US Government - Spending Problem or a Corporate Taxing Problem? Part 2

**LAM** · 04-14-2011, 08:42 AM

Corporate-Tax Reporting Draws GAO Scrutiny
By JESSE DRUCKER

At least 23% of large U.S. corporations don't pay federal income taxes in any given year, according to a report by the investigative arm of Congress.

The Government Accountability Office also found that in a given year at least 60% of all U.S. corporations studied -- which also includes many smaller companies -- reported no federal income-tax liability during the period studied, 1998 to 2005.

The study didn't reach any conclusions about why so many corporations reported no tax liability. But prior research has looked at the gap between the earnings that companies report to their shareholders and the smaller profits they report to the Internal Revenue Service.

The finding comes as the next president will inherit a record budget deficit. Both presumptive presidential nominees have proposed closing a variety of corporate tax loopholes. Sen. John McCain, the Republican hopeful, also has proposed cutting the federal corporate tax rate from 35% to 25%.

In the study, the GAO analyzed samples of Internal Revenue Service data covering both publicly traded and closely held corporations, including U.S.-based and foreign corporations operating in the U.S.

For large U.S. corporations -- defined as those with at least $250 million in assets or gross annual receipts of at least $50 million -- the GAO found that 25% reported owing no federal income tax in 2005. That percentage has been falling significantly since 2001, when it reached a peak for the period of 38%. The study also found that about 24% of these large U.S. corporations reported no tax liability for at least four of the eight years being studied.

Also, 72% of large foreign-owned corporations that do business in the U.S. reported no tax liability for at least one year during the period, the GAO found.

The GAO found that most U.S. corporations were wiping out their tax liability without using tax credits or net operating losses -- a mechanism that allows corporations to deduct from their taxable profits the losses generated in previous years. The most commonly used deductions were for salaries and wages and "other deductions."

The GAO didn't attempt to measure taxes owed as a percentage of profitability reported to shareholders, which uses a different system.

"This is a reminder that the reporting is a broken system as far as corporations are reporting one set to the tax authorities and another to the capital markets," said Mihir Desai, a finance professor at Harvard Business School who specializes in tax issues. "Both would be better off if they got a clearer sense of what real profits were."

The GAO report came in response to a request by a pair of Democratic senators -- Carl Levin of Michigan and Byron Dorgan of North Dakota -- who said they were concerned about whether so-called transfer pricing was being abused to avoid taxes. Transfer pricing is the method that companies use to allocate costs and revenue between different tax jurisdictions. However, the GAO didn't attempt to determine whether corporations were abusing transfer pricing.

Full Story Below:
Corporate-Tax Reporting Draws GAO Scrutiny - WSJ.com

**phosphor** · 04-14-2011, 10:58 AM

Like it or not, some of this is a write off to keep more than a few still in the states for operations. I am afraid enforcing the highest corporate tax structure in the world on all fronts will only drive businesses (and jobs) right out of the country. Sad but true I think. Be careful what you wish for with all the evil corporation horse-beating.

Your portion of the article droned on about the corporate part with no mention if there is a government spending problem. For someone to think Washington doesn't have a spending problem definitely needs to lay off the crack pipe.

**LAM** · 04-14-2011, 02:33 PM

Originally Posted by phosphor

Like it or not, some of this is a write off to keep more than a few still in the states for operations. I am afraid enforcing the highest corporate tax structure in the world on all fronts will only drive businesses (and jobs) right out of the country. Sad but true I think. Be careful what you wish for with all the evil corporation horse-beating.

Your portion of the article droned on about the corporate part with no mention if there is a government spending problem. For someone to think Washington doesn't have a spending problem definitely needs to lay off the crack pipe.

I am not anti-corporation or anti-capitalist at all but most don't realize that many of these things that "appear" to be good in reality may not be so good. remember that corporations are the invention of government so they feed off each other.

corporations restrict free trade they do not enhance it in anyway shape or form...

yes, the US government does have a spending problem mainly with the military but the cuts proposed by the GOP have nothing at all to do with the budget and everything to do with politics. the GOP is trying to roll the clock back to the days before the New Deal. they are trying to tamper with economic policy that will be extremely difficult to re-instate once it's gone. at the time when we should be focusing on making the government as efficient as possible, extremists are trying to make things worst.

history has shown time and time again when people of nations, republics, etc. are desperate and reach for radical changes in their government things go from bad to worst in a hurry. the census bureau just reported that 1-7 Americans now live on or below the poverty line. with every recession things are getting continually worst for the middle class, which is really a misnomer. the middle class are really poor people that simply haven't fallen into poverty yet thanks to government subsidies of various forms...

**phosphor** · 04-14-2011, 03:23 PM

Originally Posted by LAM

I am not anti-corporation or anti-capitalist at all but most don't realize that many of these things that "appear" to be good in reality may not be so good. remember that corporations are the invention of government so they feed off each other.

corporations restrict free trade they do not enhance it in anyway shape or form...

yes, the US government does have a spending problem mainly with the military but the cuts proposed by the GOP have nothing at all to do with the budget and everything to do with politics. the GOP is trying to roll the clock back to the days before the New Deal. they are trying to tamper with economic policy that will be extremely difficult to re-instate once it's gone. at the time when we should be focusing on making the government as efficient as possible, extremists are trying to make things worst.

history has shown time and time again when people of nations, republics, etc. are desperate and reach for radical changes in their government things go from bad to worst in a hurry. the census bureau just reported that 1-7 Americans now live on or below the poverty line. with every recession things are getting continually worst for the middle class, which is really a misnomer. the middle class are really poor people that simply haven't fallen into poverty yet thanks to government subsidies of various forms...

I could care less in arguing over the poor deadbeats that are content of their stations life that you rally behind. You are not against corporations, but rail on them continuously on this forum. yadda yadda. The neverending debates, like were running for office. Everyone knows your side, everyone knows mine. While I will call bullshit on many parts of what you said, it doesn't matter. Your not changing my mind and I will never consider changing yours.

**LAM** · 04-14-2011, 04:56 PM

Originally Posted by phosphor

I could care less in arguing over the poor deadbeats that are content of their stations life that you rally behind.

that is the standard reply from those on the conservative right...and this is also why the south and it's conservatism trails behind the liberal north in just about every category...stubbornness and the unwillingness to change as the world around them changes...

the funny thing is that i'm really not that liberal I just appear that way compared to some of the neo-nazis's (I mean neo-con's) on this site..that are on the far-far-far-right...

**Zaphod** · 04-14-2011, 08:25 PM

Originally Posted by phosphor

I could care less in arguing over the poor deadbeats that are content of their stations life that you rally behind.

Being happy and satisfied with what you have makes you a deadbeat?

**Dale Mabry** · 04-15-2011, 06:10 AM

Originally Posted by Zaphod

Being happy and satisfied with what you have makes you a deadbeat?

No, being poor and taking a handout is being a deadbeat. Being a large corporation and taking one is being smart.

**Diesel618** · 04-16-2011, 06:09 PM

at least steroids are out of baseball though..

**GearsMcGilf** · 04-16-2011, 08:20 PM

"Neo-nazis, extremists, and the military is the only area where spending cuts are needed." LOL! Of course there's no waste anywhere else as far as duplicated/redundant govt programs, bailouts, public funding of activist groups like ACORN, NPR, pet projects, etc. Nah, LAM's not far left..... The rest of us who don't agree with his socialistic views are just radical hate-mongers.

**irish_2003** · 04-16-2011, 08:25 PM

gears i love your signature!!!

**GearsMcGilf** · 04-16-2011, 08:30 PM

Werd. It'd be a dream ticket. Raul Castro/Michael Moore is a ticket I could see LAM getting fired up about.

**tommyel56** · 04-21-2011, 12:05 AM

NICE POST (Just trying to get my post count to 50 so I can PM... SORRY!)

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