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A few observations about the tax issue.


Posted: Oct 3, 2016

The first thing to note is that any business, and especially those that do business in multiple states and even in other countries, operates in landscape of tax obligations, of which the federal income tax is only one element and might even be much less significant than others.

Second, "tax" refers to every and any monetary obligation that any and all taxing authorities levy on a business and sometimes certain particular operations that it conducts.  For instance, fees for building permits, plans and many other activities conducted by real estate developers are all "taxes."

Third, even at the federal level, income tax is by no means the only tax that a business pays.  The same is true at the state level in every state in which a business has operations.

Fourth, with respect to all of the taxes levied at all levels on a business, the federal income tax stands in last position in the chain. That means that "income" in terms of the federal tax obligation is net of all of the tax payments that a business has paid to the other authorities that stand in a superior position.

In plain English, if a business comes to the end of the chain and has no income or even a loss to claim on its federal return - AFTER having paid, perhaps, $millions in OTHER taxes along with its operating expenses - it is completely illogical to say that the business paid no taxes, or that the business is somehow a "leech on society", "skipping out on its obligations" and some of the other characterizations you can see.

The mainstream media know that the average voter is not an expert in taxes. They know that they can get the average voter to misapply the law, and to misunderstand the way that taxation in this country works, and to ignore the plethora of non-federal tax obligations to which businesses are subject.

There are many more taxes levied on businesses than most of us have any idea.  So, when you've seen a federal tax return, you still don't even begin to have an inkling of how much it has paid in taxes - or whether, indeed, paying all of those non-federal tax obligations might be one of the very reasons that a business has no income or a loss with regard to its federal tax position.

In other words, they know how dead easy it is to get all of us to think very wrongly about this issue. It's a very sophisticated, complex subject that doesn't lend itself to superficial analysis, to snap judgments.  The media invite us jump to certain conclusions merely because they happen to suit our own personal political preferences.  As tempting as it might be, we must not eat the serpent's apple.

No one and no business has an obligation to pay one cent more in taxes than the law requires - not even some sort of "moral" or "patriotic" obligation. In fact, a business has an obligation NOT to pay more than required.  If you're an investor in a corporation that is careless about reducing its tax obligation to the least amount that it legally owes, you should vote to replace the board at the very next stockholder's meeting.

 

;

Keep making excuses - old and burned out

[ In Reply To ..]
for this pond scum. We are not only talking about business taxes, we are talking about paying personal income tax and we won't know the full story until he releases his returns. Do you really think it's all right for someone like DT to pay no income tax? No support for our troops, no support for our infrastructure, no support for health care for the military, you name it.

Is that you, Hillary? - DeplorableMe

[ In Reply To ..]
Speaking of pond scum, how about lying to the families of four dead Americans?

What difference at this time does that make?

BTW, any American with half a brain would take advantage of whatever tax advantages are available to him or her. I know I do. You probably do, too, or then again, maybe not.

Choices - old and burned out

[ In Reply To ..]
In this life we makes choices. We can choose to do everything we can get away with or we can choose to do what is right. Donald Trump made that choice a long time ago and it makes a difference at this time because he continues to do it. If he were not continuing to do it, he would release those tax returns.

He wants to defeat ISIS; that will take money. Who's going to pay for it - mom and pop down the street? They are already sacrificing their sons and daughters. The billionaires need to pay their fair share.
Suggestion - DeplorableMe
[ In Reply To ..]
Go see "Hillary's America."

The last great democrat was JFK. In the years since his assassination, the democrat party has sunken to the depths of depravity not previously known to man. The democrats are all about keeping the oppressed oppressed by redistribution. They don't want the oppressed to be successful. Go see the film. Keep an open mind.
Because I lived during JFK - Onlygooddemocrat
[ In Reply To ..]
I loved JFK despite his affairs. He and his brother were a good combination and I wished they had not been assassinated. I don't think that we would have this mess.

I liked Ike, but not tricky Dickey nor Lyndon Johnson and didn't like the way he was sworn in so fast. I mean he was already in charge, could have waited till after the funeral at least. I didn't like the Bush presidents much or the wars and of course do not like the Obama administration all 8 years of it.

I think the ones who fought in WWII were the best presidents. They really knew what they were fighting for. We should have listened to Ike about the military industrial complex.

I believe in my heart that Hillary and Bill are having people knocked off like the mafia used to knock people off. Here we have Wikileaks founder having death threats against him. I would bet anything he has some real dirt on Hillary and they are trying to get all over that.

I couldn't agree more. - See Msg
[ In Reply To ..]
They got to James Comey and Lester Holt. Now it's Julian Assange.

The above are in addition to those who have passed under mysterious circumstances.

What gets me is how Hillary laughed at getting a criminal off for raping a 12-year-old girl. She was a cold-hearted monster 40 freaking years ago and has only gotten worse.
Another Dinesh D'Souza infomercial - old and burned out
[ In Reply To ..]
In order to be a considered a documentary film maker you need to have credentials. D'Souza has an agenda and does not present information from a neutral point of view. How can you watch a piece of propaganda with an open mind? Now if Ken Burns had made the film, I'd watch it.
It's really a sad shame when people are afraid of the truth. - sm
[ In Reply To ..]
But I'm not surprised. I watch and read liberal media from time to time and understand where the rhetoric comes from.
We obviously - old and burned out
[ In Reply To ..]
have a different definition of truth. It's very difficult to discover the truth sometimes but you definitely don't get it from someone with an ax to grind.
You don't get truth from someone on a power trip - who lies her way to the top
[ In Reply To ..]
and who leaves dead bodies in her wake. Just sayin'...
You don't get it from someone who's on a power trip - and lies HIS way to the top, either.
[ In Reply To ..]

nm
I love your view old and burned out.. - lisa
[ In Reply To ..]
and totally agree...
I hope there are enough of us - old and burned out
[ In Reply To ..]
to make sure that low-life doesn't get to the White House. There have been many candidates and presidents that I haven't liked but I've never been scared before.
Like Hillary & Bill don't take advantage. Their #1 idol - Truthhurts
[ In Reply To ..]
Warren Buffet follows the same corporate tax conversion as the New York Times. How is that NOT hypocritical?

Warren Buffet complained that his secretary paid more taxes than he did, yet did he STOP using the tax code to pay more taxes? Of course not!

They all do it. Seems like only liberal progressives are allowed to scream bloody blue murder about the right/conservatives using the allowable tax code. Stop falling for the stupidity that the media pushes.

The government wastes so much of our tax payer money - that there is no incentive to pay it

[ In Reply To ..]
Our tax attorney tries to find every way possible to save on our taxes. We don't want to spend any more on taxes than we have to. Most tax payers would agree, I would think.

Something else - many provisions of tax law were written to encourage business - to invest and expand.

[ In Reply To ..]
An example is the complex set of regulations that govern depreciation expenses. In simplest terms, an expense offsets an equal amount of income.

When a business invests in productive capacity such as plant and operational capacity such as machinery and other equipment, it is allowed to assign depreciation expenses over the useful life of the asset in question.

So, it sets up a depreciation schedule and over successive accounting periods it apportions a certain percentage of the depreciable cost of such assets in order to recognize the "depreciation expense", until finally that asset has been fully depreciated. The asset's value on the balance sheet is reduced to zero (with certain provisions for salvage or residual value).

Another example has to do with when revenues and expenses are recognized for tax purposes. Timing matters when it comes to tax obligations, and sometimes this is what leads to misunderstandings about the difference between "profits and losses" for business reporting purposes and "profits and losses" for tax reporting purposes. If Boeing lands a large jet liner contract they and the press publicize the "multimillion dollar award", which many in the public seem to imagine implies that the customer has laid a check on Boeing for $multimillion. In fact, the revenue for that contract will not be realized for many, many periods in the future and will be apportioned during those periods according, again, to a complex set of regulations regarding the recognition of revenue, and whether it is recognized when earned or when paid, etc. The same is true of many expenses. Boeing contracts with a company to provide seats for these aircraft, but it doesn't recognize that expense immediately, all at once, or even at the end of the contract.

Ideally, the financial statements of a public company should reflect the manner in which these matters are being handled, but there are practical limits to what might be called perfect disclosure.

There are a myriad tax laws, tax regulations and recognized accounting practices that are among the reasons that "seeing a tax return" doesn't tell anyone - even outside tax experts - nearly as much as we're being led to believe.

these were personal taxes, not business taxes - ?

[ In Reply To ..]
that should be clarified.

stupid point anyway. the guy is just plain weird, sorry.

LOL. The distinction isn't quite that stark, but okay. I'm not - being paid to teach tax law.

[ In Reply To ..]
On to other things...

Just sayin', the OP was all about businesses not paying taxes - ?

[ In Reply To ..]
...how for businesses that do not pay taxes it is an incentive...and they should not have to pay taxes, etc.

these were not business taxes.

should not try to mislead people.

Sick of hearing this company or individual "didn't pay taxes" - which is hardly ever true.

[ In Reply To ..]
Anyone who's been in business knows that one way or another, you're paying taxes of one kind or another.

I bet there's lots on this forum who paid no federal tax last year, or darned little - and who did everything they could to reduce their tax obligation as much as possible. And when your tax preparer called and said you owed less than you had feared, did you weep that it wasn't more?

And did you send the Treasury more than the amount your return said you owed?

Hell no. You did a little jig, called your spouse with the good news, and cut the check to the Treasury for the exact amount that your return said you owed, not one penny more.

You might say otherwise and some would believe you, but millions wouldn't.

And by the way, it's just fine if you paid exactly what you owed, and it's even fine if you wound up owing nothing or got a refund. You did only what this nation expects of you.

And it would wrong for anyone to say that YOU "paid no taxes" - assuming you made purchases and paid sales tax, bought gasoline and paid the gas taxes, had a telephone/internet service and paid communications taxes, renewed your motor vehicle registration, paid your property taxes, perhaps got a building permit to add a room to your house, etc.

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