Most companies in US avoid federal income taxes
By JENNIFER C. KERR, Associated Press WriterTue Aug 12, 6:31 AM ET
Two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, according to a new report from Congress.
The study by the Government Accountability Office, expected to be released Tuesday, said about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period.
Collectively, the companies reported trillions of dollars in sales, according to GAO's estimate.
"It's shameful that so many corporations make big profits and pay nothing to support our country," said Sen. Byron Dorgan, D-N.D., who asked for the GAO study with Sen. Carl Levin, D-Mich.
An outside tax expert, Chris Edwards of the libertarian Cato Institute in Washington, said increasing numbers of limited liability corporations and so-called "S" corporations pay taxes under individual tax codes.
"Half of all business income in the United States now ends up going through the individual tax code," Edwards said.
The GAO study did not investigate why corporations weren't paying federal income taxes or corporate taxes and it did not identify any corporations by name. It said companies may escape paying such taxes due to operating losses or because of tax credits.
More than 38,000 foreign corporations had no tax liability in 2005 and 1.2 million U.S. companies paid no income tax, the GAO said. Combined, the companies had $2.5 trillion in sales. About 25 percent of the U.S. corporations not paying corporate taxes were considered large corporations, meaning they had at least $250 million in assets or $50 million in receipts.
The GAO said it analyzed data from the Internal Revenue Service, examining samples of corporate returns for the years 1998 through 2005. For 2005, for example, it reviewed 110,003 tax returns from among more than 1.2 million corporations doing business in the U.S.
Dorgan and Levin have complained about companies abusing transfer prices — amounts charged on transactions between companies in a group, such as a parent and subsidiary. In some cases, multinational companies can manipulate transfer prices to shift income from higher to lower tax jurisdictions, cutting their tax liabilities. The GAO did not suggest which companies might be doing this.
"It's time for the big corporations to pay their fair share," Dorgan said.
http://news.yahoo.com/s/ap/20080812/ap_on_...ions_income_tax
Full Version: Most companies in US avoid federal income taxes
QUOTE(picadilly @ Aug 12 2008, 08:42 AM) 
Most companies in US avoid federal income taxes
By JENNIFER C. KERR, Associated Press WriterTue Aug 12, 6:31 AM ET
Two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, according to a new report from Congress.
The study by the Government Accountability Office, expected to be released Tuesday, said about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period.
Collectively, the companies reported trillions of dollars in sales, according to GAO's estimate.
"It's shameful that so many corporations make big profits and pay nothing to support our country," said Sen. Byron Dorgan, D-N.D., who asked for the GAO study with Sen. Carl Levin, D-Mich.
An outside tax expert, Chris Edwards of the libertarian Cato Institute in Washington, said increasing numbers of limited liability corporations and so-called "S" corporations pay taxes under individual tax codes.
"Half of all business income in the United States now ends up going through the individual tax code," Edwards said.
The GAO study did not investigate why corporations weren't paying federal income taxes or corporate taxes and it did not identify any corporations by name. It said companies may escape paying such taxes due to operating losses or because of tax credits.
More than 38,000 foreign corporations had no tax liability in 2005 and 1.2 million U.S. companies paid no income tax, the GAO said. Combined, the companies had $2.5 trillion in sales. About 25 percent of the U.S. corporations not paying corporate taxes were considered large corporations, meaning they had at least $250 million in assets or $50 million in receipts.
The GAO said it analyzed data from the Internal Revenue Service, examining samples of corporate returns for the years 1998 through 2005. For 2005, for example, it reviewed 110,003 tax returns from among more than 1.2 million corporations doing business in the U.S.
Dorgan and Levin have complained about companies abusing transfer prices — amounts charged on transactions between companies in a group, such as a parent and subsidiary. In some cases, multinational companies can manipulate transfer prices to shift income from higher to lower tax jurisdictions, cutting their tax liabilities. The GAO did not suggest which companies might be doing this.
"It's time for the big corporations to pay their fair share," Dorgan said.
http://news.yahoo.com/s/ap/20080812/ap_on_...ions_income_tax
By JENNIFER C. KERR, Associated Press WriterTue Aug 12, 6:31 AM ET
Two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, according to a new report from Congress.
The study by the Government Accountability Office, expected to be released Tuesday, said about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period.
Collectively, the companies reported trillions of dollars in sales, according to GAO's estimate.
"It's shameful that so many corporations make big profits and pay nothing to support our country," said Sen. Byron Dorgan, D-N.D., who asked for the GAO study with Sen. Carl Levin, D-Mich.
An outside tax expert, Chris Edwards of the libertarian Cato Institute in Washington, said increasing numbers of limited liability corporations and so-called "S" corporations pay taxes under individual tax codes.
"Half of all business income in the United States now ends up going through the individual tax code," Edwards said.
The GAO study did not investigate why corporations weren't paying federal income taxes or corporate taxes and it did not identify any corporations by name. It said companies may escape paying such taxes due to operating losses or because of tax credits.
More than 38,000 foreign corporations had no tax liability in 2005 and 1.2 million U.S. companies paid no income tax, the GAO said. Combined, the companies had $2.5 trillion in sales. About 25 percent of the U.S. corporations not paying corporate taxes were considered large corporations, meaning they had at least $250 million in assets or $50 million in receipts.
The GAO said it analyzed data from the Internal Revenue Service, examining samples of corporate returns for the years 1998 through 2005. For 2005, for example, it reviewed 110,003 tax returns from among more than 1.2 million corporations doing business in the U.S.
Dorgan and Levin have complained about companies abusing transfer prices — amounts charged on transactions between companies in a group, such as a parent and subsidiary. In some cases, multinational companies can manipulate transfer prices to shift income from higher to lower tax jurisdictions, cutting their tax liabilities. The GAO did not suggest which companies might be doing this.
"It's time for the big corporations to pay their fair share," Dorgan said.
http://news.yahoo.com/s/ap/20080812/ap_on_...ions_income_tax
Well, we all should thank senator Dorgan for wanting to squeeze some more money out of the system. I'd also like to say a corporation just hikes is price you and me pay for their product to cover that tax the senator wants to squeeze out. I'm sure none of y'all mind at all paying 15 to 20 percent more for just about anything you want to buy considering our elected representatives have demonstrated they are so much wiser in spending that money than we are.
QUOTE(Marine @ Aug 12 2008, 09:54 AM)
QUOTE(picadilly @ Aug 12 2008, 08:42 AM)
Most companies in US avoid federal income taxes
By JENNIFER C. KERR, Associated Press WriterTue Aug 12, 6:31 AM ET
Two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, according to a new report from Congress.
The study by the Government Accountability Office, expected to be released Tuesday, said about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period.
Collectively, the companies reported trillions of dollars in sales, according to GAO's estimate.
"It's shameful that so many corporations make big profits and pay nothing to support our country," said Sen. Byron Dorgan, D-N.D., who asked for the GAO study with Sen. Carl Levin, D-Mich.
An outside tax expert, Chris Edwards of the libertarian Cato Institute in Washington, said increasing numbers of limited liability corporations and so-called "S" corporations pay taxes under individual tax codes.
"Half of all business income in the United States now ends up going through the individual tax code," Edwards said.
The GAO study did not investigate why corporations weren't paying federal income taxes or corporate taxes and it did not identify any corporations by name. It said companies may escape paying such taxes due to operating losses or because of tax credits.
More than 38,000 foreign corporations had no tax liability in 2005 and 1.2 million U.S. companies paid no income tax, the GAO said. Combined, the companies had $2.5 trillion in sales. About 25 percent of the U.S. corporations not paying corporate taxes were considered large corporations, meaning they had at least $250 million in assets or $50 million in receipts.
The GAO said it analyzed data from the Internal Revenue Service, examining samples of corporate returns for the years 1998 through 2005. For 2005, for example, it reviewed 110,003 tax returns from among more than 1.2 million corporations doing business in the U.S.
Dorgan and Levin have complained about companies abusing transfer prices — amounts charged on transactions between companies in a group, such as a parent and subsidiary. In some cases, multinational companies can manipulate transfer prices to shift income from higher to lower tax jurisdictions, cutting their tax liabilities. The GAO did not suggest which companies might be doing this.
"It's time for the big corporations to pay their fair share," Dorgan said.
http://news.yahoo.com/s/ap/20080812/ap_on_...ions_income_tax
By JENNIFER C. KERR, Associated Press WriterTue Aug 12, 6:31 AM ET
Two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, according to a new report from Congress.
The study by the Government Accountability Office, expected to be released Tuesday, said about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period.
Collectively, the companies reported trillions of dollars in sales, according to GAO's estimate.
"It's shameful that so many corporations make big profits and pay nothing to support our country," said Sen. Byron Dorgan, D-N.D., who asked for the GAO study with Sen. Carl Levin, D-Mich.
An outside tax expert, Chris Edwards of the libertarian Cato Institute in Washington, said increasing numbers of limited liability corporations and so-called "S" corporations pay taxes under individual tax codes.
"Half of all business income in the United States now ends up going through the individual tax code," Edwards said.
The GAO study did not investigate why corporations weren't paying federal income taxes or corporate taxes and it did not identify any corporations by name. It said companies may escape paying such taxes due to operating losses or because of tax credits.
More than 38,000 foreign corporations had no tax liability in 2005 and 1.2 million U.S. companies paid no income tax, the GAO said. Combined, the companies had $2.5 trillion in sales. About 25 percent of the U.S. corporations not paying corporate taxes were considered large corporations, meaning they had at least $250 million in assets or $50 million in receipts.
The GAO said it analyzed data from the Internal Revenue Service, examining samples of corporate returns for the years 1998 through 2005. For 2005, for example, it reviewed 110,003 tax returns from among more than 1.2 million corporations doing business in the U.S.
Dorgan and Levin have complained about companies abusing transfer prices — amounts charged on transactions between companies in a group, such as a parent and subsidiary. In some cases, multinational companies can manipulate transfer prices to shift income from higher to lower tax jurisdictions, cutting their tax liabilities. The GAO did not suggest which companies might be doing this.
"It's time for the big corporations to pay their fair share," Dorgan said.
http://news.yahoo.com/s/ap/20080812/ap_on_...ions_income_tax
Well, we all should thank senator Dorgan for wanting to squeeze some more money out of the system. I'd also like to say a corporation just hikes is price you and me pay for their product to cover that tax the senator wants to squeeze out. I'm sure none of y'all mind at all paying 15 to 20 percent more for just about anything you want to buy considering our elected representatives have demonstrated they are so much wiser in spending that money than we are.
I fault them for spending tax money on a study to to demonstrate what everyone already knew,
in a way that could give them some PR, but produce information that is so general that it is
usless for reducing corruption. I would like to see all companies paying their fair share of taxes.
Or the corporations can cut excessive executive compensation.
QUOTE(david sobien @ Aug 12 2008, 10:14 AM)
Or the corporations can cut excessive executive compensation.
Well David, in the real world most corporations are not Exxon Mobil. I do the CPA work for about four dozen corporations, the biggest had 40 million dollars in gross revenue last year. Guess what the president and vice president (they are husband and wife and own all the stock of the company) of that corporation made last year? One made $24,000 amd the other made $18,000 out of over a half million dollar total payroll. Their office manager and salesmen make significantly more than they do. And they did not have to pay a dime in Federal income tax last year cause of credits the democrats want to take away.
Take away those tax credits and either prices go up or they lay some folks off; which would you prefer?
Its the real world. If you cannot afford to be in business, go out of business. If a business has to worry about taxes, it sounds like they are marginal at best. Your clients are prob tax cheats anyway. Can you depend on what they put on their tax return? They prob do not report their corporate income on their tax return. Do they live in nice homes and drive nice cars? If so how do they afford that?
QUOTE(david sobien @ Aug 12 2008, 01:28 PM)
Its the real world. If you cannot afford to be in business, go out of business. If a business has to worry about taxes, it sounds like they are marginal at best. Your clients are prob tax cheats anyway. Can you depend on what they put on their tax return? They prob do not report their corporate income on their tax return. Do they live in nice homes and drive nice cars? If so how do they afford that?
I heard a IRS Payroll tax auditor make that same statement David. She was examining a fellows business who was paying some people as employees and others as contract labor. It was a driving school and the fellow paid the classroom teachers as employees but the in-car driving teachers he paid as contractors. The auditor had a hissy and demanded he treat them all as employees.
The driving instructers picked up a car from the driving school motor pool, got 3 kids, and they'd be gone for the next four hours. It was the driving instructers decision when he'd be available, the instructers descretion on how to do the teaching, and the instructer had to be licensed as an in-car driving instructer by the state. All the driving school was doing was furnishing a fueled duel control automobile and making sure three kids showed up when the driving instructer said he'd be there.
Well this auditor made him treat them as employees for payroll taxes and it did put him out of business. Why? Cause every other driving school in the country was doing it the way he was before the auditor made him change and he had to pay his in car instructors a premium to make up for the taxes he had to withhold. He couldn't raise his tuition cause every other driving school in the country charged the same price.
Yeah David, slim margin businesses have always been vunerable to the caprices of the IRS.
Well they were employees. All the rest of the companies are tax cheats. Contractors work for anyone in the general public and have numerious clients. These CONTRACTORS worked for the one corporation. I think FEDEX is having the same problem.
QUOTE(david sobien @ Aug 13 2008, 08:55 PM)
Well they were employees. All the rest of the companies are tax cheats. Contractors work for anyone in the general public and have numerious clients. These CONTRACTORS worked for the one corporation. I think FEDEX is having the same problem.
Well since the in-car instructors provided their services to multiple driving schools when and where they felt like it thanks for clarifying the IRS auditor was wrong David.
This is a "lo-fi" version of our main content. To view the full version with more information, formatting and images, please click here.