Corporate accountability

[Sandia]

In 2000, IBM told shareholders it made 5.7 billion dollars, but told the IRS it made only about five hundred million - less than one tenth of what it told Wall Street. Similarly, Microsoft told shareholders it made $14 billion two years ago, while getting a $731 million dollar tax refund from the government.***

Why the discrepancy?

IBM and Microsoft are not the only companies doing this: the proportion of taxes actually paid by corporations - as opposed to individuals - has been dropping for years, even while those same corporations tell the public they're becoming more and more profitable.

***Jonathan Weisman
The Washington Post

 

[lobito]

because it's easier for corporations to grease politicians hands, than for individuals?

 

[Ishmael]

In 2000, IBM told shareholders it made 5.7 billion dollars, but told the IRS it made only about five hundred million - less than one tenth of what it told Wall Street. Similarly, Microsoft told shareholders it made $14 billion two years ago, while getting a $731 million dollar tax refund from the government.***

Why the discrepancy?

IBM and Microsoft are not the only companies doing this: the proportion of taxes actually paid by corporations - as opposed to individuals - has been dropping for years, even while those same corporations tell the public they're becoming more and more profitable.

***Jonathan Weisman
The Washington Post

So what's your point? And why the surprise?

And corporatons have NEVER paid any taxes. Never will.

There are SAP's and there are IRS rules. Big deal.

Ishmael

 

[Sandia]

One of the ways corporations avoid paying taxes while booking profits is by deducting the costs of executive options from their tax statements, while neglecting to deduct those same costs on their p & l statements to the public.

In other words, they hype the "profitability" of their companies while keeping those same profits for themselves.

This practice is perfectly legal - though it only explains part of the gap.

"An IRS economist says one cause of the gap is the widespread use by many large companies of 'special-purpose entities' or 'independent partnerships' to move debt off their balance sheets." If you remember, this is one of the accounting methods Enron became famous for.

"When investors hear only of rosy earnings while at tax time Uncle Sam only hears of regrets and red ink, something is very wrong." Rep. Lloyd Doggett, D-Austin.

Ish: Whether corporations are ripping off their shareholders or ripping off the government (meaning everybody) is a big deal I think. I'm curious, at least.

 

[n-erasmus]

Nah -- we are "employees"

Increasingly people are treated by government as companies treat employees. Whoever heard of the *BOSS* paying taxes or doing work??

Waiting for the first national lay-off.

 

[SINthysist]

Yeah, accounting is really over my head, but I have a sneaking suspicion that we've been lied to for a really long time. That and the companies have been held to Washington's standards of accounting...

Get Ish started on that!

 

[SINthysist]

How dare you suggest government could possibly get smaller!

 

[Purple Haze]

Re: Re: Corporate accountability

So what's your point? And why the surprise?

And corporatons have NEVER paid any taxes. Never will.

There are SAP's and there are IRS rules. Big deal.

Ishmael

You seem to be okay with this, you must be a corporation.

Or work for one...

 

[SINthysist]

Interestingly, I am a corporation. I don't pay much in the way of taxes either.

 

[ma_guy]

"In 2000, IBM told shareholders it made 5.7 billion dollars, but told the IRS it made only about five hundred million..."

I'd be interested in where you got these numbers. According to the financial statement for 2000 on IBM's own WWW site their total pre-tax income was $11.534 Billion and they paid out $3.441 Billion in Income taxes on that amount.

The remaining $8.093 Billion was paid out to shareholders as dividends (which the shareholders then pay taxes on..).

 

[ma_guy]

The Microsoft numbers are equeally off.

"Similarly, Microsoft told shareholders it made $14 billion two years ago, while getting a $731 million dollar tax refund from the government"

According to their 2000 Annual Statement MSFT had $14.275 Billion in pre-tax income, paid $4.854 Billion in taxes and distributed $9.421 Billion to shareholders.

 

[Ishmael]

Ish: Whether corporations are ripping off their shareholders or ripping off the government (meaning everybody) is a big deal I think. I'm curious, at least.

First of all let's be clear. You have already acknowleged that what they are doing is legal. So if it's legal, it isn't a rip off.

These accounting practices are based on IRS guidlines and their rules and regulations. Now, you can bitch all you want, but the government's own tax code has been the primary source of the problems that we are seeing. The suggestion that the government should (or even could) do something about this is ludicrous. Without an out and out taxpayer revolt it isn't going to happen. At every turn when they've "fixed" the tax code, they've only made it more complex and created more accounting loop-holes. It's like inviting a thief in the store to count your money.

The Democrats aren't going to fix it, and the Republicans that have tried have been Pooh-poohed.

Until the general public wakes up to these practices nothing will change. But what can you expect from a nation where most can't even balance their own checkbook?

Income tax as we know it HAS to go. It is the only recourse. It's been used as a hog trough for far to long now. By the politicians and the corporations.

Now, I'm not arguing that there are many practices that shouldn't be. I'm just trying to make people aware of the source of these rules. And the companies didn't make them.

Ishmael

 

[Ransom]

Re: Nah -- we are "employees"

Increasingly people are treated by government as companies treat employees. Whoever heard of the *BOSS* paying taxes or doing work??

Waiting for the first national lay-off.

I agree with your comments n-erasmus. The once family and friendly atmosphere is gone in most companies these days. Unlike Rambo who was told he was not expendable we as employees today are expendable commodities. Never has the term "too many chiefs and not enough indians" been truer at my place of employment. The good ole boys take care of their own and the CEO, CFO, President, and a few other top brass have made sure and certain THEY will come out smelling like a rose while most employees continue to get the shaft.


"Now you're messing with a son of a bitch"

 

[Sandia]

ma_guy: Thank you for the research. The stats were from Jonathan Weisman's article. Here's a link: http://www.knoxnews.com/kns/business/article/0,1406,KNS_376_1475909,00.html

He says he got his stats from the Institute on Taxation and Economic Policy. They also have a website. http://www.ctj.org/itep/

Microsoft didn't pay its profits back to shareholders, though - at least, they've never paid any kind of dividend.

***


Ishmael, the SEC tried to make companies expense stock options on their p&l's a couple of years back, but lobbying on the part of the tech industry forced them to back off. There's no good reason why corporations shouldn't report the costs of stock options to shareholders -- the reason they don't do it is to inflate their bottom lines.

Many of the loopholes corporations use to avoid taxes were put there by legislation, and could be taken back out again.

 

[ma_guy]

Microsoft didn't pay its profits back to shareholders, though - at least, they've never paid any kind of dividend.

Hmmm.. according to their own SEC statements and their annual statement to their shareholders they paid dividends of $.92 per share in 1998, $1.54/share in 1999 and $1.81/share in 2000. (Rates are all on common stock..). ??????????

 

[Sandia]

Hmmm.. according to their own SEC statements and their annual statement to their shareholders they paid dividends of $.92 per share in 1998, $1.54/share in 1999 and $1.81/share in 2000. (Rates are all on common stock..). ??????????

Microsoft has never paid a dividend. http://moneycentral.msn.com/investor/research/profile.asp?Symbol=msft

Are you looking at their earnings per share?

Can you give me a link?

 

[ma_guy]

Microsoft has never paid a dividend. http://moneycentral.msn.com/investor/research/profile.asp?Symbol=msft

Are you looking at their earnings per share?

Can you give me a link?

Doh! I went back and looked and in MSFT's case it is EPS. My bad! They list EPS in the same line that IBM lists dividends paid.

 

[p_p_man]

Interestingly, I am a corporation. I don't pay much in the way of taxes either.

I think I must be one as well...

I get a fat healthy cheque from my Government every time I write on my tax return...

"Nothing to confess"...

ppman

 

[n-erasmus]

"Loopholes"

Our system (in the usa) is *SO* full of exceptions and gray areas that all it takes to cut your taxes in half is a little creativity on the lines of a President of the US saying "... that depends on what the meaning if 'is' is".

Shrinking bases of taxpayers, rapidly expanding base of "beneficiaries" who in most cases have never paid in.

"Sure! *YOU* can subsidize the housing and healthcare and education of the new immigrants I have hired after I cut wages 20% at my factory." Perfectly *LEGAL*, perfectly *UNJUST*. Perfectly American. Major way to get rich in Merca.

 

[Ishmael]

Re: "Loopholes"

Our system (in the usa) is *SO* full of exceptions and gray areas that all it takes to cut your taxes in half is a little creativity on the lines of a President of the US saying "... that depends on what the meaning if 'is' is".

Shrinking bases of taxpayers, rapidly expanding base of "beneficiaries" who in most cases have never paid in.

"Sure! *YOU* can subsidize the housing and healthcare and education of the new immigrants I have hired after I cut wages 20% at my factory." Perfectly *LEGAL*, perfectly *UNJUST*. Perfectly American. Major way to get rich in Merca.

Full of sarcasm, but not far from the truth.

The current tax code makes it all possible. And the pathetic part is that many of the people that are ranting on about corporations feel that the answer is to make the tax code even more complex than it already is.

A person that can see the goal is called a person of vision. A person that can see the steps to take is called a person with direction. But a person that doesn't know where they are starting from is called LOST. How do you propose to change the tax code when you don't even understand how it works today? Hmmmmmmmmmmmmmmm?

Ishmael

 

[Sandia]

I'm not a corporations, so I know nothing of corporate income tax laws. But I do my own taxes every year... I think the income tax is reasonably fair, given the complexity and interests involved.

I'd eliminate the itemized deductions, if it were up to me... and I'd tax capital gains like ordinary income. And I'd reduce the "marriage penalty" -- though I think they're already doing that.

It's easy to criticize the tax system -- and everybody hates paying taxes. But if we have to pay 'em... and we do... I'd go with a progressive income tax over a "flat" tax or national sales tax any day. Which is not to say I'm not for cutting government spending... starting with the military. Talk about sucking off the government teat!

 

[n-erasmus]

Incomprehensible by *DESIGN*

The complexity is deliberate, and enables an uneven distribution of the tax burden *IN PROPORTION TO* the benefits received.

Everyone is so concerned about the "unfair" taxation of the wealthy and powerful when the primary purpose of the system funded by taxes is to perpetuate their wealth and power.

You want an army to protect your millions?? *YOU* gotta pay for it. You want police to enforce your will and power? *YOU* have to pay for it. The average mercan tax payer gets very little for his money.

I understand the tax code very well.

If exceptions are permitted, the people using them will be the powerful, not the needy. So no exceptions. Also, either nationality exists or it does not. You can't have it one way when it is in your favor and another when it isn't. Pretend pretend pretend. All I know is I get the bills.

 

[juicylips]

Didn't read your thread. Just stopped to say hi. You post in mine occasionally and I never seem to find a topic of yours that I can offer an opinion.

So...can I just leave a kiss?

 

[Sandia]

Let's see if this works (I'm trying to paste an image here):

 

[Ishmael]

Here we go again.

First of all, that chart is falacious and misleading. It shows corporate taxes as a percentage of GDP. Not as a percentage of tax revenues. Get the chart that shows them as a percentage of tax revenues and you will have something of relavence.

Second, corporations don't pay taxes. Never have, never will (under our current tax code).

Ishmael