Subject: What a misleading "study", here's some free education...
Posted by: LA_UnderDawg on Mon Aug 18 2008 3:28:55 AM
Message:
"Two-thirds of U.S. corporations paid no federal income taxes
between 1998 and 2005, according to a new report from Congress." I
have no doubt that is a true statement. It is also completely
meaningless. Its only purpose is to elicit an emotional response
from the uninformed. A quick glance at the IRS website's tax stats
page shows that there were 6,191,814 corporation tax returns filed
in 2005. 3,684,086 of those were S corporations. That is 59.5% of
the corporate returns filed. S corps DO NOT pay income tax. Their
profits or losses are passed through to their shareholders who
report the income or loss on their individual returns.
So now the headline should read "6.17% of corporations that may be
required to pay tax if they have taxable income paid no federal
income tax." Now we can't get the population riled up with that now
can we? Notice the complete cop out, "The GAO study did not
investigate why corporations weren't paying federal income taxes or
corporate taxes" (I don't know whet they mean by corporate taxes if
not income taxes). That gives the politicians who are attempting to
mislead the public cover when confronted the facts.
The article also says "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." This is either a mistake in the article or a complete
lie. Again per the IRS website, only 13,226 returns were filed by
these large corporations. Let's see, 2/3's of 6,000,000 is
4,000,000 and 25% of 4,000,000 is 1,000,000. 1,000,000 is not
13,226.
I'll also tell you there are thousands of inactive shell
corporations that do not have any assets but are still required to
file returns. Also most nonprofit charities are formed as
corporations, but do not pay any tax. And many start-up
corporations lose money their first few years and therefore pay no
taxes. They can also carry these losses forward and reduce
otherwise taxable income in future years. I also question how the
hundreds of thousands of subsidiary corporations that do not file
separate tax returns were counted in this study. I could go on and
on with questions about how these corporations were counted.
I do this for a living and deal with stuff everyday. It pisses me
off when I see this sort of misleading crap. If you think 2/3's of
the corporations in this country are making profits and no tax is
being paid on those profits because of loopholes, you are just the
person that the authors of the "study" are hoping to reach.
If you can get your hands on the 8/15 WSJ there is an excellent
article about how the US has some of the highest corporate tax rates
in the world and how other countries are continuing to lower their
rates while we keep threatening to raise ours. The story also rips
this study apart. It was on their website Friday but you have to
have a subscription to read past articles on their site.
