37 Giant Corporations Paid 0 in Taxes Last Year -- Who Are the Cheats?

[Karee 4,190]

You were not born then Sousuke, study a bit.

The government used to REQUIRE airlines to provide service to some smaller cities in return for being rewarded the "right" to provide service to a larger city. The government controlled routes. If you wanted to fly the lucrative New York to Chicago route, you also had to provide service to Burlington, Syracuse and Albany, for instance. They did but the fares were crazy expensive because there were not many people flying that route. It amounted to a TAX on the airlines, a government forced expense. Now they are back in smaller cities because there is increased air travel because there are lower fares. It now makes SENSE to fly to New York rather than drive. I can fly to New York for less than what I pay for dinner when I get there! It is $30 to PARK a car in Manhattan, minimum. $13 in tolls to get to the place to park, not counting GAS! $49 to fly there! 40 minutes vs 5 hours.

Seriously, read the FAIR TAX book as it covers many of these examples of when taxes have beenm removed and the results

Now they don't require it, but the govt. just subsidizes it.

http://articles.chicagotribune.com/2011-08-06/news/ct-edit-faa-20110806_1_subsidies-cost-rural-airports-faa

[SMR 368]

What has made seats cheaper is the system of yeild management where actual demand determines the costs of individual seats on a plane (hence you have alot price flux over the same plane). Its interesting because a single plane of 200 passengers might have 50 or 60 different fares. The government system was not as adaptive.

Under the freemarket system, the airline will raise the ceiling if there is market room to do so, independent of other cost pressures, be it fuel, taxes etc.

This is true when the market is controlled by only a few suppliers, there is no potential for new entrants, and supply is inflexible. None of these are true for airlines. There are tons of airlines and if airlines were raking in huge profits there would be more (which would introduce more supply and bring the cost down). Further, the airlines that do exist add and remove flights on a relatively regular basis in order to match demand. If prices (and accordingly margins) were high due to high demand, airlines would introduce more flights. They might undercut competitors a bit in order to pull demand onto these new flights. Prices would go down.

In short, you are ignoring the influence that margin has on a business's decisions. If a type of business has very high margin, new entrants will come and push that margin down. If margin is too low, some companies will move out of that line of business allowing the remaining companies to raise prices and margin. Tax rates are a part of that margin. Obviously things do not change overnight, particularly with big companies. Companies will try to weather spells of low margin without raising prices and prices will have to be sustained and high before they attract new entrants and increased supply. But it will happen.

[luckytxn 2,264]

lol well apparently they give more to foreign communities than US one's per the report.

Yes they do. They pay what taxes that are due. The U.S. allows them to deduct what taxes they pay over a certain amount. They do this so they are not double taxed. If they have paid already 40% in the profits in that country and then the U.S. taxes them at the 35% rate on the remaining then that is unfair as I am sure you can see. The rest of the reason they paid no taxes is that they can also take off the taxes paid at the state and local level. They also can take away taxes they have paid on the raw materials that the Feds and some states have charged. They also can take off others stuff like the costs of doing business. They also can depreciate the large value items they have bought during the year. They are allowed a certain amount every year to depreciate and this year they could be taking off depreciation from items from years ago. ( I remember when I had my own business I wish I could take off of my taxes the full amount the first year and I would paid no taxes that year) Of course there are other deductions that are in the rules that all businesses can take. Also if they incurred any losses in any given year you can write them off.

The one tax that I had a problem with was the one where oil companies could depreciate the oil fields over time. This seemed unfair. It was of course a bought and paid for deduction specific to that industry but has been enlarged for mines and other metals and such. Also in the article it said that these companies had at one year and some two had zero taxes that placed them on the list. It made it look like that they never pay tax but when I looked they have paid billions in taxes in other years. That showed me that in those years there were things they did to ensure they could take a huge deduction that made it where they paid no taxes in that year. Also when I had my own business I searched and used every deduction I could to get the least taxes paid. I even now take advantage of a tax rule where I reduce my taxable income a lot. It has been a very nice thing to have.

[Usui Takumi 1,562]

You were not born then Sousuke, study a bit.

The government used to REQUIRE airlines to provide service to some smaller cities in return for being rewarded the "right" to provide service to a larger city. The government controlled routes. If you wanted to fly the lucrative New York to Chicago route, you also had to provide service to Burlington, Syracuse and Albany, for instance. They did but the fares were crazy expensive because there were not many people flying that route. It amounted to a TAX on the airlines, a government forced expense. Now they are back in smaller cities because there is increased air travel because there are lower fares. It now makes SENSE to fly to New York rather than drive. I can fly to New York for less than what I pay for dinner when I get there! It is $30 to PARK a car in Manhattan, minimum. $13 in tolls to get to the place to park, not counting GAS! $49 to fly there! 40 minutes vs 5 hours.

Seriously, read the FAIR TAX book as it covers many of these examples of when taxes have beenm removed and the results

Eh? That shows the government in that situation was not being adaptive as per my previous statement.

[Usui Takumi 1,562]

Yes they do. They pay what taxes that are due. The U.S. allows them to deduct what taxes they pay over a certain amount. They do this so they are not double taxed. If they have paid already 40% in the profits in that country and then the U.S. taxes them at the 35% rate on the remaining then that is unfair as I am sure you can see. The rest of the reason they paid no taxes is that they can also take off the taxes paid at the state and local level.

I was referencing the statement below from the report - NOT double taxation on foreign profit per your first paragraph above.

"Two-thirds of these U.S. companies paid higher foreign taxes on their foreign profits than they paid in U.S. tax on their U.S. profits."

That has nothing to do with be double taxed. I understand avoiding double taxation quite well through my own taxes and foreign income.

[Usui Takumi 1,562]

They also can depreciate the large value items they have bought during the year. They are allowed a certain amount every year to depreciate and this year they could be taking off depreciation from items from years ago. ( I remember when I had my own business I wish I could take off of my taxes the full amount the first year and I would paid no taxes that year) Of course there are other deductions that are in the rules that all businesses can take. Also if they incurred any losses in any given year you can write them off.

The one tax that I had a problem with was the one where oil companies could depreciate the oil fields over time. This seemed unfair. It was of course a bought and paid for deduction specific to that industry but has been enlarged for mines and other metals and such. Also in the article it said that these companies had at one year and some two had zero taxes that placed them on the list. It made it look like that they never pay tax but when I looked they have paid billions in taxes in other years. That showed me that in those years there were things they did to ensure they could take a huge deduction that made it where they paid no taxes in that year. Also when I had my own business I searched and used every deduction I could to get the least taxes paid. I even now take advantage of a tax rule where I reduce my taxable income a lot. It has been a very nice thing to have.

On depreciation, per the report:

The tax laws generally allow companies to write off their capital

investments considerably faster than the assets actually wear out. This “accelerated depreciation”

is technically a tax deferral, but so long as a company continues to invest, the tax deferral tends

to be indefinite.

In early 2008, in an attempt at economic stimulus for the flagging economy, Congress and

President George W. Bush dramatically expanded these depreciation tax breaks by creating a

supposedly temporary “50% bonus depreciation” provision that allowed companies to immediately

write off as much as 75 percent of the cost of their investments in new equipment right away.

This provision was extended and expanded through 2012 under President Barack Obama. These

changes to the depreciation rules, on top of the already far too generous depreciation deductions

allowed under pre-existing law, certainly did reduce taxes for many of the companies in our study,

probably by tens of billions of dollars. But limited financial reporting of these tax benefits makes

it hard to calculate exactly how much they saved companies in taxes. The depreciation benefits

that companies received, however, are included in our calculations of total tax subsidies.

One thing that seems clear about “bonus depreciation” is

that it has been a failure at stimulating business investment or

economic growth. That was quite predictable even before it

was enacted.11 The chart on the right shows how business

investment in new equipment performed in 2008-10,

compared to 2007, before “bonus depreciation” was adopted.

As noted, even without bonus depreciation, the tax law

allows companies to take much bigger accelerated

depreciation write-offs than is economically justified. This

subsidy distorts economic behavior by favoring some

industries and some investments over others, wastes huge

amounts of scarce resources, and has little or no effect in

stimulating investment. Besides letting “bonus depreciation”

to expire, the rest of accelerated depreciation should be

repealed, too. According to the congressional Joint Committee

on Taxation, the latter reform would cut corporate subsidies

by about $60 billion a year over the first 10 years.

[kokylolo 7]

I work for a very large corporation. They are good to me. They pay me well and provide probably the best benefits package that I have ever seen. They also choose to donate millions of their profits. I know because I work in the department that handles these decisions. Is it possible that these companies are choosing to donate and leverage that positioning rather than pay a tax bill? I am not a tax expert, but it sounds like some of you are very knowledgeable.

[Usui Takumi 1,562]

This is true when the market is controlled by only a few suppliers, there is no potential for new entrants, and supply is inflexible. None of these are true for airlines. There are tons of airlines and if airlines were raking in huge profits there would be more (which would introduce more supply and bring the cost down). Further, the airlines that do exist add and remove flights on a relatively regular basis in order to match demand. If prices (and accordingly margins) were high due to high demand, airlines would introduce more flights. They might undercut competitors a bit in order to pull demand onto these new flights. Prices would go down.

In short, you are ignoring the influence that margin has on a business's decisions. If a type of business has very high margin, new entrants will come and push that margin down. If margin is too low, some companies will move out of that line of business allowing the remaining companies to raise prices and margin. Tax rates are a part of that margin. Obviously things do not change overnight, particularly with big companies. Companies will try to weather spells of low margin without raising prices and prices will have to be sustained and high before they attract new entrants and increased supply. But it will happen.

This is a very good post. Whereas, tax generally does not cause an imediate price change it does affect competition in the long run. Its why we need to be more intelligent with our taxation. If an industry is not very profitable (like the airlines) they should be getting larger tax breaks than a more profitable industry. Unfortunately, the tax code is much more haphazard. Ideally you could develop corporate taxes in a way where rates float on the health of a specific industry. In fact the system could set off an alarm when it shows a specific industry is in trouble. Then we could look into the issue before its too late. I think we as country, for instance, were not aware that China was purposely and actively killing our rare earth metal industry until it was dead.

[Mr. Big Dog 10,747]

The problem is NOT that 37 corporations did not pay tax, the problem is that the rest of them DID.

Odd. I thought that corporations are people. There was a SCOTUS decision not that long ago confirming just that. People pay taxes. And if corporations are people, then it would follow that they ought to pay taxes. Or are corporations only people when it benefits them but not when it comes to paying taxes?