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Some Corporations Pay a Lot More Taxes Than Others

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Re: Some Corporations Pay a Lot More Taxes Than Others

#11

Post by rossriley »

zimablue wrote: post #8
grandalf wrote: post #2

This is why corporate taxes are a dumb idea. Firms should not keep one set of books for management accounting and another set that they use for tax purposes. When money is paid to an individual, tax it as income tax. Very simple. Don't give firms an incentive to act as tax shelters or tax avoiders. Think about all the legal fees that have been spent by the firms on that list to avoid and reduce corporate taxes. It's…

I think that what you're suggesting (based on a vague understanding of the UK tax system) is abolishing corporate taxes and taxing dividends as income? I'd be curious to hear someone who knows more accounting's view on this. I've always thought that the answer was to have wealth taxes, easier to avoid but surely what we should actually aim for.

Well the problem is that you just create a loophole.

You can already avoid paying any corporation tax by taking money out of a company as salary.

In the UK you have dividend tax credit so effectively when you take a dividend you get the tax back that has already been paid (as corporation tax).

So both those reasonable ways of extracting money from a company allow you to not pay any additional tax above what income tax would be.

However if there was no corporation tax then the loophole / incentive would be to move money out of the jurisdiction and extract the dividends in a zero tax country.

This is effectively what the big multinationals do via transfer pricing etc but not having any corporation tax would no doubt make it a lot easier for more companies to do that.

Re: Some Corporations Pay a Lot More Taxes Than Others

#12

Post by theandrewbailey »

quuquuquu wrote: post #4

Amazon decided to "re-invest" all profits back into equipment and etc for the business. Thus there are very few profits to tax. Wal-Mart decided to what, I guess keep all the cash on hand or something. I didn't look up their 10K or 10Qs, but that's what I assume is happening. I'm glad Amazon doesn't pay that much in taxes. 609B in tax money per year goes to the US Military, which has been responsible for more death a…

A lot more tax money goes to non-military parts of the government[0], like welfare and education. I'm not happy that Amazon doesn't pay its fair share.

[0] https://www.usafacts.org/government-finances/spending

Re: Some Corporations Pay a Lot More Taxes Than Others

#13

Post by cjarrett »

theandrewbailey wrote: post #12
quuquuquu wrote: post #4

Amazon decided to "re-invest" all profits back into equipment and etc for the business. Thus there are very few profits to tax. Wal-Mart decided to what, I guess keep all the cash on hand or something. I didn't look up their 10K or 10Qs, but that's what I assume is happening. I'm glad Amazon doesn't pay that much in taxes. 609B in tax money per year goes to the US Military, which has been responsible for more death a…

A lot more tax money goes to non-military parts of the government[0], like welfare and education. I'm not happy that Amazon doesn't pay its fair share. [0] https://www.usafacts.org/government-finances/spending

Seems bizarre to only think taxes go into the Military Industrial Complex. I mean, sure they take their cut--but I'd like to think that our taxes go towards maintaining our civil society as well!

Edit: Seems very much cutting off your nose to spite your face, if one is 'happy' a corporation isn't paying taxes

Re: Some Corporations Pay a Lot More Taxes Than Others

#14

Post by grandalf »

zimablue wrote: post #8
grandalf wrote: post #2

This is why corporate taxes are a dumb idea. Firms should not keep one set of books for management accounting and another set that they use for tax purposes. When money is paid to an individual, tax it as income tax. Very simple. Don't give firms an incentive to act as tax shelters or tax avoiders. Think about all the legal fees that have been spent by the firms on that list to avoid and reduce corporate taxes. It's…

I think that what you're suggesting (based on a vague understanding of the UK tax system) is abolishing corporate taxes and taxing dividends as income? I'd be curious to hear someone who knows more accounting's view on this. I've always thought that the answer was to have wealth taxes, easier to avoid but surely what we should actually aim for.

There are several issues that are all relevant, I think:

- Corporate taxes reduce the competitiveness of a jurisdiction and create a market for tax havens like the Caymans which add no value.

- Companies' tax avoidance schemes are massively complex and create an incentive to hide earnings and obscure profits, making this information less transparent to markets.

- A company's share price should reflect company performance only, not the performance of the company's accountants in the realm of tax minimization.

- Offshore tax avoidance schemes reduce government revenues. Google avoids taxes by running such a scheme. Why shouldn't Google pay the same fair share as a tiny startup that lacks the budget to set up such a scheme? Why should governments lose out on the revenues?

- By simply taxing the money when it is income or capital gains, governments can get the proper amount of revenue. Suppose Google evaded $10B in taxes via its offshore scheme. This $10B would instead have been collected from shareholders and employees via capital gains and income taxes.

Why don't we switch to a system of zero corporate tax? The firms like Google that have invested heavily to set up an offshore tax avoidance system are quite happy with the result. They get to be insulated from smaller competitors who do not have the budget to set up their own scheme.

Larger firms like WalMart are cash cow businesses that are not doing enough R&D to offset the profits. Investors in WalMart are OK with this and the shares are priced accordingly. If WalMart paid no corporate tax, the dividends would be higher and the revenue could be captured by capital gains tax and income tax.

Re: Some Corporations Pay a Lot More Taxes Than Others

#15

Post by maxerickson »

quuquuquu wrote: post #4

Amazon decided to "re-invest" all profits back into equipment and etc for the business. Thus there are very few profits to tax. Wal-Mart decided to what, I guess keep all the cash on hand or something. I didn't look up their 10K or 10Qs, but that's what I assume is happening. I'm glad Amazon doesn't pay that much in taxes. 609B in tax money per year goes to the US Military, which has been responsible for more death a…

Walmart currently pays $2 a year in dividends to about 3 billion outstanding shares.

So over a few years they have paid tens of billions in dividends (and have done share buybacks in addition to that).

Re: Some Corporations Pay a Lot More Taxes Than Others

#16

Post by mabbo »

quuquuquu wrote: post #6
m777z wrote: post #3

This is because some corporations make a lot more profit than others. "Amazon's corporate income tax bill is so small, though, because its corporate income (aka profit) is so small. Wal-Mart's pretax income since 2008 has totaled $209 billion, Amazon's less than $11 billion. So while Amazon's rise to fifth-biggest market cap in the world on the strength of such small earnings is a fascinating and perhaps disturbing p…

The author is acting like this wasn't an intended phenomenon. I don't understand the mental gymnastics required to NOT see this. Bezos decided, "we need to grow, and to grow we need equipment and real estate, so I'm going to spend the profits on those assets, since we will get more bang for our buck than just holding onto after-tax cash." A corporation doesn't just accidentally conduct business that way lol, for bett…

The most surprising thing about Amazon lately is that it suddenly is showing some profits. Normally, Bezos has every single dollar that looks like it might be a profit re-invested in something or other.

Re: Some Corporations Pay a Lot More Taxes Than Others

#17

Post by quuquuquu »

theandrewbailey wrote: post #12
quuquuquu wrote: post #4

Amazon decided to "re-invest" all profits back into equipment and etc for the business. Thus there are very few profits to tax. Wal-Mart decided to what, I guess keep all the cash on hand or something. I didn't look up their 10K or 10Qs, but that's what I assume is happening. I'm glad Amazon doesn't pay that much in taxes. 609B in tax money per year goes to the US Military, which has been responsible for more death a…

A lot more tax money goes to non-military parts of the government[0], like welfare and education. I'm not happy that Amazon doesn't pay its fair share. [0] https://www.usafacts.org/government-finances/spending

Amazon can't escape paying Medicare and Social Security taxes. So, they are definitely paying into that, along with everyone else who pays payroll taxes.

So, if you exclude those two things from the budget [0], you'll see that military expenses and interest on debt greatly outweigh education and NASA and etc.

Now I personally think Amazon is a great source of good in this world, compared to Lockheed Martin or Halliburton [1]. So if those guys aren't paying anything in taxes, I am biased, they should be paying more, not Amazon.

[0] https://media.nationalpriorities.org/uploads/total_spending_...

[1] they make missiles and weapons that kill people wholesale.

Re: Some Corporations Pay a Lot More Taxes Than Others

#18

Post by danmaz74 »

grandalf wrote: post #2

This is why corporate taxes are a dumb idea. Firms should not keep one set of books for management accounting and another set that they use for tax purposes. When money is paid to an individual, tax it as income tax. Very simple. Don't give firms an incentive to act as tax shelters or tax avoiders. Think about all the legal fees that have been spent by the firms on that list to avoid and reduce corporate taxes. It's…

Yes, and what happens when those corporations keep hundreds of billions in profits in the bank for years - see eg Apple?

Re: Some Corporations Pay a Lot More Taxes Than Others

#19

Post by quuquuquu »

mabbo wrote: post #16
quuquuquu wrote: post #6

Earlier quoted context omitted.

The author is acting like this wasn't an intended phenomenon. I don't understand the mental gymnastics required to NOT see this. Bezos decided, "we need to grow, and to grow we need equipment and real estate, so I'm going to spend the profits on those assets, since we will get more bang for our buck than just holding onto after-tax cash." A corporation doesn't just accidentally conduct business that way lol, for bett…

The most surprising thing about Amazon lately is that it suddenly is showing some profits. Normally, Bezos has every single dollar that looks like it might be a profit re-invested in something or other.

Maybe he wants to prop up that share price so he can become the world's richest man again :)

Amazon is expanding really heavily into so many verticals. It is crazy to see. I don't think they will stop the spending, but maybe they felt like showing a small profit for some kind of "investor confidence" strategy :)

Re: Some Corporations Pay a Lot More Taxes Than Others

#20

Post by ams6110 »

pwaivers wrote: post #5

Is there any way to determine how much Amazon employees, contractors, and third-parties have paid in taxes? Even if Amazon only pays 1.4 billion itself, doesn't the company still contribute to government taxes paying employees and buying other goods, which are then taxed in turn?

Of course it does. They also collect sales taxes in all (or nearly all?) states now based on customer address, so they contribute to state revenues as well.
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