America's Corporate Benedict Arnolds

[DanS]

people in the US don't pay tax on dividends ??

We do, although the percentage paid has been lowered.

On the other hand, corporate income tax rates in the US are among the very highest in the first world.

[Flubber]

Originally posted by chegitz guevara
It was part of the tax cuts in '93. Dividends are no longer "double taxed."

Oh, I guess you're right about carrying losses forward on business taxes. I forget about those. Still, it would be nice to be able to do that on personal income taxes.

Question-- how exactly would you carry forward personal losses?? If I make 30Gs salary what expenses should I be allowed to deduct so that I can make a loss-- (food?? rent, how about interest on a mortgage??) I agree that in a tough year where you don't make a lot and get in a hole, it would be nice if you don't get slammed with highly "progressive " tax rates since you happen to make more in certain calendar year. Since I don't see how you can have personal losses ( without a business) unless you get into an accounting nightmare ow which personal expenses are deductible, the best that could probably be done is to allow some income averaging so that a person that makes 30, 30, 120 doesn't pay way higher taxes than the one that made 60, 60 60.

I can see problems with this idea as well since people would be screaming about the CEOs getting big tax breaks when they get a huge package and then take a few years off and make no income.

[Dinner]

i don't know if I'm opposed to this lose forwarding or not though I would want to control what sort of loses can be forwarded to prevent an obvious avenue for abuse.

[Flubber]

Originally posted by Oerdin
i don't know if I'm opposed to this lose forwarding or not though I would want to control what sort of loses can be forwarded to prevent an obvious avenue for abuse.

Obviously abuses and frauds should be prevented. Loss carryforwards and carrybacks would be an element of corporate taxationin most countries.


Hmm have I PWNed the article enough yet?? I've actually had Che and Oerdin agreeing with me in the last few posts

[MrFun]

Why do you hate your own country, Oerdin?

[Adam Smith]

Originally posted by Flubber
Question-- how exactly would you carry forward personal losses??

You can carry forward capital losses on your personal income tax because the loss you can claim in any one year is limited. Say you lost $20K when the stock market tanked in 2000. You can use that loss to offset future earnings, plus deduct up to $3000 per year from your income in each of the next five years (IIRC). If you still have some loss left after five years, tough luck, you can't claim it. (This is one reason why income tax payments ahve been picking up recently.)

the best that could probably be done is to allow some income averaging so that a person that makes 30, 30, 120 doesn't pay way higher taxes than the one that made 60, 60 60.

The US tax code does have income averaging, which came in pretty handy the first couple years I was out of grad school.

[Flubber]

Originally posted by Adam Smith
You can carry forward capital losses on your personal income tax because the loss you can claim in any one year is limited. Say you lost $20K when the stock market tanked in 2000. You can use that loss to offset future earnings, plus deduct up to $3000 per year from your income in each of the next five years (IIRC). If you still have some loss left after five years, tough luck, you can't claim it. (This is one reason why income tax payments ahve been picking up recently.)

hmmm-- my recollection was that capital losses in Canada could only be applied against capital gains. So essentially you could shield your later gains and not have to pay tax in situations where your overall portfolio could be sold for exactly what you paid for it

[Flubber]

Originally posted by Adam Smith
If you still have some loss left after five years, tough luck, you can't claim it.

Its pretty easy though to time your loss though unless events occur which result in a deemed disposition. Once you stock tanked in 2000 you could have sold over the next 5 years such that some of the loss would be "useful" until 2010

I actually support longer carryforwards so that you don't place people in odd positions of being forced to hold a stock into another year. I think ( and could be wrong) that capital losses can be carried back for 3 years or carried forward indefinitely in the Canadian system.

[Imran Siddiqui]

Still, it would be nice to be able to do that on personal income taxes.

And then what happens when a CEO buys a super expensive house, making his income -$100million, and carries that loss forward on his income taxes?

Like Flubber said, how do you measure things?

[Flubber]

Originally posted by Imran Siddiqui

Still, it would be nice to be able to do that on personal income taxes.

And then what happens when a CEO buys a super expensive house, making his income -$100million, and carries that loss forward on his income taxes?

Like Flubber said, how do you measure things?

You got it -- and even if you could measure things, aren't you just using the tax system to subsidize consumption-- Who exactly would pay tax?? Almost all individuals spend close to what they make and do you really want to tax people on the bit they don't spend and dicourage savings??

[Dinner]

Originally posted by Flubber
Hmm have I PWNed the article enough yet?? I've actually had Che and Oerdin agreeing with me in the last few posts

You did? Other then Lose forwarding which didn't occur since none of these companies posted a lose what did you pwn? I belive everything else was duly refuted. So you have one interesting piece of tax law which doesn't even apply in these cases. How is that pwnage?

[DanS]

In backup to Flubber (who is doing a superb job of owning the article), corporate income tax receipts are running 50% above the 2003 figures. It is disingenuous to pick out the 2003 figures in isolation and base any kind of general argument on those figures.

[Imran Siddiqui]

Other then Lose forwarding which didn't occur since none of these companies posted a lose

I believe Dan addressed the fact that these companies did have losses in 2003 and earlier that they were forwarding.

[Flubber]

Points 2,3 and 4 of my original post.

I stick with my point. Corporations may or may not be be paying way too little tax but this article proves nothing. Take any industry where two companies paid widely divergent rates of tax. There must be REASONS for this since the same tax code should be available to both. For certain the higher paying corp have a number of tax experts looking at ways to minimize their tax hit so it isn't benevolence.

I think I have demonstrated how the stat cited repeatedly is a GARBAGE number. If someone wants to talk intelligently about this, they need to figure out why two companies in the same industry had such apparent divergent tax bills.

[Dinner]

Originally posted by Imran Siddiqui

Other then Lose forwarding which didn't occur since none of these companies posted a lose

I believe Dan addressed the fact that these companies did have losses in 2003 and earlier that they were forwarding.

Site? I haven't looked up any of these profit statements but the report says each of them reported at least a 1 billion profit to share holders. We'd have to see if 2002 or 2001 were lose years. I tend to believe Aggie and the Mac bridgade would have been gloating if IBM was losing money while Asher would have been running around trying to explain it.