A new study by the Institute for Policy Studies reports that at least 25 top United States companies paid more to their chief executives in 2010 than they did to the federal government in taxes.
The companies — which include household names like eBay, Boeing, General Electric and Verizon — averaged $1.9 billion each in profits. Rather than paying taxes these firms each received more than $400 million in tax rebates.
The authors of the study, which examined the regulatory filings of the 100 companies with the best-paid chief executives, said that their findings suggested that current United States policy was rewarding tax avoidance rather than innovation.
“We have no evidence that C.E.O.’s are fashioning, with their executive leadership, more effective and efficient enterprises,” the study concluded. “On the other hand, ample evidence suggests that C.E.O.’s and their corporations are expending considerably more energy on avoiding taxes than perhaps ever before — at a time when the federal government desperately needs more revenue to maintain basic services for the American people.”
It is outrageous that Republicans, like Wisconsin Senator Ron Johnson, are demanding huge cuts in federal discretionary spending, cuts to education, health care, research and development, local governmental services such as police and fire protection, and emergency federal disaster relief while they allow U.S. corporation's to manipulate the tax system to avoid contributing their fair share and reward CEO's with unconscionable salaries that have no relationship to performance.
The NY Times article is linked here.
Showing posts with label Corporate taxes. Show all posts
Showing posts with label Corporate taxes. Show all posts
Wednesday, August 31, 2011
Friday, April 23, 2010
The Journal Sentinel's latest man bites dog story
In the Milwaukee Journal Sentinel's latest man bites dog story Katelyn Ferral writes:
More than 65% of Midwest chief financial officers and senior comptrollers said cutting corporate and personal income taxes is the best way to create jobs, according to a national survey conducted by Grant Thornton this month.
Thirty-five percent of those polled said cutting personal income taxes would be most effective in creating employment opportunities, while 32% said cutting corporate tax rates would best allow companies to hire.
What will the MJS tell us next, that alcoholics prefer beer to sparkling water?
Economic policy, including tax policy, should be based on facts not opinions, even those of highly paid CFOs.
The United States enacted the largest tax cut in its history in 2001 ($1.3 trillion) and followed that up with additional capital gains and dividend tax cuts in 2003.
The total value of the 2001-2003 tax cuts was $1.8 trillion.
More than 50% of the $1.8 trillion tax cuts went to the richest 1%, CEOs and CFOs included who averaged over $900,000 annually.
The result-the weakest job creation of any post World War II business cycle.
If cutting top marginal income rates led to job creation we should have had a job boom. Instead we had the opposite. And a large proportion of the private sector jobs that were created (finance, real estate and construction) were the result of the housing bubble. Once that burst all of those jobs were eliminated.
We experienced much greater job growth during every other post WWII business cycles, including those in the 50s, 60s, 70s and 90s, when the top marginal tax rate was significantly higher than it was during the 2001-2007 business cycle.
High income personal income tax cuts, such as the 2001 tax cuts or those advocated by the CFOs, are weak economic engines because high income earners are less likely to spend their additional income than less affluent people.
More than 65% of Midwest chief financial officers and senior comptrollers said cutting corporate and personal income taxes is the best way to create jobs, according to a national survey conducted by Grant Thornton this month.
Thirty-five percent of those polled said cutting personal income taxes would be most effective in creating employment opportunities, while 32% said cutting corporate tax rates would best allow companies to hire.
What will the MJS tell us next, that alcoholics prefer beer to sparkling water?
Economic policy, including tax policy, should be based on facts not opinions, even those of highly paid CFOs.
The United States enacted the largest tax cut in its history in 2001 ($1.3 trillion) and followed that up with additional capital gains and dividend tax cuts in 2003.
The total value of the 2001-2003 tax cuts was $1.8 trillion.
More than 50% of the $1.8 trillion tax cuts went to the richest 1%, CEOs and CFOs included who averaged over $900,000 annually.
The result-the weakest job creation of any post World War II business cycle.
If cutting top marginal income rates led to job creation we should have had a job boom. Instead we had the opposite. And a large proportion of the private sector jobs that were created (finance, real estate and construction) were the result of the housing bubble. Once that burst all of those jobs were eliminated.
We experienced much greater job growth during every other post WWII business cycles, including those in the 50s, 60s, 70s and 90s, when the top marginal tax rate was significantly higher than it was during the 2001-2007 business cycle.
High income personal income tax cuts, such as the 2001 tax cuts or those advocated by the CFOs, are weak economic engines because high income earners are less likely to spend their additional income than less affluent people.
Thursday, April 8, 2010
New York unions take the fight for jobs to Wall Street
New Yorkers for Fiscal Fairness has just launched a media campaign all across the state aimed at urging the Legislature to help save New Yorkers from losing even more jobs during these tough economic times.
While Wall Street has largely recovered from the economic crisis and reaped record profits in the last year, Main Street continues to suffer from the fallout of the economic crisis. It seems like corporations are doing better than the rest of us.
While Wall Street has largely recovered from the economic crisis and reaped record profits in the last year, Main Street continues to suffer from the fallout of the economic crisis. It seems like corporations are doing better than the rest of us.
Make Corporations Pay Their Fair Share! by NYFF from New York State AFL-CIO on Vimeo.
Monday, June 2, 2008
Ryan health plan raises taxes and protects insurance and drug companies
On May 21, Congressman Paul Ryan released his “Roadmap for America’s Future”, which includes a health insurance reform proposal that is nearly identical to the one proposed by Senator John McCain.
The proposal has been widely praised by Republican commentators and has elevated Ryan's status among the party's elite. Local talk show radio hosts have used the proposal to promote Ryan's long shot vice presidential candidacy.
Ryan's health care proposal is neither new or courageous. If adopted, it would move the country further away from quality, affordable health care for everyone.
It starts by adopting McCain’s proposal to count the value of any employer-provided health insurance as taxable income. The average comprehensive family health insurance policies cost at least $10,000 a year. So families would have to pay taxes on this amount added to their regular wages.
What will they get in return? A tax credit or payment of $5000 for a family so they can buy their own insurance. What a deal! You pay more taxes and get a credit that buys at best half the cost of a good family health insurance policy. This is health care reform?
Ryan adds other measures as well: the virtual elimination of state standards for health insurance policies, promotion of Health Savings Accounts (which means high yearly deductibles with pre-tax income—if you have enough), and totally inadequate access for those with pre-existing conditions to get the health insurance they need in the private “market”.
Remarkably, Ryan has little to say about controlling spiraling health care costs which are at the root of the nation's health care crisis.
Ryan only real proposal aimed at controlling health care inflation is to provide the public with more information about doctor and hospital pricing. Economists call this increased transparency. And who could argue with that?
But this is not a new idea and it won't reduce rising health care costs because it does not address the primary cause-the market dominance of the for profit insurance and pharmaceutical companies and the profit maximizing behavior of non profit health care providers that raise costs and distort resource allocation.
Economist Robert Kuttner who studies the inefficient U.S. health care system has observed:
"The extreme failure of the United States to contain medical costs results primarily from our unique, pervasive commercialization... Profits, billing, marketing, and the gratuitous costs of private bureaucracies siphon off $400 billion to $500 billion of the $2.1 trillion spent, but the more serious and less appreciated syndrome is the set of perverse incentives produced by commercial dominance of the system."
Ryan's proposal leaves this entirely dysfunctional and inefficient structure that is dominated by insurance, pharmaceutical and large oligopolistic health care providers intact.
The proposal has been widely praised by Republican commentators and has elevated Ryan's status among the party's elite. Local talk show radio hosts have used the proposal to promote Ryan's long shot vice presidential candidacy.
Ryan's health care proposal is neither new or courageous. If adopted, it would move the country further away from quality, affordable health care for everyone.
It starts by adopting McCain’s proposal to count the value of any employer-provided health insurance as taxable income. The average comprehensive family health insurance policies cost at least $10,000 a year. So families would have to pay taxes on this amount added to their regular wages.
What will they get in return? A tax credit or payment of $5000 for a family so they can buy their own insurance. What a deal! You pay more taxes and get a credit that buys at best half the cost of a good family health insurance policy. This is health care reform?
Ryan adds other measures as well: the virtual elimination of state standards for health insurance policies, promotion of Health Savings Accounts (which means high yearly deductibles with pre-tax income—if you have enough), and totally inadequate access for those with pre-existing conditions to get the health insurance they need in the private “market”.
Remarkably, Ryan has little to say about controlling spiraling health care costs which are at the root of the nation's health care crisis.
Ryan only real proposal aimed at controlling health care inflation is to provide the public with more information about doctor and hospital pricing. Economists call this increased transparency. And who could argue with that?
But this is not a new idea and it won't reduce rising health care costs because it does not address the primary cause-the market dominance of the for profit insurance and pharmaceutical companies and the profit maximizing behavior of non profit health care providers that raise costs and distort resource allocation.
Economist Robert Kuttner who studies the inefficient U.S. health care system has observed:
"The extreme failure of the United States to contain medical costs results primarily from our unique, pervasive commercialization... Profits, billing, marketing, and the gratuitous costs of private bureaucracies siphon off $400 billion to $500 billion of the $2.1 trillion spent, but the more serious and less appreciated syndrome is the set of perverse incentives produced by commercial dominance of the system."
Ryan's proposal leaves this entirely dysfunctional and inefficient structure that is dominated by insurance, pharmaceutical and large oligopolistic health care providers intact.
The Ryan-McCain approach to health care “reform” is topsy-turvy. It does not improve the current unfair, inefficient, and unsustainable health care system. Instead, it proposes to subject even more people to the tyranny and capriciousness of insurance industry dominated health care. It leaves families dependent on the mercy of insurance companies and their insatiable appetite for profit. It presumes that quality of health care will improve, but leaves that to the magical workings of the “market”. It shifts even more costs to health care consumers without a real mechanism for reducing health care costs.
"I suppose this is a good proposal if you want John McCain to choose you as his Vice Presidential running mate,” said David Newby, President of the Wisconsin State AFL-CIO. “But if you want health care reform which guarantees that everyone will have affordable access to the quality health care they need, you’d better look elsewhere. We don’t need Ryan/McCain tinkering with our broken health care system: we need broad reform which guarantees that everyone in America gets the health care they need, regardless of income or health status.”
Thursday, February 14, 2008
Wal-Mart heirs bankroll Scott Walker; Milwaukee taxpayers pay the bills
Milwaukee County Executive, Scott Walker, received his largest campaign contributions from the founding family of the notoriously anti-employee, but taxpayer subsidzed, Wal-Mart Corporation.
Jim, Christy and Lynne Walton, residents of Arkansas, contributed $7,500 to Walker. The trio is bankrolling Walker because of his support for the Milwaukee private school voucher program according to the Milwaukee Journal Sentinel.
The Walton’s $7,500 contribution pales in comparison to the $54,120,825 million Milwaukee’s taxpayers are shelling out for this program in fiscal year 2008.
That’s a return on investment that would make even Warren Buffet salivate!
The voucher program is partially financed by a reduction in state aids to MPS of 45% of the total cost of the program. But MPS is allowed to levy property taxes to make up for the amount of aid lost due to this reduction. So the state pays 55%, the voucher program takes the other 45% from MPS, and MPS turns around and raises the lost 45% by increasing local property taxes on some of Milwaukee County's poorest residents. In effect, Milwaukee's property taxpayers are financing two school systems!
Walker poses as a friend of the taxpayer. But his support for the Milwaukee voucher program has caused property taxes to soar. Next year, the city’s taxpayers will be forced to raise their taxes another $5 million as the program's cost to MPS grows to $59.5 million.
It’s not surprising that heirs to the founder of Wal-Mart are Walker backers. Wal-Mart is one of the world’s most profitable corporations, generating $315 billion in revenue and $11.2 billion in profits in 2006. Yet, the company is notorious for using legal loopholes to avoid taxes and regularly feeds at the public trough!
Wal-Mart sticks it to Wisconsin’s beleaguered taxpayers by transferring ownership of its stores to in-house real-estate investment trusts (REITS). It then cuts its taxes by taking deductions for rent payments that never leave the company. A North Carolina Judge recently ruled that Wal-Mart owed that state millions in back taxes because REITs were little more than tax avoidance schemes.
It is well documented that Wal-Mart’s employees are poorly paid, part timers. As a result, 1,673 of Wal-Mart's Wisconsin employees and their dependents are enrolled in BadgerCare, the taxpayer financed medical care program for low-income families. The cost-$3.7 million dollars!
Wisconsin taxpayers have also shelled out $22 million in various subsidies to Wal-Mart.
The Walton trio aren’t the only ones from outside Milwaukee County financing the County Executive who is being challenged by State Senator Lena Taylor.
Fully 62% of the $360,000 Walker raised in the second half of last year came from outside the county. Taylor, on the other hand, raised more than 80% of her campaign funds from Milwaukee County residents!
Republicans like Walker talk about local control and holding the line on taxes. But they don't walk the walk!
It's not locals who control the Walker campaign. But, it's locals who pay the bills he runs up.
Jim, Christy and Lynne Walton, residents of Arkansas, contributed $7,500 to Walker. The trio is bankrolling Walker because of his support for the Milwaukee private school voucher program according to the Milwaukee Journal Sentinel.
The Walton’s $7,500 contribution pales in comparison to the $54,120,825 million Milwaukee’s taxpayers are shelling out for this program in fiscal year 2008.
That’s a return on investment that would make even Warren Buffet salivate!
The voucher program is partially financed by a reduction in state aids to MPS of 45% of the total cost of the program. But MPS is allowed to levy property taxes to make up for the amount of aid lost due to this reduction. So the state pays 55%, the voucher program takes the other 45% from MPS, and MPS turns around and raises the lost 45% by increasing local property taxes on some of Milwaukee County's poorest residents. In effect, Milwaukee's property taxpayers are financing two school systems!
Walker poses as a friend of the taxpayer. But his support for the Milwaukee voucher program has caused property taxes to soar. Next year, the city’s taxpayers will be forced to raise their taxes another $5 million as the program's cost to MPS grows to $59.5 million.
It’s not surprising that heirs to the founder of Wal-Mart are Walker backers. Wal-Mart is one of the world’s most profitable corporations, generating $315 billion in revenue and $11.2 billion in profits in 2006. Yet, the company is notorious for using legal loopholes to avoid taxes and regularly feeds at the public trough!
Wal-Mart sticks it to Wisconsin’s beleaguered taxpayers by transferring ownership of its stores to in-house real-estate investment trusts (REITS). It then cuts its taxes by taking deductions for rent payments that never leave the company. A North Carolina Judge recently ruled that Wal-Mart owed that state millions in back taxes because REITs were little more than tax avoidance schemes.
It is well documented that Wal-Mart’s employees are poorly paid, part timers. As a result, 1,673 of Wal-Mart's Wisconsin employees and their dependents are enrolled in BadgerCare, the taxpayer financed medical care program for low-income families. The cost-$3.7 million dollars!
Wisconsin taxpayers have also shelled out $22 million in various subsidies to Wal-Mart.
The Walton trio aren’t the only ones from outside Milwaukee County financing the County Executive who is being challenged by State Senator Lena Taylor.
Fully 62% of the $360,000 Walker raised in the second half of last year came from outside the county. Taylor, on the other hand, raised more than 80% of her campaign funds from Milwaukee County residents!
Republicans like Walker talk about local control and holding the line on taxes. But they don't walk the walk!
It's not locals who control the Walker campaign. But, it's locals who pay the bills he runs up.
Wednesday, January 16, 2008
North Carolina judge provides hope for Wisconsin's taxpayers
A North Carolina state judge’s ruling against a Wal-Mart tax avoidance scheme provides hope for Wisconsin’s beleaguered taxpayers who have seen their taxes increase as corporate taxes have decreased.
Wal-Mart is one of the world’s most profitable corporations, generating $315 billion in revenue and $11.2 billion in profits in 2006.
Yet in North Carolina, Wal-Mart transferred ownership of its stores to various in-house real-estate investment trusts (REITS), and then cut its taxes by taking deductions for rent payments that never left the company.
In a judgment signed on December 31, Emergency Special Judge of Superior Court Clarence Horton Jr. ruled "there is no evidence that the rent transaction, taken as a whole, has any real economic substance," other than for cutting Wal-Mart's taxes. "It is particularly difficult for the court to conclude that rents were actually 'paid' when they subsequently returned to the payor corporation," the judge ruled.
The judge dismissed the giant retailer's suit, which sought a refund of the $33.5 million in taxes, interest and penalties.
Wal-Mart, like other corporations doing business in the Wisconsin, manipulates the tax code to avoid paying taxes using REITS and Passive Investment Corporations (PICs). Both are little more than accounting gimmicks that turn taxable profits into operating costs, often reducing taxable income to zero. These companies are gaming the system at the taxpaying public’s expense.
It’s not as if Wisconsin’s business taxes are high. Forward Wisconsin, the state’s public private marketing and business recruitment agency, brags that: “Wisconsin business taxes are low - lower than those in 35 other states..." and " Wisconsin's business-friendly attitude is reflected in positive business tax changes that have been made in every biennial legislative session since the early 1970s. "
The Accounting firm, Ernst & Young, reports that the corporate share of state and local taxes in Wisconsin is among the 10 lowest in the country.
Nonetheless,corporations avoided $643 million in Wisconsin income taxes in 2006, according to a recent study in the tax journal, State Tax Notes. The Institute of Wisconsin’s Future reports that Microsoft, the computer behemoth that made $12 billion in profits in 2005, didn't pay a penny of Wisconsin corporate income tax. Nor did Merck, the pharmaceutical giant with $5 billion in 2005 profits. Nor Sears, whose retail family includes Kmart and Lands' End, which made $1 billion in 2005 profits.
Since 1978 Wisconsin’s corporations' real (inflation adjusted) profits have doubled, while real tax contributions have actually declined slightly. As a result, the share of state revenue contributed by corporations has fallen dramatically:
1979-10%
1989-7%
2000 4.6%
2006 3.5%
Corporate tax avoidance schemes have contributed to shifting the tax burden onto homeowners and Wisconsin’s working families.
As corporate tax contributions have declined, state government has reduced its support for the University of Wisconsin system, technical colleges and local governments. Services have been cut and residential property taxes, tuition and fees have increased.
Milwaukee's state aid has declined from 45% of the city’s budget in 1998 to 34% in 2006. To compensate residential property taxes have increased from 12% to 17% and non property tax revenue such as parking ticket fees and street parking permits from 21% to 30%.
MATC, the state’s flagship technical college, has seen its state aid decline from over 30% in 1990 to 14% in 2007. Students now contribute more to our technical colleges through their tuition and fees than the state does.
Corporations that use accounting gimmicks to avoid paying their taxes are shifting the burden of financing local government and educational services to homeowners, students, and other citizens. They are classic free riders, benefiting from these public goods, but refusing to pay their fair share.
Wisconsin's billion dollar plus structural deficit is, in part, the result of these tax avoidance schemes.
In response, state Senator Dave Hansen (D-Green Bay) has introduced the Corporate Tax Accountability Act (SB367) which would require publicly-held corporations to report their profits and tax contributions to the state. The legislation will affect less than 1% of Wisconsin’s companies, primarily large multi-state businesses like Wal-Mart and Merck.
Co-sponsors include nine senators and nineteen assembly representatives. Assembly Representative Phil Garthwaite (D-Dickeyville) plans to introduce an Assembly version.
This legislation will provide legislators with important information if they are to provide Wisconsin’s beleaguered taxpayers with real tax relief.
Wal-Mart has announced that it hasn't decided on how it will proceed in the aftermath of the North Carolina ruling, and declined to comment on the case's specifics due to a possible appeal. It continues to use REITS in Wisconsin.
Wal-Mart is one of the world’s most profitable corporations, generating $315 billion in revenue and $11.2 billion in profits in 2006.
Yet in North Carolina, Wal-Mart transferred ownership of its stores to various in-house real-estate investment trusts (REITS), and then cut its taxes by taking deductions for rent payments that never left the company.
In a judgment signed on December 31, Emergency Special Judge of Superior Court Clarence Horton Jr. ruled "there is no evidence that the rent transaction, taken as a whole, has any real economic substance," other than for cutting Wal-Mart's taxes. "It is particularly difficult for the court to conclude that rents were actually 'paid' when they subsequently returned to the payor corporation," the judge ruled.
The judge dismissed the giant retailer's suit, which sought a refund of the $33.5 million in taxes, interest and penalties.
Wal-Mart, like other corporations doing business in the Wisconsin, manipulates the tax code to avoid paying taxes using REITS and Passive Investment Corporations (PICs). Both are little more than accounting gimmicks that turn taxable profits into operating costs, often reducing taxable income to zero. These companies are gaming the system at the taxpaying public’s expense.
It’s not as if Wisconsin’s business taxes are high. Forward Wisconsin, the state’s public private marketing and business recruitment agency, brags that: “Wisconsin business taxes are low - lower than those in 35 other states..." and " Wisconsin's business-friendly attitude is reflected in positive business tax changes that have been made in every biennial legislative session since the early 1970s. "
The Accounting firm, Ernst & Young, reports that the corporate share of state and local taxes in Wisconsin is among the 10 lowest in the country.
Nonetheless,corporations avoided $643 million in Wisconsin income taxes in 2006, according to a recent study in the tax journal, State Tax Notes. The Institute of Wisconsin’s Future reports that Microsoft, the computer behemoth that made $12 billion in profits in 2005, didn't pay a penny of Wisconsin corporate income tax. Nor did Merck, the pharmaceutical giant with $5 billion in 2005 profits. Nor Sears, whose retail family includes Kmart and Lands' End, which made $1 billion in 2005 profits.
Since 1978 Wisconsin’s corporations' real (inflation adjusted) profits have doubled, while real tax contributions have actually declined slightly. As a result, the share of state revenue contributed by corporations has fallen dramatically:
1979-10%
1989-7%
2000 4.6%
2006 3.5%
Corporate tax avoidance schemes have contributed to shifting the tax burden onto homeowners and Wisconsin’s working families.
As corporate tax contributions have declined, state government has reduced its support for the University of Wisconsin system, technical colleges and local governments. Services have been cut and residential property taxes, tuition and fees have increased.
Milwaukee's state aid has declined from 45% of the city’s budget in 1998 to 34% in 2006. To compensate residential property taxes have increased from 12% to 17% and non property tax revenue such as parking ticket fees and street parking permits from 21% to 30%.
MATC, the state’s flagship technical college, has seen its state aid decline from over 30% in 1990 to 14% in 2007. Students now contribute more to our technical colleges through their tuition and fees than the state does.
Corporations that use accounting gimmicks to avoid paying their taxes are shifting the burden of financing local government and educational services to homeowners, students, and other citizens. They are classic free riders, benefiting from these public goods, but refusing to pay their fair share.
Wisconsin's billion dollar plus structural deficit is, in part, the result of these tax avoidance schemes.
In response, state Senator Dave Hansen (D-Green Bay) has introduced the Corporate Tax Accountability Act (SB367) which would require publicly-held corporations to report their profits and tax contributions to the state. The legislation will affect less than 1% of Wisconsin’s companies, primarily large multi-state businesses like Wal-Mart and Merck.
Co-sponsors include nine senators and nineteen assembly representatives. Assembly Representative Phil Garthwaite (D-Dickeyville) plans to introduce an Assembly version.
This legislation will provide legislators with important information if they are to provide Wisconsin’s beleaguered taxpayers with real tax relief.
Wal-Mart has announced that it hasn't decided on how it will proceed in the aftermath of the North Carolina ruling, and declined to comment on the case's specifics due to a possible appeal. It continues to use REITS in Wisconsin.
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