IRS Scandal

[eeven73]

Thoughts?

[goofyboy]

IRS is supposed to be a non-biased entity. They went way out of that realm and targeted specific groups / citizens and harrassed them. The over reach of the federal government has gotten out of control. Bush II started it and Obama is letting it roll along.

[jgriffith]

Its scary and sad and probably nothing new. I've lost a lot of faith in our system over the last few years.

[Rhawn]

The American government is a stuff filled cesspool, news at 11.

[Porterwake]

Why is everyone surprised and shocked at this? We've had the Patriot Act in effect for over 10 years that allows the Feds to spy on us all they want. How stupid is America to fall into this politicized trap?

Well I guess this is only important because it targeted political groups which affects politicians. They will only care and make something out of it if it affects them. If the Feds are spying and collecting information on Americans and can detain them indefinitely over suspicion, they don't care.

Screw American government.

[buckthis]

The IRS laws consist of 72,000 pages WTF? Close some of the loopholes You A-holes, oh, thats right you listen to the lobyists who make millions by working for the companies that make billions and get to keep 98% of their profits because they have a little p.o. box in the Cayman Islands, F-them! Welcome to America (We screw the little guy, and they like it!)

[Okie Boarder]

Porterwake, yup.

buckthis, yup.

It's amazing to me how asleep at the wheel we've been for years and all the liberties we've already lost. What is also amazing to me is how long a small group has been pulling the strings. Trace the money back and you'll see for yourself.

I'm not surprised about this IRS targeting thing. They've been targeting people since 1913...we're hearing about it now because it is a larger and political group.

[jgriffith]

buckthis, screw the little guy? How so? I thought the rich paid the very large majority of the taxes and millions of little guys paid negative taxes...

[buckthis]

The little guy, the one who works a 40 hr week and cannot afford a CPA to do their taxes. Not that a CPA could save them any money because most of the money goes to buy necessities for his family of which Most of it is TAXED! When a corporation pays 2% or Less of its profits for taxes America gets screwed with no lube! These corporation have almost all of their workforce In America but with offshore accounts get their taxes they owe to almost if not zero.

[jgriffith]

buckthis, you obviously dont understand the tax system...

http://www.ntu.org/tax-basics/who-pays-income-taxes.html

[buckthis]

jgriff, you obviously don't understand the Corporate tax system, Finland has one of the lowest corporate tax rates in the world at 12% but that's not good enough, so they get yet another subsidiary with a p.o. box in the cayman islands that only charge a 2% tax rate even though most All of the employees work and live in the US. See, when I say PO box, that is their whole company with thousands of employees stuffed into a little 4"x3" PO box, how do they do it? Its called loopholes, I think most people on this board know I am Not talking about Working Americans when I talk about big companies who make Billions of dollars and do not pay their fair share of taxes, so your chart with individual tax returns is irrelevant.

[jgriffith]

Hmmm...the little guy who works 40 hrs a week..i figured thats who you were talking about for some strange reason

[jgriffith]

Please explain to an ignorant taxpayer like myself what these corporate "loopholes" are

[taitrt]

I feel like this should be the standard treatment for any political party who applies for tax exemption, not some exception for the Tea Party.

[jason_ssr]

A compromised IRS is a big deal.

IMO, our tax code is a shady setup to begin with. I dont mind businesses having tax loopholes. They should. What are taxes in a country for the people by the people? They are the cost of citizenship for individuals. They pay for the protection and infrastructure of the country. Businesses are not individuals. They provide jobs so individuals can earn money and pay tax on the income. They should be given every incentive possible to put more individuals to work!

Many complain that big businesses influence the government. The people should infulence the government! Then stop taxing businesses to death and affectively turning them into citizens with just as much right to the government's ear as the individual. They are bigger!

A guy who makes a good enchilada plate shouldnt have to be an accounting genius just to sell a few. Small business is dying in this country because the government makes it infinitly complex in an effort to sqeeze every penny out of it. Its easier and more profittable to just go to work for an established industry giant.

[buckthis]

"Please explain to an ignorant taxpayer like myself what these corporate "loopholes" are"
jgriff, The tax code consist of 72,000 pages! everyone is an ignorant taxpayer! Even the IRS agents have a hard time understanding the code. General Electric has been in the news for the last several years because they pay no taxes!

Bank of America
Had $17.2 billion in profits offshore in 2012 on which it paid no U.S. taxes. Reported it would owe $4.3 billion in U.S. taxes if profits are brought home.

Citigroup
Had $42.6 billion in profits offshore in 2012 on which it paid no U.S. taxes. Reported it would owe $11.5 billion in U.S. taxes if profits are brought home.

ExxonMobil
Paid just a 15% federal income tax rate from 2010-2012, less than half the official 35% corporate tax rate – a tax subsidy of $6.2 billion. Had $43 billion in profits offshore in 2012 on which it paid no U.S. taxes.

FedEx
Made $5.7 billion from 2010-2012 and didn’t pay a dime in federal income taxes. Got a tax subsidy of $2.1 billion. Received $10.3 billion in federal contracts from 2006-2012.

General Electric
Made $88 billion from 2002-2012 and paid just 2.4% in taxes for a tax subsidy of $29 billion. Paid no taxes in 4 years. Had $108 billion in profits offshore in 2012 on which it paid no U.S. taxes. Received $21.8 billion in federal contracts from 2006-2012.

Honeywell
Made $5 billion from 2009-2012 and paid just $50 million in federal income taxes – a tax subsidy of $1.7 billion. Had $11.6 billion in profits offshore in 2012 on which it paid no U.S. taxes. Received $16.7 billion in federal contracts from 2006-2012.

Merck
Made $13.6 billion and paid $2.5 billion in federal income taxes from 2009-2012. Paid an 18.4% federal income tax rate, half the official 35% rate – a tax subsidy of $2.2 billion. Had $53.4 billion in profits offshore in 2012 on which it paid no U.S. taxes. Received $8.7 billion in federal contracts from 2006-2012.

Microsoft
Saved $4.5 billion in federal income taxes from 2009-2011 by transferring profits to a subsidiary in the tax haven of Puerto Rico. Had $60.8 billion in profits stashed offshore in 2012 on which it paid no U.S. taxes; reported it would owe $19.4 billion if profits are brought home.

Pfizer
Received $2.2 billion in federal tax refunds from 2010-2012 while earning $43 billion worldwide even though 40% of its sales are in America. Had $73 billion in profits offshore in 2012 on which it paid no U.S. income taxes. Received $3.4 billion in federal contracts from 2010-2012.

Verizon
Made $19.3 billion in U.S. pretax profits from 2008-2012 but paid no federal income taxes during the period; instead got $535 million in tax rebates. Total tax subsidy: $7.3 billion. Received up to $6 billion in federal contracts from 2011 through 2023.

CORPORATE TAX DODGERS AND THEIR FAVORITE LOOPHOLES

As the budget battles in Washington continue, corporations have stepped into the fray with some of
the most aggressive lobbying we’ve seen in years – calling for cuts to corporate tax rates, a widening of offshore tax loopholes that already cost the U.S. Treasury $90 billion a year, and cuts to government services and benefits, including Social Security and Medicare.

In making their case, corporate executives decry the U.S.’s 35% corporate tax rate claiming it is the highest in the world and makes their businesses uncompetitive globally. The evidence suggests otherwise.

Corporate profits are at a 60-year high, while corporate taxes are near a 60-year low [See Figure]. U.S. stock markets are at record levels, and American CEOs are paid far more than executives who run firms of similar size in other nations. Many U.S. corporations pay a higher tax rate to foreign governments than they do here at home.

America’s 35% tax rate is the highest among industrialized nations, but very few companies pay anything like those rates. Total corporate federal taxes paid fell to 12.1% of U.S. profits in 2011, according to the Congressional Budget Office. The average profitable company in the Fortune 500 paid just 18.5% of its profits in federal income taxes between 2008 and 2010, according to Citizens for Tax Justice, a nonpartisan tax research organization. Dozens of large and profitable companies paid nothing in recent years.

CEOs who are the face of various corporate pro-austerity, anti-tax campaigns with names like Fix the Debt, The LIFT America Coalition, The RATE Coalition and even the long-standing Business Roundtable, preach a theory that cutting corporate taxes is “pro-growth.” But they neglect to say that the growth is of their corporate bottom lines, not the economy and certainly not social well-being.

Though many of these austerity crusaders have corporate retirement plans that will provide tens- and even hundreds of thousands of dollars PER MONTH in their retirement, these CEOs shamelessly argue for cutting monthly Social Security benefits and raising the retirement age to 70 – which automatically reduces seniors’ retirement benefits by 20%.

It wasn’t always this way. There was a time, not so long ago, when America’s largest businesses did not question the need for taxes to pay for investments in education, infrastructure and basic research that benefited businesses and citizens alike. It was from these investments that things like computers, the Internet and life-saving drugs and medical technology emerged in life-changing ways.

In 1952, under Republican President Dwight D Eisenhower, corporate income taxes were nearly a third of the federal government’s receipts but had declined to less than 10% by 2012. This is due to a corporate tax code riddled with loopholes, perks and preferences won by corporate lobbyists and backed by millions of dollars of campaign gifts to Members of Congress.

Corporate Tax Dodgers - Decline of Corporate Taxes as Percentage of Federal Revenues, 1952-2012

This report looks at 10 U.S. corporations that have used an array of tax loopholes and corporate subsidies to slash their tax bills. Here are a few of the loopholes and subsidies:

The offshore tax loophole. This gaping loophole costs the U.S. Treasury $90 billion a year by letting corporations ship profits and jobs overseas. It was originally established to encourage U.S. multinational corporations to expand their businesses into other countries; for instance, to encourage car manufacturers to build plants and sell cars in Germany or England. If profits from those sales were reinvested in new and better plants overseas, that money would not be subject to U.S. income taxes. But starting a couple of decades ago, corporate tax attorneys and accountants found ways to stretch this concept and set up ways for companies to register intellectual property, such as patents or trademarks, in low-tax nations, called tax havens.

When a product is sold in America, a chunk of the purchase price is sent to the tax haven to pay for use of the patent, and these funds escape U.S. taxes. One of the companies profiled in this report is Microsoft, which sends 47 cents of every U.S. sales dollar to Puerto Rico to pay for patents on discoveries largely made in the United States. Pfizer has turned these tax-avoiding paper transactions into an art form – it sells 40% of its drugs here but hasn’t reported any U.S. profits in five years. Merck and Citigroup also benefit from offshore tax loopholes.

The excessive CEO pay tax dodge. This loophole was created in 1993 when Congress passed legislation seeking to cap the deductibility of executive compensation to no more than $1 million per year per executive. Companies could continue to pay whatever they wanted, taxpayers just wouldn’t be subsidizing more than the first $1 million per executive. As the bill moved through Congress, a loophole was inserted that exempted all pay considered to be “performance based.” Rather than reining in pay, the effect of the law with the loophole intact was an explosion of stock-based compensation. This loophole costs the U.S. Treasury $8 billion a year. Honeywell is one of the company’s profiled that has used this loophole to save on its taxes.

The corporate malfeasance tax dodge. When you get a parking ticket or a speeding ticket, come tax day you are out of luck because such fines are not tax deductible. But if you are a corporation, the costs of corporate crimes and abuse are most often tax deductible, in effect forcing other taxpayers to subsidize their abusive behavior. When Bank of America paid to settle claims that its foreclosure practices violated the rights of customers who lost their homes or when ExxonMobil paid $1.1 billion to settle claims for the Exxon Valdez oil spill, their tax deductions of these costs meant the rest of us picked up some of the tab for their harmful practices.

The paying business to do what it would do anyway tax subsidy. Several companies profiled were able to sharply cut their taxes by taking advantage of special tax write-offs associated with the 2009 stimulus bill. Corporations have long been allowed to deduct a portion of the cost of their property and equipment over the life of the asset. But the 2009 law allowed companies to immediately write-off 50% of the value of the equipment in the year the purchase was made, regardless of how long the equipment was expected to last. While the intent of the legislation was to get businesses to spend more to stimulate the economy, in reality most companies got enormous tax breaks for doing what they were going to do anyway. FedEx and Verizon are big beneficiaries of this subsidy as they buy aircraft and build cell phone towers.

Bank Bailout, round 2. America’s taxpayers spent more than $2 trillion to bailout America’s financial institutions during the recent banking crisis. But the terms of the bailout did not address whether the financial institutions involved could use the losses incurred during the crisis to reduce their taxes for years to come, in effect, giving them a second bailout. Bank of America used its losses as a get-out-of-taxes free card. Many other banks and financial institutions did the same.
http://www.ips-dc.org/about

[jgriffith]

buckthis, thats all nice, but how does that screw the little guy who pays no or low taxes? (The 40 hour a week guy you referred to, also see my link)

Also if the money never enters the US why should it be taxed? The patents were sold to foreign corps before they became profitable. The money cannot enter US commerce without being taxed

I agree about the bailouts, the gov needs to stay out of private business. Capitolism works if you let it work, some businesses succeed, some fail

[buckthis]

buckthis definition of the little guy- guy who works 40 hrs a week, makes less than $150,000 a year, cannot avoid taxes like the big corporation, the little guy spends most all of his money which supports the large corporations that pay no taxes.

jgriff definition of the little guy- guy who leaches off the government causing great harm and growing the federal deficit because he doesn't make enough money to pay more taxes, scumbag lowlife not worth anything cannot even work for one of the great corporation who gives us the opportunity to work and make a living.

[jgriffith]

Ill tell you who gets screwed, the guy with the advanced degree with massive student loans who immediately loses all "loop holes" when he begins work (child credit, ira (roth and traditional), student loan interest deduction, and more) and has to pay a large % of his income in taxes.

[buckthis]

Exactly.

[eeven73]

Sad this has digressed to a tax structure discussion.

It should be a discussion of political corruption.

[jryoung]