Bernie Sanders' Effective Tax Rate is 13.5%

[cm husker]

Do you have a problem with this retaining in offshore accounts monies earned offshore thereby avoiding US taxation (until they bring it back onshore)?

 

It's very very important to understand when evaluating this specific issue is that (a) they aren't sending US profits offshore to dodge US taxes, and (b) this is a completely legal tax avoidance strategy with respect to monies earned by a US company by selling its products overseas. It's not tax evasion.

[cm husker]

15 Fortune 500 companies didn't pay taxes probably got the same reason 47% of Americans don't in a given year. They weren't profitable and/or had legal deductions that reduced their taxable income to zero for a year. Think, for example, about the massive losses in the oil sector this year. Those are large companies that will likely not pay taxes because they operated at a loss.

 

Keep in mind that their shareholders and employees will still pay taxes based on value they derived from the company this year, so it's not like there's a Scrooge McDuck vat of money situation where the pool isn't taxed at all.

 

What would be more interesting is to see if any of those 15 companies have paid no taxes during the past 5 years. My suspicion is that they all have.

[BigRedBuster]

I agree that it's a very complicated subject.

 

If the money is off shore due to normal business practices.....then, that's a gray area that is well open for discussion.

 

However, my main supplier is a Japanese company with a large portion of their production in the US because this is where the raw materials are and a good portion of their market. However, they also export a large amount of what they produce in the US. The products that are exported, are some how transferred or sold to a wholly owned subsidiary that is located on some island in the Caribbean. They sell that product to the off shore company at or below costs so it appears the sale didn't produce any income to be taxed. By doing this, they can then sell it to Europe at a profit and those profits are not taxed.

 

THIS scenario, I have a problem with. Here you have a foreign company coming into the US, using our resources and services that allow them to do what they do and they use these types of tactics to avoid paying a large portion of taxes.

 

So.....it's not an easy subject.

[BigRedBuster]

15 Fortune 500 companies didn't pay taxes probably got the same reason 47% of Americans don't in a given year. They weren't profitable and/or had legal deductions that reduced their taxable income to zero for a year. Think, for example, about the massive losses in the oil sector this year. Those are large companies that will likely not pay taxes because they operated at a loss.

 

Keep in mind that their shareholders and employees will still pay taxes based on value they derived from the company this year, so it's not like there's a Scrooge McDuck vat of money situation where the pool isn't taxed at all.

 

What would be more interesting is to see if any of those 15 companies have paid no taxes during the past 5 years. My suspicion is that they all have.

That's exactly my point as to why I need more info before I get outraged by this.

[cm husker]

Yeah, that wasn't directed specifically at you. Though the people who it was directed at probably won't read or try to understand it.

 

You mentioned something; why should capital expenditures be deductible? Wouldn't it make more sense to eliminate those deductions and just lower the rates on everyone?

[BigRedBuster]

Yeah, that wasn't directed specifically at you. Though the people who it was directed at probably won't read or try to understand it.

 

You mentioned something; why should capital expenditures be deductible? Wouldn't it make more sense to eliminate those deductions and just lower the rates on everyone?

Not necessarily. I have no problem with financially motivating companies to build corporate infrastructure, update equipment, maintain current equipment...etc.

[cm husker]

Not necessarily what?

 

And while I don't have a problem with wanting companies motivated to do that, we don't need to motivates them with tax breaks. Competition and profit incentives are motive aplenty.

 

What happens with these tax breaks is that it bestows an advantage on existing competitors at the expense of everyone else.

 

I don't think you'd advocate a direct subsidy to a company to do those things (i.e., us gov writes a check to apple or exxon to upgrade their facilities), but tax breaks are effectively the same thing as a direct subsidy.

 

Recall, if the government budget is $100,000 then a tax break on company A means that companies B, C, D and individuals X, Y, Z have to pick up the slack that A dropped through its tax break/subsidy.

[BigRedBuster]

Not necessarily what?

 

 

An answer to your last question.

 

Well.....I might as well throw out my true view of how Corporations should be taxed.

 

I believe corporations actually should have zero corporate income tax. Now, I know I just lost half the people on this board and they won't actually consider the rest of my post but, I'll type it anyway.

 

BUT...in doing that, you tax the people who benefit from that corporation. So, anyone who gets an income of any kind from that corporation, would get taxed and raise the level of that tax to the appropriate rate to pay for what we need to have done in the country.

[cm husker]

I agree, it should be zero. And then I'd raise taxes on capital gains to equal regular income taxes.

 

I think we are in agreement, and I think our stance is what most economists would think is the appropriate approach. Obviously with a 0% tax rate, there would be no need to have deductions.

 

 

That said, it would reduce revenue, at least in the short term, so the likelihood of passing this sensible piece of reform is remote.

[BigRedBuster]

I agree, it should be zero. And then I'd raise taxes on capital gains to equal regular income taxes.

 

I think we are in agreement, and I think our stance is what most economists would think is the appropriate approach. Obviously with a 0% tax rate, there would be no need to have deductions.

 

 

That said, it would reduce revenue, at least in the short term, so the likelihood of passing this sensible piece of reform is remote.

Well....there is absolutely no way this would ever pass because politicians would paint anyone who supported it as greedy corporate lovers that just want to screw the poor and destroy anything that is good.

[zoogs]

Yes, "that said, it would reduce revenue."

 

...go on.

[BigRedBuster]

Yes, "that said, it would reduce revenue."

 

...go on.

I'm not in agreement that it would reduce revenue.

[cm husker]

Yes, "that said, it would reduce revenue."

 

...go on.

Cutting corporate taxes (and any other taxes) would reduce federal tax revenues.

 

I think there are a lot of good reasons to do this, but that's a true statement. Republicans are wrong to argue that "tax cuts will pay for themselves" at least in terms of government revenue totals.

[BigRedBuster]

 

Yes, "that said, it would reduce revenue."

 

...go on.

Cutting corporate taxes (and any other taxes) would reduce federal tax revenues.

 

I think there are a lot of good reasons to do this, but that's a true statement. Republicans are wrong to argue that "tax cuts will pay for themselves" at least in terms of government revenue totals.

 

In my original post on the subject, I said we would raise taxes on the people who earn incomes from the corporation to make up the difference.

[cm husker]

Right. And that's fair; though I'm not sure if it would exactly work out that way. But it would be a better approach in my opinion.

 

There's not a real good argument for why capital gains taxes should be lower than income taxes, except that capital gains are already taxed at 35% before they get to the shareholder. Eliminate that tax, and it makes sense that it should be taxed as regular income.

 

Anyway, here's a good summary of why tax cuts in isolation don't pay for themselves (though, as you suggest, you can always make up the revenue with a different tax).

 

http://taxfoundation.org/blog/do-tax-cuts-pay-themselves