Date: Wed Mar 26 18:59:37 2008
Sender: Henry Morgan
From the Tax Foundation
Currently, the average combined federal and state corporate tax rate in the
U.S. is 39.3 percent, second among OECD countries to Japan's combined rate of
39.5 percent. Lowering the federal rate to 30.5 percent would only lower the
U.S.'s ranking to fifth highest among industrialized countries.
More recently, other members of Congress—including Sen. John McCain and
Congressman Eric Cantor—have released proposals to cut the corporate rate even
deeper to 25 percent. While this lower rate would improve the U.S.'s
international ranking and competitiveness, that improvement would be mitigated
by the high corporate tax rates imposed by many states.
Many states impose state corporate income taxes at rates above the national
average of 6.6 percent. Iowa, for example, imposes the highest corporate tax
rate of 12 percent, followed by Pennsylvania's 9.99 percent rate and
Minnesota's 9.8 percent rate. When added to the federal rate, these states tax
their businesses at rates far in excess of all other OECD countries.
When compared to other OECD countries:
* 24 U.S. states have a combined corporate tax rate higher than top-ranked
Japan.
* 32 states have a combined corporate tax rate higher than third-ranked
Germany.
* 46 states have a combined corporate tax rate higher than fourth-ranked
Canada.
* All 50 states have a combined corporate tax rate higher than fifth-ranked
France.
Date: Wed Mar 26 20:55:01 2008
Sender: AJ Perko
Nice Try-
I wonder how many other countries allow corporations to write off 75% of their
income.
Allow executives to write off corporate cars, family vacations, and in most
states even homes.
Not to mention subsidies and tax breaks... which I'm not an expert on...
but I've seen the tax returns for corporations bringing in 2-3 million per
year, and paying on under 100K profit.
Date: Wed Mar 26 21:13:43 2008
Sender: Henry Morgan
Well whatever their income and their tax liability, it'll be on any public
company's 10-K.
Date: Wed Mar 26 22:25:51 2008
Sender: William Johnson
" I wonder how many other countries allow corporations to write off 75% of
their income. Allow executives to write off corporate cars, family vacations,
and in most states even homes. "
Aren't ALL business's allowed to write off company cars? Aren't ALL
employee's allowed to write off most aspects of a vacation as long as there is
a business related event happening (that they attend)? And, aren't ALL
employees allowed to write off limited portions of homes that are used as part
of the business (in the states that allow it)?
" but I've seen the tax returns for corporations bringing in 2-3 million per
year, and paying on under 100K profit. "
You've got 2 different statements there. One where the corp 'brings in' $2-3
mil. Another where you count only profit.
Do you mean these numbers as the same value? Meaning a corp can 'bring in'
$3 mil but spend $2.9 mil on company vehicles, building upgrades, product
purchases, ect. Leaving $100K as profit. Which under tax laws would be the only
part required to pay taxes on.
Or, do you mean the corp made $3 mil profit and only paid taxes on $100K?
(which would seem to be illegal)
Do you take any tax deductions? If so, you shouldn't, since you don't want
business's to do it either.
Date: Thu Mar 27 07:47:16 2008
Sender: Jeff Luddingsmash
The corporate tax rate in Canada is 25%. And yes, we too write- off business
expenses, such as cars, entertainment, etc.
That being said, it is important to note that the funds left after taxes are
often passed on to shareholders in the form of dividends and these dividends
are subject to personal income taxes. In other words, the government gets a lot
more than 25%.
My parents have a small corportation. Assuming they earn 500,000, then $125,000
would go to the government in corporate tax. This would leave $375,000 dollars.
My parents could then take dividends or reinvest the money in the business.
However, dividends would count as income, so they might have to an additional
percentage on that dividend income.
And because personal taxes are so high, my parents tend to keep most of the net
profit in the business, which is unfortunate for the government because 40% of
zero is zero.
Date: Thu Mar 27 08:11:19 2008
Sender: Laurent Boudias
They may need to re-evaluate the structure they chose for their company.
As the only member of an LLC, the profit is not taxed twice. The profit is
taxed under my name, not under the LLC. My LLC doesn't pay taxes, I do - once.
I understand that big corporations pay corporate taxes and each individual
benefiting of some salaries/dividend,etc. pays taxes too.
I don't understand when a simple corporation like your parents have should be
taxed on both levels.
Date: Thu Mar 27 08:42:45 2008
Sender: Henry Morgan
Jeff, we have dividends as well, just FYI.
Date: Thu Mar 27 13:05:14 2008
Sender: AJ Perko
profit....
perhaps I should have said accumulation of wealth or assets if you want to get
picky. Corporations are far from over taxed.
Why do you think every individual who starts a lemonade stand chooses a LLC
or an S corp over simply filing an individual return?
William-
and no, last I checked ALL employees can't write things off. The write-off for
a W2 employee aren't that great.
Date: Thu Mar 27 13:47:50 2008
Sender: Jeff Luddingsmash
Hey Laurent. Corporate structure works better for them for various reasons, one
of which is due to the fact that they are divorced but still running a business
together. In any case, the income tax that they pay on dividends is less than a
regular income tax. I believe they pay a regular income tax rate minus 25% on
dividends, but I'm not 100% sure, as I'm no tax expert.
The point I'm trying to make is the government doesn't only get 25%. I believe
they get something like 25% (corporate tax) + [income tax (on divends
income)-25%]. In other words... if a corp earns $500,000 and pays 25% and the
owners take a $50,000 salary and $50,000 in dividends and pay an income tax of
40% then the total tax paid would be:
corporate tax= 25% of $500,000 = $125,000... plus
income tax on salary= 40% of $50,000 = $20,000... plus
tax on dividends income= 40%-25% of 50,000 = $7,500
Total tax= $152,500
That being said, I may be completely wrong. I'm a Marketing guy and accounting
was always my worst subject.
Date: Thu Mar 27 15:15:53 2008
Sender: Laurent Boudias
AJ, LLC's are not a corporation on the tax level, though it is on the liability
level. That's what makes it great for small businesses.
Don't compare an LLC and a big corp.
Jeff - Yes but as a corp it makes sense to tax dividends and to tax company
profit.
And like I said, the LLC gives you a corporation structure with the advantages
of sole property taxation. And you can have as many members as you want. Each
member takes his/her dividends (which is not called dividend) and they get
taxed on an individual level. And the company is not taxed at all, except the
property tax but it's another thing.
Date: Thu Mar 27 18:24:03 2008
Sender: Jeff Luddingsmash
Laurent, as far as I know LLCs don't exist in Canada. I might be wrong, but
somewhere in the back of mind mind I recall a discussion in biz school
revolving around that. Might be wrong.
In any case, I agree that it makes sense to tax dividends and to tax company
profit. That being said, the system creates incentives for owners to keep money
in a business and to expense as many things as they can in order to reduce the
amount of tax they pay. Another nice trick is to make your teenage children
"employees" and to pay them a small salary in order to get around paying taxes.
There are hundreds of tricks and business owners use most of them. And as a
result the government often gets less than it might if dividends were taxed at
a lower rate.
That's my experience with my parents business anyhow.
Date: Fri Mar 28 16:23:57 2008
Sender: Gregor Ellis
LLC's and S-Corp status are chosen simply to contain liability, not for tax
purposes.
In most countries, businesses pay very little tax even when the rates are quite
high. European and Asian companies have typically provided massive amounts of
non-cash compensation (use of company cars, houses, vacations and facilities in
vacation spots, etc) and exceptionally generous definitions of business
expenses including T&E that are reimbursed of handled through non-taxable
expense accounts.
Corps should not pay income tax at all - it encourages absurd accounting abuses
and schemes to provide non-cash compensation and skews the tax system. No
property tax breaks should be allowed; ALL non-cash benefits provided to
employees, including health care, should count as taxable individual income
including dual-use facilities such as the mid-town Manhattan apartments many
companies keep supposedly for employee use and company cars.
Companies should also be treated and taxed based solely on the net revenue they
earn in the country as determined ONLY from transactions with non-affiliated
entities in order to stop the asinine tax dodge of offshore HQ. The same for
the BS a company like Microsoft pulls wherein an Ireland-based subsidiary
actually owns all MS patents and copyrights and licenses them back to the
parent corp for very high rates in order to reduce US taxes and take advantage
of low Irish taxes on licensed IPR.
Date: Fri Mar 28 17:07:14 2008
Sender: AJ Perko
"LLC's and S-Corp status are chosen simply to contain liability, not for tax
purposes."
What are you talking about? It's a benefit, but not the only reason (and not
even the main one) why people incorporate.
I we wrote off nearly $53000 of $90000 in income for a S- Corp I'm a small part
of.
You can't get away with that on an individual tax return.
Date: Fri Mar 28 18:52:28 2008
Sender: William Johnson
" I wonder how many other countries allow corporations to write off 75% of
their income. "
" I we wrote off nearly $53000 of $90000 in income for a S- Corp I'm a small
part of. "
Well, that's only 59% of your income. Not quite as good as Exxon and the
rest of the companies you complain about. So, I take it you weren't complaining
about the US allowing it?
Date: Fri Mar 28 20:40:48 2008
Sender: Laurent Boudias
Gregor, if it wasn't a tax related decision, I would have incorporated my
business. Liability obviously but taxation is right there too when you choose
an LLC.
Date: Sat Mar 29 06:46:58 2008
Sender: William Johnson
" William- and no, last I checked ALL employees can't write things off. The
write-off for a W2 employee aren't that great. "
You must be kidding, right? I can write off my underwear if I'm required to
wear them at work. Why do you think there is a tax preparation business every 3
blocks? They don't call taxes a "season" because no one can take advantage of
it.
Date: Sat Mar 29 07:53:16 2008
Sender: Lord Bremen
Romney was going to cut it to 20%. We want businesses here, not in Mexico
where they have 0% tax. So we have to make it profitable for them. I'd rather
have jobs and a strong economy than a bit more tax revenue.
Date: Sat Mar 29 14:23:19 2008
Sender: Red Burley
"Romney was going to cut it to 20%. We want businesses here, not in Mexico
where they have 0% tax. So we have to make it profitable for them. I'd rather
have jobs and a strong economy than a bit more tax revenue."
Didnt they used to have tariffs to protect American companies?
Date: Sat Mar 29 15:22:15 2008
Sender: Henry Morgan
Still do in some cases. There's a stiff tariff against Brazilian ethanol.
Date: Sun Mar 30 17:12:15 2008
Sender: Laurent Boudias
Wonder how Mexico infrastructure is as good as the one in the USA. Oh there's
no corporation taxes, you mean no money for the government to spend on what
could give people a better life? You wonder why there's no more jobs in Mexico
and why they all want to come to live here. Is it such a heaven there?
Date: Sun Mar 30 18:22:21 2008
Sender: Jeff Luddingsmash
"Didnt they used to have tariffs to protect American companies?"
I just got back from a business trip in Brazil. During the trip I was shocked
to see the negative impact tariffs has had on their economy. It's completely
out of control... foreign goods are sometimes 2-3 times the price of what they
would be in Canada. And many of the Brazilian products that use foreign raw
materials are also considerably more expensive.
High tariffs makes it very difficult to compete outside your borders, since
virtually every product requires some type of foreign good. Plus it totally
screws over consumers (consumer surplus is often overlooked when people talk
about economics).
It's no wonder that most of the poorest countries in the world, also have the
highest tariffs.
Date: Mon Mar 31 09:52:54 2008
Sender: AJ Perko
there is a neccessary balance.
You can't have
industrialized, modern country on one side
3rd world, unregulated, slave pit on the other
and just one day say OK NO TARIFFS!!!!
or as Ross Perot said "that big Swooshing sound"
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