“The United States has a top corporate income tax rate of 35%. Add in state and local income taxes, and it comes to roughly 39%. It is the highest nominal corporate tax rate among the developed economies,” Charley Blaine reports for 24/7 Wall St. “That doesn’t tell the entire picture, however. When you take out research-and-development tax credits, deductions for income taxes paid in other countries and a host of other deductions and credits, the effective rate comes out closer to 27.7%. The new figure is roughly in line with tax rates in other countries, according to the Organization for Economic Cooperation and Development (OECD).”
“The current statutory 35% top rate is bad and should be cut to, say, 25%, many economists say,” Blaine reports. “The current rate discourages foreign companies from making big investments in the United States unless they have to… At the same time, tax-cut proponents say that the high tax rate pushes U.S. companies to move more of their investment spending outside the United States. Cisco Systems Inc. routinely books billions of profits annually through subsidiaries in Switzerland, the Netherlands and Bermuda. CEO John Chambers has hinted at moving jobs out of the country unless the tax problem is fixed. Plus, and this is important, companies that earn big profits overseas do not like to bring the money home because it is subjected to U.S. corporate income taxes. This repatriation can end up being a double taxation.”
“As of December 31, Apple Inc. was sitting on a cash hoard of some $158.8 billion. Of that, according to Apple’s fiscal first-quarter report, $124.4 billion was parked outside the United States. It is not clear what Apple is doing with all that money. It estimates $11 billion in capital spending in fiscal 2014 and it can fund its dividend and interest payments on its debt from domestic profits,” Blaine reports. “That is all bad for the United States. You can cut the rate and cut taxes on repatriated profits, but some may argue that this would push the deficit higher. A better solution, economist Laura Tyson has argued, would be to offset a cut in the corporate tax rate with a boost in the tax rate on dividends and capital gains, now close to historic lows. Half of those dividends and capital gains go to pension funds, retirement plans and nonprofits and are not taxed anyway. Could such an idea happen? Most likely not this year. And Apple’s big cash hoard will keep on growing.”
Read more in the full article here.
MacDailyNews Take: The U.S. corporate tax rate is way too high. Obviously.
Under the current U.S. corporate tax system, it would be very expensive to repatriate that cash. Unfortunately, the tax code has not kept up with the digital age. The tax system handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free flow of capital… Apple has always believed in the simple, not the complex. You can see it in our products and the way we conduct ourselves. It is in this spirit that we recommend a dramatic simplification of the corporate tax code. This reform should be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S. We make this recommendation with our eyes wide open, realizing this would likely increase Apple’s U.S. taxes. But we strongly believe such comprehensive reform would be fair to all taxpayers, would keep America globally competitive and would promote U.S. economic growth. – Apple CEO Tim Cook, May 21, 2013
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Apple makes the money it makes because the US government protects their ability to do business in a way that no other country could or would? Why should they or any other US firm get a discount for that? This “give me my free and protected market for free” mentality is ridiculous. Move Apple or any other US company elsewhere if they think the tax rates are a raw deal. Except guess what? If they are a UAE company, will there be a consulate for them in San Francisco to help them out? No. Apple, Cisco, Microsoft, pay the piper for your dance. Or move!
Move to Germany or Japan, then relist there. Those countries would be very proud of Apple.
Yes, every country would be proud of Apple.
However, the core issue whether 35% or even little higher profit tax rate would hurt USA’s economy makes little sense, because by far most companies only use their profits to buy back their shares or just keep them on bank accounts — not for creating jobs at all.
So every time you hear argument that corporate profit tax should be lowered remember the reality.
please provide verifiable documentation of your statement: “by far most companies only use their profits to buy back their shares or just keep them on bank accounts..”
Thank you in advance.
https://today.duke.edu/2010/09/cfo.html
Here is CFOs’ poll. Kind of old, but results would not be different much.
$1.8 trillion of undistributed profits.
Only half of companies plan any spending, and only half of them on capital spending and investments, and only 22% of THAT would lead to hiring.
So, do businesses need less tax profit? They have accumulated giant profits and any investments that would lead to hiring is literally the last thing they do with their money. Most of it just continues to be unspent or used for share buy back programs.
a poll? I don’t think you understand what “verifiable documentation” means. I’m talking empirical data not some fucking Junior Gallup Poll from boneheads at Duke University that never had a job in the real world.
poll, verb [ with obj. ]
1 record the opinion or vote of: focus groups in which customers are polled about merchandise preferences.
• [ no obj. ] (of a candidate in an election) receive a specified number of votes: the Green candidate polled 3.6 percent.
155 CFOs were polled in detail on that. And this is not the only poll on that matter. And we do not even need poll: just see trajectory of cash and short-term investments blowing up from profits through the years. Cutting tax below 35% would not make companies to create jobs, contrary to common talking point — they just do not do it. Before, corporate profit tax was higher, and when it was cut it brought no effect, either.
so?
That poll was taken in September of 2010, at the height of the RECESSION. Worthless data. When Kennedy and Reagan cut corporate tax rates in the 60s and 80s employment boomed. Facts don’t bear out your thesis. When investment in business is discouraged, as it is now, employment tanks. There is ample evidence for this. I am an economist. I know what I am writing about.
Don’t get me wrong, the argument that 35% corporate profit tax is too high could be very well made, but, for objectivity sake, it should be uncoupled with idea of hiring. Financial history shows no actual effect of tax cuts of this type.
What economy history does show, however, is the fact that tax cuts for the poorest ones have the maximum economy multiplier effect of all, because every cent that people get saved from such tax cuts is absolutely gets spent, raising demand for all kinds of products from various industries.
So the most effective taxation system would be no sales tax on cheap goods, not income tax on the poor, with progressively bigger taxes on more wealthy. This would guarantee maximum economy multiplier effect. By the way, wealthier people, in fact, would not suffer much because growing mass consumption would make their businesses bigger and eventually compensate for higher profit tax.
This is a terrible argument. There’s no correlation between unused capital and a company’s workforce.
Companies only hire when there’s a need for additional resources. They aren’t a charity, hiring just to take people off the unemployment roles.
The same can be said about overhead like office space/manufacturing capacity. Companies invest in resources/capacity when demand for their products justify it.
In the current sketchy economic environment where the middle class in the US continues to shrink, it’s prudent for businesses to play it safe and hold off hiring as long as possible.
This is good argument, because you hear on TV that “if only companies would pay lower than 35% profit tax, THEN they would create more jobs!” — and in reality even with this tax rate they still use only tiny bit of those money for job creation. It is not politicians or economists say that, this is what companies say themselves, this is their financials, there is no way to deny it.
No, it’s a bad argument regardless of who makes it.
You may be able to cite articles from companies saying they’d hire if they can repatriate, but mostly what I see is companies saying they’d pay down debt or invest repatriated $$$. Now if they invest to expand operations in the US then that could result in new hires, but it really depends on how they use the $$$.
Not quite. Apple borrows money only to avoid bringing it back from abroad under 35% tax rate. However, even in US Apple had ~$50 billion of undistributed profits that have nothing to do with hiring people. The same is with other companies. Money abroad are not used or anything, but it does not matter since even domestic money are not used in anything that leads to hiring.
This is not about repatriation of abroad money; this is different issue. USA’s companies have giant undistributed income in the USA. Just like Apple (1/3 of its profits are/were in USA), USA’s profits are spent on share buy back programs, not in any investments that would lead to hiring, or just sit as cash and short-term investments for years.
Actually, Apple is borrowing money to buy back shares. In addition, Apple has invested billions in new plant and equipment IN the USA, for example building four data centers, a new corporate headquarters, a Sapphire plant in Arizona for another company for which Apple is funding the Lion’s share, expanding its Austin assembly plant for MacPros. And IIRC, $12 billion in R&D last year. You really don’t know what you are blithering about.
Swordmaker, see the answer above: http://macdailynews.com/2014/04/09/is-the-35-u-s-corporate-tax-rate-hurting-americas-economy/?replytocom=1399025#respond
Hilarious that you think CFO’s lying to Duke means something. Guess who paid the people at Duke to do this poll and get the results they wanted.
How CFOs were “lying” if the volume of unspent USA-based profits does not decrease? Companies do not spend their money on hiring, this is just statistical fact by Federal Reserve/IRS/Treasury statistics. Cutting corporate profit tax would not change a thing in terms of hiring.
Dress, having the money just sit in bank accounts and liquid assets is NOT what these companies wish to be doing with the money they’ve accumulated. A lot of it is located in off shore locations and many of them want to bring it into the US and invest it here. But under the US current tax code, one of only two in the world that requires such a thing, bringing these funds into the US, despite the fact they were earned under the aegis and auspices of other perfectly legal, independent, sovereign jurisdiction where all legal taxes were paid, income taxes will have to be paid AGAIN, before the now drastically reduced funds can be invested in the plant and equipment to create those jobs you so desperately want these companies to create. No other country on earth except a tiny dictatorship in central Africa does such a thing! For them, it’s not a problem as it only applies to their expat citizens coming home. . . all zero of them.
For those who claim our 35% corporate tax rate isn’t so bad because of deductions. . . those deductions occur ONLY if the business engages in activities that are politically desirable and conform to some pet cause or whim of social or ecological whether it be beneficial to the well-being of the owners of the company, or the future of the business or not. Reaching minimal taxation may actually be an exercise in distortion of good business practices for the best interests of the business, the stockholders, and our economy.
In the best interests of our economic well being, we should not tax the MEANS of generating wealth, but tax the wealth it generates. Tax the dividends! Tax the distributions of the earnings when monetized to the owners of the companies. That’s the way to create jobs and growth!
Not Venezuela.
This is a lot of corporate boot licking. They could keep all their profits in the U.S. and still not be taxed anywhere near 35%.
This is well known and obvious.
What a nonsense article to post here. Probably posted by the same people who post anything for that poor excuse for a human being Rush Limbaugh.
Darwin – thank you for disproving the theory of evolution.
Darwin is the missing stink.
The new “transformed” US believes in “spreading the wealth around”. Or “spreading the poverty around”. That is becoming our chief product in America under our current leader. Look at Detroit. Look at Cleveland, Philadelphia, Houston, DC, Baltimore. Look at the “rust belt” where once busy factories lay idle (good, they consumed energy). Look at the San Joaquin Valley, Central Valley in California, where farms are turning to dust and farm workers are turning to EBT cards. That is OK, there is enough fresh water to save the bait fish in the Pacific Ocean even if there is not enough to water the crops.
Spread the poverty. Thank you Barack.
That is infallible, sound analysis. You should be a logician.
When you have “anti-capitalists” in charge you kill private sector jobs, since they are deemed bad. You are left with government jobs. That is the cause and effect. And yes, it is logical. We elected a Marxist and we will get equality. Except the really rich and the government workers will be “more equal” than everyone in the food lines.
In this paragraph Kent, you pull the gross exaggeration move again. Obama doesn’t remotely qualify as a Marxist or an ‘anti-capitalist’.
BUT: You otherwise essentially got it right IMHO. This is very much part of what happens under the thrall of beyond the edge socialism/Marxism/communism, what ever you want to call it. It’s a catastrophic mess every time, except among a small minority of people who understand how to live in an actual socialist system.
The solution is out in the midlands, if you’re stuck living on the 1 dimensional political scale. Or to put it more intelligently from my POV: You have to take into account every factor available and decide what is the responsible solution to each of those factor’s problems? Obviously, the solution is NOT to go into narrow-minded lock down extremist mode, left, right or center. That’s for little babies having a temper tantrum.
To paraphrase Will Sonnett, “it ain’t exaggeration when it’s fact.”
And: It’s not fact when it’s bloated, exaggerated, imagined opinion. You’re great at the propaganda approach to hiding facts in favor of mere opinion. I am the opposite. Therefore, we don’t get along. We won’t ever get along.
I’m sure he will pull through.
I am watching old episodes of the Phil Donahue show in an effort to better understand Derek. Also some Michael Moore movies.
lol
You are great at dodging responsibility for the destruction caused by your liberal socialist ideology.
Let’s deconstruct some of your facts, all of the cities you cite didn’t just miraculously find themselves in economic trouble as soon as the current administration took over, all of them have seen trouble going back 20 plus years.
Obama didn’t turn California into a dust bowl, or magically turn the climate against America as soon as he took power in 2009.
You use the term socialist, and I am pretty sure you don’t really understand what socialism is, as last time I checked the workers hadn’t seized the means of production, and private business wasn’t 100% seized and now controlled by the state. The stock market is at all time highs, more jobs have been made in the last 6 years than during the entire Bush administration, which included digging out from the 2008 crash and a recession on top of it.
All sides in the political spectrum deserve scorn for the current state of things. Blame can be equally placed on the Republicans and Democrats, and more than a few administrations going back to Carter and even Nixon.
Sorry got a bit wordy there.
Gods, but you dumbs shits are annoying. What you know of socialism wouldn’t fill a thimble. Interstate? SOCIALISM. Police and fire services? SOCIALISM. Gets your heads out of Ronald Reagan’s ass and stop lying to yourself about the nature of Western Democracies. The right wing pretends they are following some Darwinian ideology of survival of the fittest right up to the point they piss away trillions of dollars on corporate welfare. But then it becomes “economic aid” and “American jobs”. Deluded horseshit peddlers have made you believe that billionaires are hard done by and the poor have it too good. The most effective propaganda campaign ever enacted against the middle class for the benefit of the extremely wealthy.
Oh no, it’s Kent. I’ve been here before. And all I have to do is point backwards through history at all the ABUSE of the USA and its citizens by EVERY presidential administration. I can easily point all the way back to the Reagan administration and their absurdity of what I can only call ‘Tinkle Down Economics’. Etc.
IOW: This Obama abomination is just another one of the abusers.
I am so HAPPY HAPPY HAPPY to see Derek back. He is the fellow who says that, yes Hitler was bad but there were German leaders before Hitler so therefore they were all equally bad. Derek says all German leaders of all time are equal to Hitler because Hitler was bad. Derek has difficulty discerning distinctions and the difference between “bad” and “evil”. Other than that, Derek is always a good read.
HAHAHAHAHA!
I’ve spoken my mind the subjects of Kent and dire socialism.
@Kent
Your stupid logic is amazing. I suppose Detroit was a booming town until 2008 when Obama was elected? Back in 2008 our factories were booming and unemployment was low, until Obama stole all their money and started “spreading it around”?
As soon as he got into office he pulled trillions of dollars out the economy (retroactively) and caused the great financial meltdown that happened before he arrived.
As far as him “spreading the wealth around”, I got 2 million dollars on the day he was elected, how much did you get?
Stop letting some talking head on Fox News think for you. Look around and use your own brain for a change. The world is in bad shape right now and unless we start using our own brains to think, the world is doomed!
“…I got 2 million dollars on the day he was elected..”
please provide verifiable documentation, otherwise one might deduce you are one of those internet liars. Thank you in advance.
I am assuming that you must have gotten 4 million on the day he was elected because you are too stupid to understand sarcasm. Don’t spend it all in one place please.
nah.
Almost all major cities have been run by Democrats for the past 60 years. Like Chicago, Detroit, Cleveland, Baltimore. Their budgets, their tax policies, the attitude about capitalism. There is zero question that Democrats detest manufacturing and any private business that uses fossil fuels. It is part of your religion. And the effect of this is to destroy all the capital like factories, refineries, power plants running on fossil fuels, etc . Destruction is considered a virtue nog Democrats. A closed factory is celebrated. A reservoir not built is a victory. A refinery shut down is cause for a party. If you don’t know this you are just ignorant.
kent, the economic problems in the cities that you listed started decades ago during the suburban exodus, not in 2009. If you and people like you would quit assigning blame for everything on the current administration or a particular political party and open your mind to the idea that these situations are complex and cannot be pigeon-holed by simply “naming and blaming,” then this country might be able to turn itself around. You can name any of your preferred present/past politicians and I guarantee that you can trace at least some of the current issues can be traced back to them.
Ol’ jug ears won’t be a happy man until a tax rate of 99% is reached and everyone is eating grass on the road verges because that will have brought equality to America.
You believe your own lies. Pathetic.
Actually, he nailed it. You are the one who likes the lies of the Marxist. Marxism equals lies.
Reality is that even if Obama’s solutions are totally wrong and would destroy the country… That is clearly not his intention. You people have become obsessed with hyperbole. You people have clearly lost your minds.
“even if Obama’s solutions are totally wrong, and would destroy the country…”
Please check your premises, Mr. Bonehead: a solution, by definition, is correct not wrong, otherwise it could not be a solution. Your “logic” verges on the menopausal.
dang, shoulda given Thomas clarity on the use of “premises.” He’s probably runnin’ around his house checking for unlocked windows.
I fire off a few comments from my iPhone occaisionally… I don’t approach this like it’s my profession. I suspect you have nothing better to do than give this forum your all.
in the future, please fire them off in the toilet where they belong.
grass is already taxed in Colorado.
The Colorado Democrats are amateurs. They’re taxing RAIN in Maryland…
The 35% rate is before deductions. Many US corporations pay no taxes and some more back than they pay. The system is designed to be complicated and favors the largest companies in each industry. The system is like this becuase lobbyests write our laws.
The fact is, taxation in the U.S. is currently too low, not too high. Why do I say that? Because our tax revenues do not balance our spending. If you want to cut spending, start making everyone pay the full cost of the services. Then you might get some traction.
The discussion that everyone else is having is distribution of the tax load. It certainly makes sense to levy taxes in a manner with the least amount of adverse impact to the economy. If that means reducing corporate taxes, then fine. But we would have to raise some other tax/fee to compensate. As stated in the paragraph above, we already borrow too much to fund our ongoing government operations. I will not support a tax “reform” that further imbalances the tax revenue/spending situation.
Of course, in Europe, governments make up for the lack of a corporate tax by having the value added tax and what would in the US be extremely high and progressive personal income taxes. And a *much* more robust social safety net than anything in the US. And *much* better outcomes per euro spent.
yeah, that ol’ European Union is quite the model of economic efficiency.
Dividends and capital gain taxes target those who have investments and affect the wealthy the most. That is why taxes on those have been reduced over time. I would be surprised if there was any support for raising tax on those.
The tax code does need simplifying – the loopholes needs to be closed and basic corporate reduced at the same time. In order to do that, politicians need to have the guts to make the change. Unfortunately special interests will make sure the politicians know who will be paying for their re-election or providing them a job after their gov’t career is over.
Whatever taxes corporations pay are reflected in the price of the goods they produce. In the end, it is the consumer who pays the tax.
Wrong. Look up marginal elasticity.
As an economist, I am aware of marginal elasticity. . . But it is a fiction. In the long run all taxes are built into the prices of the goods and services provided by the businesses who supposedly pay those taxes. Why? Because the only MONEY to PAY those taxes comes from the sales of goods and services by the business in the normal course of business — unless the taxes are being taken from the capital invested in the business. . . money which has ALREADY BEEN TAXED and therefore cannot be taxed again. The money from the sales of goods and services comes from the customers. Ergo, inescapably, they pay the taxes.
Thank you, sir.
excellent.
No, some of the money comes from reduced profits by the business owner. The tax acts just like a raise in price.
You clearly do not understand at all. Where do you think those profits come from? The tooth fairy? The profits ALSO are factored into the price of all goods and services and are paid for by the CUSTOMER!!!
You mistake price and costs. Assuming a tax is a cost, . . Which it should not be in a sane system, it would increase the price to the consumer. Taxes should never be hidden in the prices of the goods and services we buy. . . That allows the government to pilfer funds without the taxpayer knowing what, when, and how much he is being robbed of his hard-earned savings. It has been said that taxes should hurt. . . meaning that you should KNOW when you pay them. A tax that is extracted while you are distracted is picking your pocket. . . Theft. Withholding meets that criterion as well. If you don’t see it, don’t receive it, never get to hold it, they take it while the worker is under anesthesia. Some taxes are even worse. . . You work for them, but your employer incurs those costs for you. . . and pays the government on your behalf without you. Would you not benefit more if your employer PAID YOU, and you invested the money in your choice of financial instrument even if you HAD to choose one to invest that money? Yes, you would be. Far better off.
That is incorrect Mr. “economist.” If a firm is profit maximizing at a certain price and a certain tax rate, then they are still profit maximizing at that price at any tax rate, according to math. So a change in corporate tax rate would not change cost to consumer, but only change the amount of money the owner receives.
This may induce the owner to spend more on salaries or equipment, thereby reducing their tax burden. The only other effect would be to make certain industries more attractive IF the tax rate was not applied consistently across industries.
Excuse me. Price is what a consumer pays. Costs are components of prices. You do not understand at all. You are using popular terminology for technical terms. The product sell for a price. Costs are labor, raw material overhead, taxes, advertising, operating, shipping, etc., everything that one includes in the mix to produce and/or acquire the product or service one sells. Once you know your total mix of costs, you apply your mark up to attain the profit you desire. The result is the selling price. That is not a cost for you.
A price can become a cost to the person who buys it. . . But you demonstrate your misunderstanding when you use the terminology “not change the cost to the consumer. . .” Because it would alter the ultimate pricing structure of the company, industry, or economy where the tax rate is applied. It has to.
Do you realize how illogical your argument is? The Widget Company, a corporation, is selling widgets for $10 (price) that cost $5 to make and sell—including all overhead, salaries, amortization of equipment, depreciation, etc., resulting in a gross profit of $5. The hypothetical tax rate is 50%, or $2.50, which is dutifully paid, leaving a net profit of $2.50. . . Which is held in retained earnings in the company. WHERE DID THAT $2.50 TO PAY UNCLE SAM COME FROM? As a business person, to NOT treat this taxes as a known cost and include them in your price calculation is insane.
Now, let’s lower the tax rate to 10%. The Widget Company’s competitor’s living in the same world and competing in the same market also have the same tax rate. . . and also are happy with a similar return. Costs remain the same (and for this example we have to ignore the cascading cost reductions in the supply chain for simplicity’s sake). We work it backwards. $10 price, $5 cost, $5 gross, 10% tax = 50¢ tax, $4.50 Net Retained earnings. . . But the Franistan Amalgamated also makes widgets and cuts the price of their widgets to $9. Widget Co. Responds to compete by cutting its price to $8.50 and so on. . . Until a new equilibrium of competition is reached around $8.
Now, widgets sell for $8 price, $5 costs, $3 gross profit, tax rate 10% = 30¢, resulting in $2.70 net profit retained earnings. . . and perhaps a Dividend! The consumer price WENT DOWN because the corporate tax rate changed! Both the consumer AND the business benefited. Competition and the free market will assure that will happen.
No, you are confusing things here. Your claim, implicitly, is that the tax becomes part of the marginal cost, but your calculation doesn’t incorporate it there. That’s because it is a cost that depends on profit and you don’t model that. Second, you have no demand or quantity change in your calculation, which is kind of the point of me bringing up elasticity.
If we were to try to model it your way, with tax as a part of cost, we’d get something like:
P*Q -C*Q-t*F = F
P=price, Q=Quantity, C= Marginal Cost, t = tax, F=profit.
Assume MC is a constant and setting it to zero just to save keystrokes, the equation becomes:
P*Q =F*(1+t)
You then claim F will remain constant for any t, but that fixes the curve to only one line. For example, a line that passes through 3,5 and 4,6 cannot satisfy the equation. Since the demand curve is a given and can be of many different slopes, your assumptions are proven to be incorrect. QED.
You are ignoring the basic point. If there are NO sales, ergo, no products or services sold, there are NO REVENUES TO PAY ANY PROFITS OR TAXES! The ONLY sources of those funds comes from the money extracted from the production of goods and services paid for by the consumer. . . and you are throwing up a flurry of fiction trying to baffle everyone with BULLSHIT to claim otherwise!
You are busy counting the trees and missing the forest completely. A business cannot exist without the SOURCE of its income. . . and all of it comes from its customers. Once you have made the initial seed investment to set the engine of revenue generation in motion, the output (income that is taxable) is totally a result of the input of cash from the exchange for the products and services the company has manufactured or provides. Without that input from the consumer—the customer—there would BE no income on which to pay taxes. QED the taxes all are paid by the customer IN the prices they pay!
You are sadly, engaging in a fools errand. You cannot convince Democrats that taxes are paid by the end customer. They believe, as a matter of their religious belief in big government, that taxes are paid only by Rich Republican Big Corporate Fat Cat evil people, like the Koch Brothers, whoever they are. And whoever the Koch Brothers are, they must be evil, because whenever Harry Reid speaks he talks about them and foam starts coming out of his mouth and he gets really upset until the men with the white suits and the nets come and take him to a more peaceful place.
My, you do get excited when you are proven wrong, don’t you?
The question is whether an increase in the tax rate will come from the consumer in terms of higher prices or from the business in terms of lower profits. It may be a trade-off according to the specific elasticity of that product at that price, or it may just come from the business because the profit maximizing point is the same regardless. In either case, it is unlikely to be completely passed on to the customer.
No, it’s not the question. You decided to make that the question. My original point STILL stands. . . all taxes, ultimately, are paid by the customer. You are merely arguing what proportion the government and business owner get to take of the profits. . . How to divvy up the take. The Government wants its Vig.
Always ask yourself this question regarding taxes: Who would know best how to spend the money…the people who earned it or the people who stole it?
The current Leader, Obama, and the current lieutenants (Pelosi, Reid, Boehner, McConnell) all believe they earned the money you have and it is theirs (they built the roads and allowed you to breathe) but their generosity means you are allowed to be given some of what you have and you must remit the rest, or go to jail. You did not earn it.
Hold on a gosh darn minute!
You cut the tax rate for foreign made profits, and that money comes into the USA where it circulates and makes more money. You get to tax the vast foreign profits. You get to tax the generated money inside the USA.
And they’re arguing about ‘how to pay for it’?!
And then there’s the justice of the whole thing. That foreign profit has NO obligation to enter the USA and be taxed. Why isn’t #MyStupidGovernment doing all it can to WELCOME that money instead of being a barrier to it? Permanently and deeply cut the taxation rate of foreign made profits, duh. Welcome dear profits to the USA, where we’d gladly have you abide.
“where it circulates and makes more money”
Where it circulates and… makes… more… money…. Greenspan couldn’t have put it better LOL!
What’s it going to do? Get stuffed under Tim Cook’s mattress? Are you oblivious?
If taxes were so terrible then some place like North Dakota would be a business heaven. Why don’t we see the moving vans lined up to move corporations from high tax places like the San Francisco Bay Area to Fargo? Because the Bay Area has a rich ecosystem for supporting business that was paid for with taxes. Things like three international airports, a highway system, rail systems, multiple world class universities, vast public forests and parks, a court system, police and fire departments, and on and on.
There has to be a balance. You can’t have nice things if you aren’t willing to pay for them.
They are. . . There is a business flight from California to low tax states going on to the extent that California is considering laws to continue taxing them even AFTER they have moved away! California has been trying that with civilians already. Three years ago when I paid my company’s payroll taxes on line, EDD would give me two auto assigned reference numbers for the two transactions that were exactly 3000 numbers apart because of the sheer numbers of other California employers connecting and paying their payroll taxes online at the same time. Over the years of the Bush administration I had seen that increment number grow from 1000 to 2000, then 3000. Since the Obama economy and what the Democrats are doing to California, it shrank rapidly back to 1000. I know many small businesses, if they were not geographically anchored because of client bases, that would have pulled out of California years ago and re-established in Texas, South Dakota, or Idaho. . . or even Wisconsin, mine among them.
California even gave Businesses a significant tax credit to hire new employees five years ago. . . the last year it was declared unconstitutional because it did not benefit out-of-state companies who had employees working in California who made no income here (!) to benefit from the tax credit for hiring said employees and the liberal judge ruled the tax credit was “unfair!” The legislature voided the tax credit, retroactive. . . and the state then assessed PENALTIES on all the businesses who had hired people because of this Democrat passed credit, took the tax credit on good faith. . . and then the state charged the businesses INTEREST on the back taxes and on the PENALTIES!!! For five years. . . Retroactively. Is that insane, or what? That’s the way liberals govern.
Wrong, wrong, wrong. In the 1950s through the mid-1970s, the top tax rate was never below 70%, and we had a prosperous economy and pp got a living wage. Why? Because instead of padding executives salaries, or put money overseas, since it would’ve been taxed, they had to reinvest in the business and that benefited workers and the economy. Inequalityforall.com
huh?
Taxes are EVIL
Taxes are the price of admission to a civilized society.
And in Obama’s “civilized society” his IRS GOONS use their power of the police state to target all Obama’s political enemies. And today’s COEXIST Democrats don’t mind, they like the Nazi power being applied to their political enemies. Because they are so tolerant. Not like Brendan Eich.
Not an expert, but what really counts in the end is the ‘effective’ tax rate, i.e. what corporations or individuals actually pay. Almost certainly not the same as the nominal rate for most businesses or 1%ers.
The author makes several rookie mistakes, but he carries it off sounding authoritative and credentialed.
For instance, the real question is not how much Apple (or anyone else) is paying, but rather what it is keeping. An effective rate of 28% is only possible with credits for taxes already paid in other countries — roughly 12%, in Apple’s case, so Apple must pay the US only 28%. But of course, it has already paid the 12% to foreign governments, so it has still paid-out 40% — plus the accounting expenses associated with paying those taxes in many other countries.
It is not about what Apple pays, but what it keeps that matters to Apple, and upon which it bases it’s decisions.
The author points out several ways in which companies reduce their tax rates without resorting to deducting foreign taxes, so your calculations are incorrect.
Absolutely NOT…. If it were our businesses would not be making record profits.. the stock market would not be at all time highs! The rich crying that they actually have to pay taxes on billions of dollars is all this is…. the world isn’t free. This countries laws and business environment allowed them to make the money.. there is a price to be paid for that. If they don’t like it perhaps some other socialist or dictatorship country would be more to their liking? They are still here because its still the best place in the world to make billions at a very low tax rate..
The stock market is at all time highs for only one reason. . . Quantitative Easing. Our vaunted leader who has never so much as run a lemonade stand is borrowing against our children’s and our Grandchildren’s future earnings and buying into the financial markets with $80,000,000,000 a month!
Yes, that’s right. EIGHTY BILLION DOLLARS A MONTH literally being tossed into Wall Street to prop up the portfolios of the stock traders. The treasury department is dumping money in to keep things on the DOW looking good. . . but it doesn’t help main street.
And it doesn’t help the companies who’s stock is being traded because THEY aren’t getting the money so it really cannot be invested in plant, equipment, and JOBS! Obama and Yellin really don’t understand that.
Unless a company issues MORE stock, trades of the shares on the exchange do NOT benefit the company in any way. A company such as Apple is NOT benefitted by having its stock price go up to $1000 a share, or hurt by it dropping to $200, unless they want to raise capital by issuing new shares (thereby diluting outstanding shares and risking raising the ire of current stockholders) and selling them into the exchange. Otherwise, it’s just one shareholder selling to another. . . with Apple getting no piece of the transaction.
Is the 35% U.S. corporate tax rate hurting America’s economy?
Shouldn’t be too hard to answer. Reduce tax rate so that Local, State and Federal tax is 15% total for five years and see what happens. Then increase it to to 50% total for five years. Then compare businesses actions to the two and you’ll have your answer.
35%. Bullshit.
First all it’s a myth that U.S. corporate tax rates are higher than the tax rates of other big economies, because of deductions. The fact is that after deductions and tax credits, the average corporate tax rate in the U.S. is actually lower. According to the Congressional Research Service, the United States has an effective corporate tax rate of 27.1%, compared to an average of 27.7% in the other large economies of the world.
Next? U.S. corporations need lower taxes in order to make investments in new jobs? Nope. Corporations are sitting on almost $2 trillion of cash they don’t know what to do with and are not investing in new jobs. The 1000 largest U.S. corporations alone are hoarding almost $1 trillion.
Rather than investing in expansion, they’re buying back their own stocks or raising dividends. They have no economic incentive to expand unless (or until) consumers want to buy more, but consumer spending is pinched because the middle class keeps shrinking and the median wage, adjusted for inflation, keeps dropping (and has since the late 1960s).
And U.S. corporations need a tax break in order to be globally competitive? BS again. The “competitiveness” of American corporations is meaningless because most big U.S. corporations are no longer “American” companies at all. The biggest firms have been creating way more jobs overseas than in the U.S. itself.
What a complete crock. Anytime a for-profit business suggests that by paying less they’ll give back more in a “piss-down” economic fashion, means they’re lying.
100% Bullshit. Nice work.
Precisely the caliber of reply I expect of you, bottom.
Botvinnik proves that “brevity is the soul of wit.”
You prove that “Montex don’t know shit”.
ah, Montex,..yet another Obamite regurgitant who regards all monies earned by others to be the property of those who did not. A less noble trait does not exist.
Did you learn this new word “regurgitant” in prison, bottom-nik? It’s not in the dictionary.
no, I coined it especially for you.
…a portmanteau of regurgitate and irritant..you should be flattered.
Yes, your standard replies are 100% bullshit.
You might consider finding a better model to paraphrase than ol’ Mealy-Mouthed Montex, chief of propaganda for Gulag Americana.
bottom-nik calls me names so you know I must be getting to him. LOL!
I don’t think any corporations or anyone making more than $100k per year should have to dirty themselves with paying any taxes, state or local. The entirety of the tax burden should be shouldered by the middle class and poor, because… obviously. And only those in the wealthiest 1% should be allowed to vote because… obviously. I am Republican.
Obviously your thinking is irrational because you are a Democrat.
How did all that tax cut tin’ work for your economy to this point, jackanapes? Massive tax cuts have allowed massive hoards of cash to move to the top 5%. That’s it, that’s all. If any of the bullshit arguments about “job creators” needing more money to help the economy were true, you wouldn’t have economic collapses on a regular basis would you?
Truly don’t understand you Americans. You accept that your IRS (?) seek out every individual expat American in the world and double tax them. I have dual-national friends (Canadian/American) who have relinquished their American Citizenship[1] rather than pay dual taxes but your government can’t legislate any kind of taxation on even domestically operating companies in the U.S. Itself. Does any US company actually pay 35%? Doubtful.
[1] Canada’s quality of life is much higher and Healthcare is actually vastly superior in the delivered standards of care, accessibility, quality of doctors and we actually don’t mind an extra day’s wait if someone’s need is more urgent for things like MRIs.
Canada blows. They have not created one original business, concept, art form, music, literature, machine, architecture in their entire impotent, polar existence. Their claim to fame is the dice roll of sharing a border with the United States Of America.
my conscience won’t let me rest without this one caveat: Canada DID take in American men who refused to be drafted into Robert Strange McNamara’s “police action” in Vietnam.
Wrong on all accounts. To quote Dylan Moran, “The reason everyone dislikes Americans—aside from everything they’ve done—is that their stupid people sound so stupid.”
The author of that article is rather confused: he states that the average effective rate is 27%, But then goes on to use the 35% number as if it were the actual fact. And yes, it would be nice to lower the statutory rate in exchange for fewer loopholes, but name me one loophole that actually has a chance of being closed.
Furthermore, I’ve seen estimates that the actual tax rate is as low as an average 14%. Also, this is dependent on the particular industry: utilities are taxed at a high rate (34%) and software firms average a much lower rate (9%) (by some calculations. But software companies can, in theory, move offshore, but utilities can’t: so the idea that the tax rate is causing companies to flee the US it bogus.
Consider the insanity of what you just described. Companies ARE fleeing the US. That is not bogus. It’s a fact. General Electric is now a French Company. Many companies maintain only small presences in the US and have moved much of their operations overseas. . . and it is mostly because of tax reasons. Income taxes are the least of the taxes that are chasing them out.
But to return to the insanity. The basic tax rate for corporations in the US is 35% but the Byzantine tax code results in what you wrote. The outcome varies according to a multitude of seta sides, some of which are industry, or even COMPANY specific, that should never have gotten into our tax code. . . but there they sit. Special favors for political cronies. There are tax breaks in the code that are written to benefit specific individuals. . . ABSURD! That is insane.