If you can read this, either the style sheet didn't load or you have an older browser that doesn't support style sheets. Try clearing your browser cache and refreshing the page.

(Yahoo)   Think America gives too many breaks to big business? U.S. corporations pay 39% tax while the average for industrialized nations is only 25%   (finance.yahoo.com) divider line 112
    More: Interesting, United States, developed country, fairs, technical analysis, corporate tax, tax rates  
•       •       •

1148 clicks; posted to Business » on 10 Jul 2012 at 2:54 PM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



112 Comments   (+0 »)
   
View Voting Results: Smartest and Funniest

Archived thread

First | « | 1 | 2 | 3 | » | Last | Show all
 
2012-07-10 04:50:55 PM

The_Six_Fingered_Man: The_Six_Fingered_Man: wildcardjack: Can someone name a Fortune 500 company paying 39%? 35%? Even an effective rate in the 20% range.

It's an economy of scale. Once you get large enough to hire weasel accountants they can lower your effective tax rate until you can hire another, and another. Soon your company is paying near zero in taxes, but $500 million a year for weasel food.

The same happens with individuals. Hardly anyone pays their marginal (or statutory) rate.

To answer your question though, the CTJ report that said that the companies were not paying their share also noted at least 70 of the 280 Fortune 500 companies paying in the neighborhood of 30%.

Sorry, to answer your question with a specific example, the CTJ found that Honeywell International had an effective rate in 2011 of 43.6%

DuPont was at 45.6%

Both are in the top 80 companies in the Fortune 500.


i'm not a tax talking guy, so i definitely defer to you on this, but how does a company manage to pay a higher effective rate than the highest marginal rate?
 
2012-07-10 04:52:38 PM

thomps: The_Six_Fingered_Man: The_Six_Fingered_Man: wildcardjack: Can someone name a Fortune 500 company paying 39%? 35%? Even an effective rate in the 20% range.

It's an economy of scale. Once you get large enough to hire weasel accountants they can lower your effective tax rate until you can hire another, and another. Soon your company is paying near zero in taxes, but $500 million a year for weasel food.

The same happens with individuals. Hardly anyone pays their marginal (or statutory) rate.

To answer your question though, the CTJ report that said that the companies were not paying their share also noted at least 70 of the 280 Fortune 500 companies paying in the neighborhood of 30%.

Sorry, to answer your question with a specific example, the CTJ found that Honeywell International had an effective rate in 2011 of 43.6%

DuPont was at 45.6%

Both are in the top 80 companies in the Fortune 500.

i'm not a tax talking guy, so i definitely defer to you on this, but how does a company manage to pay a higher effective rate than the highest marginal rate?


When you end up paying deferred taxes from prior years.
 
2012-07-10 04:58:34 PM
2.bp.blogspot.com

seriously? this has been debunked so many farking times already.
 
2012-07-10 05:01:16 PM

Debeo Summa Credo: Minarets: The Homer Tax: The_Six_Fingered_Man: Are you saying that GE paid nothing in sales taxes, property taxes, payroll taxes, etc?

Using that exact same logic, the GOP talking point about how "half of the people pay no taxes" is also complete bullshiat. Plus anything about how illegal immigrants pay no taxes.

FWIW.

Hypothetical situation: If we offered all corporations a flat rate tax on income of 15% with no deductions, no loopholes, no nothing or allowed them to keep the current tax system and its ominous "39% rate"...which do you think most would choose?

Considering the average effective tax rate posted up thread was 12.2%, I would say they take the current system.

High 20%s per meat0918's graph upthread.



Which is still lower than 39%, and I think the graph is from Feb. 2009 before some tax breaks in the stimulus went into effect.
 
2012-07-10 05:04:44 PM

The_Six_Fingered_Man: thomps: The_Six_Fingered_Man: The_Six_Fingered_Man: wildcardjack: Can someone name a Fortune 500 company paying 39%? 35%? Even an effective rate in the 20% range.

It's an economy of scale. Once you get large enough to hire weasel accountants they can lower your effective tax rate until you can hire another, and another. Soon your company is paying near zero in taxes, but $500 million a year for weasel food.

The same happens with individuals. Hardly anyone pays their marginal (or statutory) rate.

To answer your question though, the CTJ report that said that the companies were not paying their share also noted at least 70 of the 280 Fortune 500 companies paying in the neighborhood of 30%.

Sorry, to answer your question with a specific example, the CTJ found that Honeywell International had an effective rate in 2011 of 43.6%

DuPont was at 45.6%

Both are in the top 80 companies in the Fortune 500.

i'm not a tax talking guy, so i definitely defer to you on this, but how does a company manage to pay a higher effective rate than the highest marginal rate?

When you end up paying deferred taxes from prior years.


So they didn't really pay those tax rates last year, did they?
 
2012-07-10 05:06:08 PM
Many of the biggest companies have been avoiding taxes for years, these sites list many of them. GE is especially egregious in their taxes as the state of Ohio allows the company to also keep most of the state taxes paid by employees on their payroll! So not only did they pay 0 federal taxes, but they were paid taxes by the state of Ohio for being "job creators".

http://blogs.suntimes.com/sweet/2011/03/ten_giant_us_companies_avoidi n .html

http://thinkprogress.org/economy/2011/11/03/360185/30-corporations-no - taxes/?mobile=nc

And whomever posted that Honeywell pays taxes may want to check their data.
 
2012-07-10 05:12:40 PM

Moopy Mac: The_Six_Fingered_Man: thomps: The_Six_Fingered_Man: The_Six_Fingered_Man: wildcardjack: Can someone name a Fortune 500 company paying 39%? 35%? Even an effective rate in the 20% range.

It's an economy of scale. Once you get large enough to hire weasel accountants they can lower your effective tax rate until you can hire another, and another. Soon your company is paying near zero in taxes, but $500 million a year for weasel food.

The same happens with individuals. Hardly anyone pays their marginal (or statutory) rate.

To answer your question though, the CTJ report that said that the companies were not paying their share also noted at least 70 of the 280 Fortune 500 companies paying in the neighborhood of 30%.

Sorry, to answer your question with a specific example, the CTJ found that Honeywell International had an effective rate in 2011 of 43.6%

DuPont was at 45.6%

Both are in the top 80 companies in the Fortune 500.

i'm not a tax talking guy, so i definitely defer to you on this, but how does a company manage to pay a higher effective rate than the highest marginal rate?

When you end up paying deferred taxes from prior years.

So they didn't really pay those tax rates last year, did they?


Yes, they did. They were deferred from prior years, paid in 2011. Why do you think they didn't pay those rates in 2011?
 
2012-07-10 05:16:19 PM

pushpinder: Many of the biggest companies have been avoiding taxes for years, these sites list many of them. GE is especially egregious in their taxes as the state of Ohio allows the company to also keep most of the state taxes paid by employees on their payroll! So not only did they pay 0 federal taxes, but they were paid taxes by the state of Ohio for being "job creators".

http://blogs.suntimes.com/sweet/2011/03/ten_giant_us_companies_avoidi n .html

http://thinkprogress.org/economy/2011/11/03/360185/30-corporations-no - taxes/?mobile=nc

And whomever posted that Honeywell pays taxes may want to check their data.


You mean the Honeywell data from the CTJ report that your ThinkProgress article is linking to?

The one where it shows Honeywell's effective tax rate? That data?

We can discuss the merits of the CTJ report, if you like. But the data came from the same source linked in your article.

http://www.ctj.org/pdf/notax2012.pdf (page 3)
 
2012-07-10 05:27:51 PM

MagnesDrachen: HellRaisingHoosier: Do people believe this drivel?

Two kinds of people:

1) morons
2) paid shills

That's about it.


You missed 3) Teabaggers
 
2012-07-10 05:42:34 PM

The_Six_Fingered_Man: Moopy Mac: The_Six_Fingered_Man: thomps: The_Six_Fingered_Man: The_Six_Fingered_Man: wildcardjack: Can someone name a Fortune 500 company paying 39%? 35%? Even an effective rate in the 20% range.

It's an economy of scale. Once you get large enough to hire weasel accountants they can lower your effective tax rate until you can hire another, and another. Soon your company is paying near zero in taxes, but $500 million a year for weasel food.

The same happens with individuals. Hardly anyone pays their marginal (or statutory) rate.

To answer your question though, the CTJ report that said that the companies were not paying their share also noted at least 70 of the 280 Fortune 500 companies paying in the neighborhood of 30%.

Sorry, to answer your question with a specific example, the CTJ found that Honeywell International had an effective rate in 2011 of 43.6%

DuPont was at 45.6%

Both are in the top 80 companies in the Fortune 500.

i'm not a tax talking guy, so i definitely defer to you on this, but how does a company manage to pay a higher effective rate than the highest marginal rate?

When you end up paying deferred taxes from prior years.

So they didn't really pay those tax rates last year, did they?

Yes, they did. They were deferred from prior years, paid in 2011. Why do you think they didn't pay those rates in 2011?


You are being disingenuous. It is off-putting and counter productive.
 
2012-07-10 05:47:38 PM
CORRECTION: U.S. corporations are supposed to pay 39% tax. Thanks to their accountants and the amount of loop holes in the system, they often pay much, much less.
 
2012-07-10 05:57:03 PM

Moopy Mac: You are being disingenuous. It is off-putting and counter productive.


I'm being disingenuous by pointing out facts? WTF?

Before we continue, I'm going to have to ask you from where you determined that Honeywell and DuPont didn't pay the specified rates that the CTJ ascribed to them. They even listed the reasons for the rates in their report.
 
2012-07-10 05:58:26 PM
Troll-tastic headlines? in my FARK Business tab?

/It's more likely than you think
 
2012-07-10 06:06:10 PM

imontheinternet: [clccharter.org image 320x439]

See, Mr. Banker, your marginal height is roughly 6', but after we've made our deduction, your effective height will be considerably less.


You.

I like the way you think.
 
2012-07-10 06:09:47 PM

Debeo Summa Credo: Of course, the taxes reduce incentive for investors to enter industry


That has to be the worst part. I was all ready to buy stock - my initial investment would be recouped in seven years and the money after that would be like being paid just for having money - but then I said, "Taxes? I don't THINK so."

So I burned the cash instead.
 
2012-07-10 06:13:55 PM

Debeo Summa Credo: Investors indirectly pay corporate taxes


Oh, FFS, you're not going on about that double taxation nonsense again, are you?
 
2012-07-10 06:20:29 PM
They "pay" taxes.
 
2012-07-10 06:23:56 PM
upload.wikimedia.org
 
2012-07-10 07:00:02 PM
i'm all for cutting corporate tax rates if all deductions are eliminated. this is something that Jeff Immelt has said on the record his ideal rate was 20% without deductions, which is still higher than Ireland but lower than France or Germany.

but any reform like this would be derailed by interest groups, especially the major accounting firms and the American Bar Association. and Dems would lose their beloved R&D tax credit.

so the likelihood of serious reform happening is zero.
 
2012-07-10 07:01:58 PM
bipartisan? farkwads

corporations are already sitting on the most cash ever, doing huge stock buybacks to increase their earnings per share and thereby the bonuses and now we need to lower their taxes so that they can have more cash?
 
2012-07-10 07:09:46 PM

vpb: Actually 39% is the maximum rate. It varies from 15-39% Unless you count all the loopholes and loss caryovers and deductions and such. The effective tax rate was 12.1% in FY2011.

2/3rds of companies don't even pay tax.


FTA: "The vast majority of the large corporations that did not pay taxes had net losses, he said, and thus no income on which to pay taxes. "The notion that there is a large pool of untaxed corporate profits is incorrect."

Corporations are taxed on profits. If they make no profit they are not taxed. Lots of companies make losses in any one year.

Not saying there isn't lots of "creative" tax schemes, but the headline "2/3 of companies pay no tax" is very misleading.
 
2012-07-10 07:11:16 PM

SoundOfOneHandWanking: bipartisan? farkwads

corporations are already sitting on the most cash ever, doing huge stock buybacks to increase their earnings per share and thereby the bonuses and now we need to lower their taxes so that they can have more cash?


when you have a tax code that changes dramatically from year to year depending on how dysfunctional Congress is, it creates lots of uncertainty as to what the right investment decisions should be, and some investment decisions can be affected by taxes in a huge way.

i'm not saying that corporate tax confusion is the sole cause of companies sitting on cash, but it is a factor. and companies have themselves to blame by helping create this environment.

so where do we go from here? do nothing is not the right answer.
 
2012-07-10 07:17:26 PM

Flint Ironstag: vpb: Actually 39% is the maximum rate. It varies from 15-39% Unless you count all the loopholes and loss caryovers and deductions and such. The effective tax rate was 12.1% in FY2011.

2/3rds of companies don't even pay tax.

FTA: "The vast majority of the large corporations that did not pay taxes had net losses, he said, and thus no income on which to pay taxes. "The notion that there is a large pool of untaxed corporate profits is incorrect."

Corporations are taxed on profits. If they make no profit they are not taxed. Lots of companies make losses in any one year.

Not saying there isn't lots of "creative" tax schemes, but the headline "2/3 of companies pay no tax" is very misleading.


this reminds me: companies should not be allowed to carry forward losses to offset future tax gains. this is a rule that leaves itself open to all sorts of abuse. it creates distortions in perceived values of publicly traded companies, giving them sometimes very large amounts of intangible assets which inflate their valuations (huge problem at Citigroup)
 
2012-07-10 07:45:23 PM

Dog Welder: Came here to berate subby's intelligence, but I can see I'm not needed here.

/good jorb, everyone


Are you a Mexican?

/there's a fairly goodly amount of illegals here in Maine actually
//they're white and cut trees or drive trucks
/doesn't really get affected by it
 
2012-07-10 08:03:43 PM

The_Six_Fingered_Man: Eps05: Corporations pay taxes on their profit, not on their income. I *might* shed a tear if they had to pay 39% in taxes before expenses. I'd be really happy if i could deduct rent, non-recreational food, work-home transportation fees, clothing, etc, from my taxable income.

Are you unaware of what the Standard Deduction and Personal Exemption are? You are getting, at minimum, an $8000 deduction from your AGI to arrive at taxable income.

But you do know that corporate deductions are not from taxable income, right? They are from total income, which is used to arrive at taxable income.


Doesn't that mean that we are paying more than these "people"? I get my first real deduction this year for being a daddy! So I get 8000+ that.

But corporations get 100% of their income deducted from being taxable.
 
2012-07-10 08:07:42 PM

HighlanderRPI: Troll-tastic headlines? in my FARK Business Politics Jr. tab?

/It's more likely than you think


FTFUs
 
2012-07-10 08:55:01 PM

Rincewind53: That's why companies like GE paid a grand total of 0% taxes last year!


So you are saying you are too stupid to realize how roll forward losses work and why you can't look at a single year for corporate taxes. Got it.
 
2012-07-10 08:56:09 PM

vpb: Actually 39% is the maximum rate. It varies from 15-39% Unless you count all the loopholes and loss caryovers and deductions and such. The effective tax rate was 12.1% in FY2011.

2/3rds of companies don't even pay tax.


Again, one day liberals will grow up and learn, single year rates mean nothing for corporate taxes. Stop being ignorant. Companies do not work on a single year tax scale. Just stop.
 
2012-07-10 08:57:54 PM

MagnesDrachen: HellRaisingHoosier: Do people believe this drivel?

Two kinds of people:

1) morons
2) paid shills

That's about it.


And yet idiot liberals keep citing the 1950s income tax rate which has many of the same problems... Go figure!
 
2012-07-10 09:00:22 PM

King Something: Have you gone to a convenience store lately and purchased a bottle of soda or a candy bar? Did you pay sales tax on that purchase?

Congratulations, you've paid more in taxes than General Electric did in 2010.

/if you believe corporations pay the full 39%, I've got some high-quality real estate for sale about two miles west of the Sawgrass Expressway
//$ome people are more equal than others


LOL, you keep continuing to prove how ignorant of reality you are... keep up the good work King Something!
 
2012-07-10 09:14:29 PM

dumbobruni:
this reminds me: companies should not be allowed to carry forward losses to offset future tax gains. this is a rule that leaves itself open to all sorts of abuse. it creates distortions in perceived values of publicly traded companies, giving them sometimes very large amounts of intangible assets which inflate their valuations (huge problem at Citigroup)


Paying off your debt is an expense. How could it not be?

Year 1:
Make a loss of $1m
Result: $1m overdraft.
No profit no tax.

Year 2:
(Trading) Profit of $1m
Pay off $1m overdraft.
Net Profit $0
39% of $0.00 is......

It works the same if you are GE or a mom and pop store. Same everywhere in the world AFAIK. Note during both years you will still be generating and paying sales taxes, payroll taxes, property taxes etc.
 
2012-07-10 09:24:31 PM

MyRandomName: vpb: Actually 39% is the maximum rate. It varies from 15-39% Unless you count all the loopholes and loss caryovers and deductions and such. The effective tax rate was 12.1% in FY2011.

2/3rds of companies don't even pay tax.

Again, one day liberals will grow up and learn, single year rates mean nothing for corporate taxes. Stop being ignorant. Companies do not work on a single year tax scale. Just stop.


Why didn't you make this point when The_Six_Fingered_Man trotted out his facts above?
 
2012-07-10 09:25:35 PM

The_Six_Fingered_Man: Moopy Mac: You are being disingenuous. It is off-putting and counter productive.

I'm being disingenuous by pointing out facts? WTF?

Before we continue, I'm going to have to ask you from where you determined that Honeywell and DuPont didn't pay the specified rates that the CTJ ascribed to them. They even listed the reasons for the rates in their report.


MyRandomName already said it better than I could.
 
2012-07-10 09:50:47 PM
We should outlaw all companies. They don't really do anything for us and they fark us over every chance they get. We would be much better off if there were no companies. I'd have sooooo much more money to buy stuff all the cool stuff I want at the store and I wouldn't have to work sooooooooooooo hard.
 
2012-07-10 09:52:07 PM

Samalie: MagnesDrachen: HellRaisingHoosier: Do people believe this drivel?

Two kinds of people:

1) morons
2) paid shills

That's about it.

You missed 3) Teabaggers


That was covered in 1)
 
2012-07-10 10:28:27 PM

Welfare Xmas: We should outlaw all companies. They don't really do anything for us and they fark us over every chance they get. We would be much better off if there were no companies. I'd have sooooo much more money to buy stuff all the cool stuff I want at the store and I wouldn't have to work sooooooooooooo hard.


We should outlaw all corporate taxes. They don't really do anything for the US economy and the US farks them over every chance they get. We would be much better off if there were no corporate taxes. I'd have sooooo much more money to buy stuff all the cool stuff I want at the shore and I wouldn't have to work sooooooooooooo hard.
 
2012-07-10 10:33:22 PM
Maybe other countries don't have the world's largest military force to feed.
 
2012-07-10 10:40:37 PM

MusicMakeMyHeadPound: Debeo Summa Credo: Of course, the taxes reduce incentive for investors to enter industry

That has to be the worst part. I was all ready to buy stock - my initial investment would be recouped in seven years and the money after that would be like being paid just for having money - but then I said, "Taxes? I don't THINK so."

So I burned the cash instead.


Right. Idiots like you are representative of the entire investor universe. So it's appropriate to assume that because lower expected returns don't affect your capital allocation decisions, they won't affect anybody else's.
 
2012-07-10 11:18:38 PM

MagnesDrachen: HellRaisingHoosier: Do people believe this drivel?

Two kinds of people:

1) morons
2) paid shills

That's about it.


#2 = GeneralJim
 
2012-07-10 11:59:12 PM
Well ok the rate is too high and the government doesn't capture the appropriate amount of revenue at any given nominal rate.

lower the rate to 25%, reduce deductions; capture more revenue.

tah dah
 
2012-07-11 12:02:07 AM
Welcome to America, the land of opportunity! You make of yourself what you want! The sky's the limit!

..... Hey you rich fark, i'm poor because you were successful! gimme gimme gimme!
 
2012-07-11 12:12:02 AM

Debeo Summa Credo: The_Six_Fingered_Man: The_Six_Fingered_Man: wildcardjack: Can someone name a Fortune 500 company paying 39%? 35%? Even an effective rate in the 20% range.

It's an economy of scale. Once you get large enough to hire weasel accountants they can lower your effective tax rate until you can hire another, and another. Soon your company is paying near zero in taxes, but $500 million a year for weasel food.

The same happens with individuals. Hardly anyone pays their marginal (or statutory) rate.

To answer your question though, the CTJ report that said that the companies were not paying their share also noted at least 70 of the 280 Fortune 500 companies paying in the neighborhood of 30%.

Sorry, to answer your question with a specific example, the CTJ found that Honeywell International had an effective rate in 2011 of 43.6%

DuPont was at 45.6%

Both are in the top 80 companies in the Fortune 500.

Stop confusing them with facts. Left wing shills HATE it when you contradict the narrative prescribed to them.


He can name 3 companies out of the top 500, and you see that as some sort of proof/fact? Do you ignore GE at the same time, as well as the average being slightly over 12 percent?

I'm genuinely curious how pointing out the 12 percent average makes people "left wing shills", but being able to find 3 companies above 39% is "pointing out facts".
 
2012-07-11 12:20:16 AM

Samalie: Sure. I'll be more than happy to change the statutory tax rate to 25% for American corporations.

We will just eliminate EVERY farkING LOOPHOLE YOU CORPORATE farkWADS USE TO RAPE THE WORKING CLASS.


Rape the working class? Really? Tax deductions rape the working class? How? Never mind, you're obviously a retard.
 
2012-07-11 01:18:19 AM
Easy way to fix the corporate tax issues make them pay taxes on income not profit. keep the deductions as even with them they would pay their fair share.
 
2012-07-11 01:56:16 AM

Foundling: Please don't post a story until you're over the age of seven


Please continue to think with your heart. Never let facts get in the way of how you feel the truth
 
2012-07-11 02:27:00 AM
Is subby a shill or just absolutely stupid?
 
2012-07-11 02:40:56 AM
Liberal tax accountant here to clear a few things up so we can have a more informed discussion:

The_Six_Fingered_Man: thomps: The_Six_Fingered_Man: wildcardjack: Can someone name a Fortune 500 company paying 39%? 35%? Even an effective rate in the 20% range.

CTJ has no access to tax returns, so they are using the 10-K, which is not a tax form, has no concrete calculations of tax owed, and cannot be used to accurately determine tax liability for a publicly traded company.

But since so many Farker put so much stock in it, I'll use it to illustrate my point, even if they bury the offending data in their report to make their point look better.

If given an hour or so, I could reasonably determine from IRS data the number of corporations that paid close to the 35% rate.


The tax expense and effective tax rate on the 10-K is actually a better indicator of the tax expense incurred by the company than what appears on a given year's tax return. Reporting for 10-K purposes follows GAAP, which strives to match income and expenses in the same period. The tax return follows all of the wonky tax rules which have deferrals and acceleration of transactions that move revenue and expense to different periods. For instance, during the past couple years businesses have been allowed to depreciate the full cost of any capital equipment they have placed in service for tax purposes. So instead of buying a car and recognizing the expense as depreciation over several years, as they would do for GAAP, they just get to deduct the whole thing this year. Consequently, they forgo the depreciation they would have gotten in later years. The end result of this is less tax paid now but more tax paid later, which nets to zero in the long run. The tax return will simply show greatly reduced taxable income, whereas the 10-K will show a deferred tax liability for the additional future taxes.

runwiz: One sentence in the article did mention that the effective tax rate was well below 39% but did not hold the spokesman for RATE to address that point but instead allowed him to address an entirely different point.


The real rate is 35%. There is a narrow band of income (on the relatively low end) which is taxed at 39%. This and other strange brackets result in a large corporation's income being taxed at a flat 35%.

The_Six_Fingered_Man: thomps: The_Six_Fingered_Man: The_Six_Fingered_Man: wildcardjack: Can someone name a Fortune 500 company paying 39%? 35%? Even an effective rate in the 20% range....dumbobruni:

this reminds me: companies should not be allowed to carry forward losses to offset future tax gains. this is a rule that leaves itself open to all sorts of abuse. it creates distortions in perceived values of publicly traded companies, giving them sometimes very large amounts of intangible assets which inflate their valuations (huge problem at Citigroup)


This is completely unreasonable. Imagine a company has lost $100k 3 years in a row and in the fourth makes a meager $10k. You think the owner has made a profit and should be taxed?

Concerning the intangible nature of an NOL (net operating loss) carryforward, it is a very real asset that can be used to offset actual cash taxes that would be otherwise owed in the future. If it appears unlikely that the company will have future income that will result in payable tax, this asset will be reduced in size or eliminated by a valuation allowance. This is usually an area under high scrutiny by the company's auditors.

i'm not a tax talking guy, so i definitely defer to you on this, but how does a company manage to pay a higher effective rate than the highest marginal rate?

When you end up paying deferred taxes from prior years.


Deferred taxes do not affect the company's effective tax rate. Deferred taxes only relate to timing differences, like the depreciation example above. To use that example further, they would be recognizing expense for higher future taxes (due to forgone depreciation) in the current period. So while they take the deduction for the full cost of the property on their tax return, for 10-K purposes they will recognize additional expense which offsets the effect on the ETR to zero. This is the case for all deferred tax assets and liabilities.

What does affect the ETR are permanent differences between GAAP accounting and tax accounting. For instance, the IRS disallows 50% of expenses for meals and entertainment (with exceptions, but lets ignore those). So, any expenses for meals and entertainment will drive up your ETR, because for tax purposes you get less deduction than for book purposes. To clarify, say you have a company with $100 in income before taxes. If your taxable income is the same as GAAP income, then your tax expense is $35 and your ETR is the same as the statutory rate of 35%. But, lets say that included in your $100 of income is $10 of meals and entertainment expense. Since for tax purposes only half of that $10 is deductible, your taxable income is $105. The statutory rate of 35% will result in current tax expense of $36.75. When you divide that by your GAAP income before tax, you get an ETR of 36.75%. This is how a company's ETR varies from the statutory rate.

The idea that large corporations don't pay any tax is ludicrous. It is true, however, that some companies have very low rates and others high. This is a result of the different treatment for tax purposes of income and expenses. Not all companies reap the benefits of these differences equally, as is indicated by the effective tax rate disclosed in the tax footnote in their 10-K. Flame on!
 
2012-07-11 04:07:53 AM
This is what happens when I'm only moderately familiar with Canadian accounting standards (Due to training, then finding work outside of my accounting field after University).

I hear a claim like this, so I check their investment information.

FY 2009, the company claims to investors that they made over 1.1 billion in tax credits to inflate net profit that year for all taxation purposes (Approx 12% GAIN on net income)
FY 2010, the company "" "" they paid just around 1 billion in taxes as defined in their income statement for all taxation purposes. (Approx. 8% payment on net income)
FY 2011, the comapny "" "" paid 5.7 billion in taxes as defined "" "" "" "". (Approx. 27% payment on net income)

Me thinks they had used the credits to the best of their abilities and had just used as big a bath as they could interntionally for that moment and possibly adjusted their reporting for prior years (Net income adjustment of 3 billion for 2009? Something got re-reported).

Strange note: According to my source (Just yahoo investing) they offer Options at a 0 dollar rate. How that is still legal is absolutely beyond me. "Alright, here's your compensation: You leech value from our investors without costing us a dime".
 
2012-07-11 06:49:43 AM

Samalie: Sure. I'll be more than happy to change the statutory tax rate to 25% for American corporations.

We will just eliminate EVERY farkING LOOPHOLE YOU CORPORATE farkWADS USE TO RAPE THE WORKING CLASS.

I mean jesus...the rate may be 39%...but how many corporations pay that? How many corporations get a net gain from the government in rebates, incentives, etc?

You can have a lower rate....just expect that we'lll actually force you to farking pay it for once. See how you like them apples.


wow, I was expecting but but but... LOOPHOLES to take several posts.

(loopholes are not an American monopoly, dippy)
 
2012-07-11 06:51:37 AM

meat0918: [cloudfront.mediamatters.org image 338x328]


your graph said rate twice.
 
Displayed 50 of 112 comments

First | « | 1 | 2 | 3 | » | Last | Show all

View Voting Results: Smartest and Funniest


This thread is archived, and closed to new comments.

Continue Farking
Submit a Link »






Report