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The public has a right to know how companies that pay no taxes pull it off

larrysummers.com

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Re: The public has a right to know how companies that pay no taxes pull it off

#51

Post by supernova87a »

I'm not sure I understand (or agree with) his assumption that the full tax returns of corporations are private matters and always must be. That's a choice that Congress can make.

If corporations are the way for entities to achieve individual profits without individual liabilities, then surely privacy is not the same concern as for individuals' tax returns. Why are corporations (whose structure is granted by law to reap certain benefits with incorporated protections) then further shielded from their tax returns being public to show how they did it?

We can (if our leaders were incentivized to do it) choose to have it be true.

Re: The public has a right to know how companies that pay no taxes pull it off

#52

Post by chii »

juskrey wrote: post #45

Why no one ever mentions how much companies effectively contribute to various salary and employees income taxes? Corporate tax is practically nothing.

> employees income taxes?

that's the employee's contribution, not the company's.

Re: The public has a right to know how companies that pay no taxes pull it off

#53

Post by chii »

an_opabinia wrote: post #18

Summers is right, of course releasing M3 would be a no-brainer. Can we ever reconcile accounting and economics? With its excess cash reserves, if Apple paid tax, absolutely nothing about its business would change. The more profound perspective is, who is really the tax collector then? Who is playing that economic role? Obviously these giant tax-evading companies. They are accumulating huge stockpiles of cash they can…

> They are accumulating huge stockpiles of cash they cannot spend,

they (the corps) can use this asset that they cannot repatriate as collateral for cheap loans.

Re: The public has a right to know how companies that pay no taxes pull it off

#54

Post by gostsamo »

juskrey wrote: post #45

Why no one ever mentions how much companies effectively contribute to various salary and employees income taxes? Corporate tax is practically nothing.

Well, if my employer is a small company, they pay my additional taxes plus their own. So, why big companies should have an edge in front of the small ones?

Re: The public has a right to know how companies that pay no taxes pull it off

#55

Post by knowingpark »

As if Larry Summers doesn't know how they do it. Is he trolling? Why doesn't he just write the article "This is how corporations pay no tax"? Maybe it has something to do with un-elected officials, who generally represent the not-public, being Treasury Secretary.

Re: The public has a right to know how companies that pay no taxes pull it off

#56

Post by donmcronald »

gnicholas wrote: post #13
gscott wrote: post #7

Earlier quoted context omitted.

People have tried and the problem is when you want to bring the money back to use it on something. Say you setup a licensing company on an island nation that use to then charge yourself $10,000 a month to license the software you wrote... that you transferred there. Now lets say you want to buy a house and you bring back a certain amount of money. That money is taxable and that is where people mess up they don't repo…

The first point of failure is that if you are a US taxpayer, then you are already taxed on your worldwide earnings, including the earnings of your wholly-owned foreign subsidiary. Even if you could borrow domestically against your foreign earnings in order to finance your lifestyle, you would have already been taxed on those foreign earnings, as an individual.

How do big corporations get away with it? Is it because they aren't wholly-owned by an individual?

Edit: NVM. I saw your explanation in another comment. Good info :-)

Re: The public has a right to know how companies that pay no taxes pull it off

#57

Post by gnicholas »

fierarul wrote: post #46

This will not end until people will all "incorporate" and apply the same tax tricks as major corporations. In other words we need the revolution of the "personal corporation". The startup that offers this will be the next Apple. Or, will be shut down when the law is changed. Either way, it's a win for society. Stripe Atlas is a step in the right direction, but it does only the low hanging fruit. Accounting, handling…

Unfortunately, sophisticated tax advice simply does not scale down to the level that would make it applicable to most companies/people. This type of advice is heavily fact-specific, and if you create a complicated legal structure, you can't take your eye off the ball for a minute. Otherwise you can end up blowing the whole thing up, or worse.

I would note that the world you describe (where people have tax tricks just like corporations) used to exist. Before the tax reform bill of 1986, doctors/lawyers/dentists/etc. were able to take advantage of tax shelters that greatly reduced their wage income, without actually incurring any real losses. These passive loss tax shelters were heavily marketed by accounting firms because of their general applicability. But in 1986 they were eliminated by a tax reform bill that outlawed perceived abuses and lowered tax rates.

Re: The public has a right to know how companies that pay no taxes pull it off

#58

Post by wolco2 »

closeparen wrote: post #47
ALittleLight wrote: post #26

I read about tax avoidance schemes like corporate inversions or sending all your patents to a company in some tax free haven and licensing your patents from your company for all your profits, and so on, and it makes me really mad. Companies making many billions of dollars paying no taxes. My intuition is that if I personally came up with a cute "gotcha" like this where I wound up paying zero in taxes because of some…

If it's a real loophole, the government is out of luck; best it can do is remove it next year. When the money flowing through a corporation actually makes someone rich, it becomes his personal income. It's not clear that corporations paying their own taxes is even a good idea vs. collecting the same revenue through higher marginal tax rates on the beneficial owners.

Expensives can be hidden at the corporate level but used personally. The company plane can be used for both personal/business and those are hard to separate.

Re: The public has a right to know how companies that pay no taxes pull it off

#59

Post by bagels »

Zarath wrote: post #43
ALittleLight wrote: post #26

I read about tax avoidance schemes like corporate inversions or sending all your patents to a company in some tax free haven and licensing your patents from your company for all your profits, and so on, and it makes me really mad. Companies making many billions of dollars paying no taxes. My intuition is that if I personally came up with a cute "gotcha" like this where I wound up paying zero in taxes because of some…

If you are upper middle class it is possible to pay zero taxes. Between tax loss harvesting, 401ks, opportunity zones, and LLC formation, a citizen can legally pay no taxes some years. It's a bit of a learning curve but none of the mechanics are particularly difficult.

Where can we learn how to do this?

Re: The public has a right to know how companies that pay no taxes pull it off

#60

Post by triceratops »

bagels wrote: post #59
Zarath wrote: post #43

Earlier quoted context omitted.

If you are upper middle class it is possible to pay zero taxes. Between tax loss harvesting, 401ks, opportunity zones, and LLC formation, a citizen can legally pay no taxes some years. It's a bit of a learning curve but none of the mechanics are particularly difficult.

Where can we learn how to do this?

Here's one case study: https://www.gocurrycracker.com/never-pay-taxes-again/
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