different companies so as a whole they don't hire or fire per say although I'm sure calls and meetings with the right executives from the mother company can influence routine business. Even Mitt Romney's effective tax rate is about 12-15% as an individual. I agree over taxing is a clear and present danger but when individuals are paying more than big national/multi-national corporations there is something wrong.
 
Taxes aren't the reason why companies charge higher prices, but I'm sure they appreciate people believing it is.

Companies charge higher prices based on what the market will bear. The more people are willing to pay, the more they'll charge. Automation is making it so that they can operate with fewer employees than ever before & as such, are making record profits. CEO's & their staff are making astronomical salaries & bonuses, yet they still cry poor mouth when it comes to paying their fair share of taxes.

The culprit is corporate greed, not taxes.
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I'd have to agree with this sentiment.
Also, the US is not alone in having big corporations structure their businesses to appear to make little profit in the country where they are earning revenue. Corporations are global entities able to play ducks and drakes with their business model to avoid their responsibilities to the countries in which they are allowed to do business. To overcome this problem a global solution involving co-operation between nations. This is something that I think will be on the agenda of the next G20 meeting.
 
Dame Warrigal said:
I'd have to agree with this sentiment.
Also, the US is not alone in having big corporations structure their businesses to appear to make little profit in the country where they are earning revenue. Corporations are global entities able to play ducks and drakes with their business model to avoid their responsibilities to the countries in which they are allowed to do business. To overcome this problem a global solution involving co-operation between nations. This is something that I think will be on the agenda of the next G20 meeting.
Click to expand...

Starbucks is the perfect example of an international company avoiding taxes overseas in places like the UK

http://www.reuters.com/article/2013/06/28/starbucks-tax-britain-idUSL5N0F43ET20130628

Yet the UK already has a high and rising income tax rate.

http://www.taxationinfonews.com/2014/07/uk-taxpayers-being-dragged-into-top-tax-brackets/

Even if 'rich' how the heck can multi national corporations pay nothing while individuals are losing almost half of their income to taxes. This is what could very easily come to the US.
 
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