Friday, February 15, 2013

Stock Option Tax Deduction Loophole = Paying Zero Corporate Income Taxes For Years

Brought to you by the Republicans who are now serving or served in the Congress since 2001

This should enrage every last middle class taxpayer in America, but if you are a hard right Republican today you will probably see nothing wrong with corporations paying zero taxes.  I swear some of the hard right has been brainwashed to think whatever wealthy donors want is okay because they could be wealthy some day.  Only thing that explains the hard right standing behind their members of Congress who vow not to raise taxes on the wealthy individuals/corporations or close loopholes.  Shaking my head at the abject lack of rational thinking on the part of the hard right.  We are talking loopholes so the wealthy corporations/individuals would have to pay their fair share of taxes not deductions like mortgage interest which they cannot seem to get it through their mind there is a difference.  Sen Levin of Michigan lays it out very succinctly:
“Due to the stock option loophole, Facebook may not pay any corporate income taxes on its profits for a generation,” said Senator Carl Levin, a Michigan Democrat who has proposed changing the policy. “When profitable corporations can use the stock option tax deduction to pay zero corporate income taxes for years on end, average taxpayers are forced to pick up the tax burden,” he said. “It isn’t right, and we can’t afford it.”  
The US Treasury is losing at least $2 billion a years due to lost revenue thanks to loopholes for big corporations which leaves the rest of the 98% to pick up the tab.  This is through loopholes but what about offshore accounts?  How much are we losing in tax revenue there where a person/company puts their assets offshore and still takes expenses off their income tax until the money is brought back on shore which is like years in the future or never.  No wonder the wealthy keep getting more wealthy and everyone else suffers.

Contemplate for a moment that the Citizens United ruling made corporations people so they could put large sums into campaigns or to put it bluntly allowed them to buy off politicians so their low tax rates could be maintained or in some cases paying zero taxes.  Fortunately for all of us Romney did not get elected as he was part of that group who paid low taxes and would bet in some years almost no taxes.  With Romney losing we dodged a bullet, but we are still facing big problems to get tax reform and close loopholes since the GOP gerrymandering made sure Republicans kept the House in 2012.

Closing tax loopholes is probably going to have to wait until after the 2014 elections when a large grassroots effort aimed at defeating House Republicans and some Senators like Mitch McConnell will take place.  At the same time in January 2015, there had better be some changes made to filibuster rules -- would hope that Democrats learned a lesson that you cannot trust Sen McConnell or most Senate Republicans is today's reality.  Took less than three weeks before McConnell went back on his word.  Senator Reid needs to go as Majority Leader since he is in the hip pocket of NRA which some are saying led him to cut a deal on the filibuster.

Facebook has joined a long list of corporations not paying taxes but yet they benefit from our infrastructure and in the case of Facebook they are getting tax dollars back.  If this doesn't lead to revolt against the wealthy avoiding taxes nothing will:
Facebook Paid No Corporate Income Tax Last Year, After Making More Than $1 Billion In Profits 
By Pat Garofalo posted from ThinkProgress Economy on Feb 15, 2013 at 9:00 am 
Between 2008 and 2011, 26 major corporations were able to pay no federal corporate income tax, despite making a combined $205 billion in profits. According to a new report from Citizens for Tax Justice, Facebook joined that illustrious club last year, receiving $429 million in tax rebates despite making more than $1 billion in profits:
Earlier this month, the Facebook Inc. released its first “10-K” annual financial report since going public last year. Hidden in the report’s footnotes is an amazing admission: despite $1.1 billion in U.S. profits in 2012, Facebook did not pay even a dime in federal and state income taxes. 
Instead, Facebook says it will receive net tax refunds totaling $429 million. 
Facebook’s income tax refunds stem from the company’s use of a single tax break, the tax deductibility of executive stock options. That tax break reduced Facebook’s federal and state income taxes by $1,033 million in 2012, including refunds of earlier years’ taxes of $451 million 
Facebook will be able to carry further tax rebates forward, according to CTJ, for a total of $3 billion in tax deductions.
See Think for more on Corporate Taxes
The Corporate Tax Rate the Republicans don't want to raise is a joke as we see below thanks to a report from CTJ researched by Think Progress:
CTJ looked at 280 companies, all of them members of the Fortune 500, and found that “while the federal corporate tax code ostensibly requires big corporations to pay a 35 percent corporate income tax rate, on average, the 280 corporations in our study paid only about half that amount.” And those who paid even half the statutory corporate tax rate paid far more than many of their competitors. 
In fact, in the last three years, 78 corporations had at least one year where they paid no federal income tax at all, while 30 corporations paid not a dime over the entire three years. Those 30 corporations paid nothing, even though they made $160 billion in profits over that period:
Seventy-eight of the 280 companies paid zero or less in federal income taxes in at least one year from 2008 to 2010…In the years they paid no income tax, these companies earned $156 billion in pretax U.S. profits. But instead of paying $55 billion in income taxes as the 35 percent corporate tax rate seems to require, these companies generated so many excess tax breaks that they reported negative taxes (often receiving outright tax rebate checks from the U.S. Treasury), totaling $21.8 billion. These companies’ “negative tax rates” mean that they made more after taxes than before taxes in those no-tax years.
Thirty corporations paid less than nothing in aggregate federal income taxes over the entire 2008-10 period. These companies, whose pretax U.S. profits totaled $160 billion over the three years, included: Pepco Holdings (–57.6% tax rate), General Electric (–45.3%), DuPont (–3.4%), Verizon (–2.9%), Boeing (–1.8%), Wells Fargo (–1.4%) and Honeywell (–0.7%).
As CTJ’s report put it, “just as workers pay their fair share of taxes on their earnings, so should successful businesses pay their fair share on their success. But today corporate tax loopholes are so out of control that most Americans can rightfully complain, ‘I pay more federal income taxes than General Electric, Boeing, DuPont, Wells Fargo, Verizon, etc., etc., all put together.’ That’s an unacceptable situation.” And its one that lawmakers could fix, if they were willing to stand up to the nation’s biggest corporations. 
Republicans are pulling a scam on the American people with their reasons not to raise taxes on corporations and the wealthy.  Thanks to Twitter, people are starting to wake up and realize that the wealthy are getting wealthier while the middle class is losing ground.

Time to vote out every last Republican in 2014 that subscribes to the theory you cannot raise taxes on the corporations/wealthy or close loopholes.  This has to be an activist movement across the Country to get some common sense returned to the Congress which the Republicans have destroyed with being bought and paid for by wealthy donors and corporations.

1 comment:

  1. The Facebook "rebate" sent me over the top today. I would love to know what the GOP's definition of tax "fairness" is.