> "Raising the income tax rate has by far the least negative effect on GDP. In the long run, the simulation shows that the economy pretty much returns to baseline levels, with a slight increase in potential output.
The opposite is true for corporation taxes. A rise in the corporation tax rate leads to a severe and negative initial fall in GDP. Potential output also decreases. This leads to lower productivity, higher inflationary pressures and deteriorating economic circumstances in the long run.
A rise in indirect taxes (such as VAT) does not affect GDP quite as badly as a rise in corporation taxes, but it does affect GDP more substantially than a rise in income taxes. Indirect taxes operate largely through the price channel, increasing the prices of goods. By artificially raising prices, demand is curtailed."
jshier · 9m ago
I really need a good explanation for the assertion about corporate taxes, as it makes no real sense. Frankly, it sounds like corporate propaganda.
lesuorac · 3m ago
I don't think the studies account for a 0% tax rate and $0 government subsidy. If you're running a large deficit then adding in a tax rate is like having a fire that you're pouring lighter fluid on. Of course when you take away the lighter fluid the fire gets smaller. However, how are you getting that lighter fluid in the first place?
It also doesn't mean that 0% is the correct tax rate. This gives pretty strong evidence that during boom (bull) years you should increase the corporate tax rate to prevent the formation of bubbles and then during bane (bear) years you should decrease it to stimulate growth.
atbpaca · 47m ago
This number is actually a shame in the sense that it shows how little taxes are paid by other big companies.
crazygringo · 25m ago
No it's not. It shows how much more profitable Berkshire Hathaway has been than other big companies. Which is what it's known for.
You'd never want other companies paying as much tax if they didn't have the profit to back it up. It would bankrupt them.
>You'd never want other companies paying as much tax if they didn't have the profit to back it up. It would bankrupt them.
They do have the profit in that the money they make doing things exceeds the money they spend to do the thing, but though a series of tricks of varying legality and ethics they make it so on paper they do not have "profit" and therefore successfully avoid taxes.
Amazon reported losses for the first 10 years while growing to billions in yearly revenue.
>It would bankrupt them.
It really wouldn't have. While Amazon was growing to dominate retail and putting very many competitors out of business, they were paying 0 corporate taxes. Many companies play these tricks and many people want them to pay fair taxes. If you need to be tax free to break even, you should go bankrupt. Especially in the Fortune 500 region.
monero-xmr · 11m ago
The correct corporate tax rate is zero, or the correct income tax rate is zero. Double taxation on employees of corporations is ludicrous and warping.
IMO corporate tax should be zero, and we tax individual people instead.
PaulDavisThe1st · 4m ago
For the hundredth time, it is not double taxation.
Money is taxed (generally) whenever it moves between parties. You paid tax on your income; you give (some of) it to someone else for goods or services - they pay taxes on it again. That's not double taxation, that's how tax works.
Money flows to the corporation. They pay some to employees, who pay tax on their income. They (might) pay some to shareholders, who (might) pay tax on dividends or capital gains. What is left (very simply speaking), the corporation pays tax on as its income.
Sparkle-san · 4m ago
I think this can make sense theoretically and what about cases where companies just horde wealth like Apple or spend it on stock buybacks (like Apple)? I'd want to see some sort of impetus for them to either reinvest or pass it along to their employees.
Enginerrrd · 1m ago
It seems strange to me to punish a corporation for maintaining a larger reserve with which to handle economic downturns and the like, allowing them to continue to pay and employ those same employees instead of just letting them go.
dpbriggs · 7m ago
Limited liability needs to priced to reflect the enforcement costs. Sole props are "free".
colechristensen · 2m ago
Ok, now I'm a corporation, I'm paid $1 to house-sit in my corporation's mansion and my food, vacations, car, and entertainment are employee benefits.
andrewl · 26m ago
Here's a short (2:46) video called Warren Buffett: No one would owe 'a dime' of federal taxes if other companies paid fair share.
Publicly saying "we paid lots of tax" would be career suicide for a tech CEO.
paxys · 20m ago
I'm trying to imagine what would happen to the random Berkshire board member who floats the idea of replacing Buffett.
strangattractor · 59m ago
Wow and they still make money despite paying their fair share. Who would have ever thought.
gruez · 57m ago
But corporate taxes are on profit, not revenue, so almost by definition any company that "paying their fair share" is "still makes money".
PaulDavisThe1st · 3m ago
> But corporate taxes are on profit, not revenue
They are taxes on revenue, but with a set of allowed deductions (e.g. labor costs, R&D, capital expenditure, etc. etc.)
Whether you call that a tax on profit or a tax on revenue with business related deductions is really just a matter of perspective.
vel0city · 47m ago
Imagine if a household was only taxed on the money they managed to put away in savings and could count housing expenses, food expenses, education costs, healthcare, entertainment, vacations, vehicle purchases, etc. 100% against their income.
That's what the standard/itemized deduction is supposed to represent. The problem is that we obviously can't let you deduct everything, because if you can deduct everything there would be nothing to tax, aside from savings. And you really don't want to tax savings because savings (also known as "investment") is what makes the modern economy possible.
energywut · 35m ago
I most certainly cannot deduct housing, food, entertainment, vacations, or large purchases.
> The problem is that we obviously can't let you deduct everything, because if you can deduct everything there would be nothing to tax, aside from savings.
This is the point the parent poster is making. We say that it's ok for corporations to deduct everything, but not the people? Why are we ok with that?
gruez · 15m ago
>This is the point the parent poster is making. We say that it's ok for corporations to deduct everything, but not the people? Why are we ok with that?
Because companies, to some approximation, are pass-through entities, so it doesn't make sense to tax them. Most of the stuff you buy are for own use/consumption. Food is an obvious one, but so are movie tickets TV and last year's European vacation. Companies don't do any of that. It doesn't need food, movie tickets, or European vacations. It might buy flight tickets for its employees to go on sales trips or whatever, but it's not for the company itself. Moreover if you're buying stuff for business purposes (eg. you're a contractor and need a flight ticket to go meet your client), you can deduct it too.
More practically, taxing revenue or not allowing companies to deduct expenses would heavily encourage vertical integration. A vertically integrated widget factory will only have to pay such a tax once, but a widget factory that buys its sheet metal from a foundry, which gets its ores from a miner will have to pay the tax 3 times. That's bad for the economy because it discourages specialization and division of labor, which is basically the other pillar of the modern economy.
vel0city · 6m ago
> Companies don't do any of that. It doesn't need food, movie tickets, or European vacations.
And yet they sure seem to cater a lot of lunches and dinners, pick up the costs for large corporate events, pay for suites at event venues, and fly executives around the world in private jets.
tonyhart7 · 27m ago
because they force you to open bussiness
vel0city · 31m ago
> That's what the standard/itemized deduction is supposed to represent.
If they wanted you to deduct housing costs they'd just let you deduct housing costs. Instead they play games about mortgage interest deductions because they want to incentivize certain kinds of living arrangements over others and give handouts to some voters but not others.
I agree the idea of only having households pay taxes on savings is pretty much untenable with existing revenue structures and would be disencentivizing things we want to incentivize. Just pointing out how corporate taxes just seem pretty absurd from what households pay in comparison.
Let's imagine two groups of people. One group gets a bonus and takes that money to go on a cruise. Easily 30%+ of that money gets taken by income taxes (including FICA). The other group gets their company to just pay for them to go on that cruise as a team building exercise/corporate summit/planning meeting/whatever you want to call it. That's negative taxes in the end, the cost of the business operating, it's a cost that offsets revenues. Good luck getting that audited and declared taxable.
Totally seems fair.
gruez · 4m ago
>That's negative taxes in the end, the cost of the business operating, it's a cost that offsets revenues. Good luck getting that audited and declared taxable.
How is that negative taxes? At best it's tax free, but calling it negative tax (because it's lower than the alternative?) is double-counting. Moreover AFAIK this sort of tax evasion mostly happens at the small business level (eg. a plumber buying a pickup truck and then using it to go to the grocery store and pick up his kids from soccer practice), but it doesn't really happen at the corporate level because 1) such spending will almost be in contravention of corporate governance policies and be flagged by auditors and 2) you need so many people in on the conspiracy that it's impossible to keep a lid on it. Plenty of companies get flak for their subsidiaries in tax havens, but I'm not aware of any serious allegations of corporate tax evasion by the way of fringe benefits.
denkmoon · 39m ago
nobody would ever put anything into savings under such a scheme.
learn-forever · 38m ago
are you agitating to tax companies that lose money?
viraptor · 19m ago
Yes! That's the VC funded model - money injection while you burn cash and run on losses until you're big enough for a huge return. Which incentivises all sorts of bad behaviours. Same with Hollywood accounting. Just tax a bit less on revenue.
cynicalkane · 32m ago
Unironically yes. The reason people want taxes on profits is they think large, powerful companies are a threat... but if you think that, why tax money that large, powerful companies don't waste?
The other reason is to tax the rich, but you can do that by simply taxing the rich directly. If we fear powerful companies, we can put some sort of scaling size tax on the largest ones.
crazygringo · 20m ago
> Unironically yes.
Do you realize that won't produce more revenue, it will just bankrupt companies and produce less revenue?
Companies are already incentivized not to waste by competition. That's the whole point of capitalism. You don't need taxes for that.
margalabargala · 10m ago
Why not? We tax people that lose money.
jay_kyburz · 38m ago
companies are owned by people, so taxing companies, then taxing the owners again is paying tax twice.
mulmen · 39m ago
Is this a joke? That’s mostly how it works already.
vel0city · 23m ago
Most of my health expenses, sure. Not necessarily all of them, unless I play games and live within allowed limits of tax advantaged savings accounts which might just eat my money at the end of the year.
My vacations, car payments, food expenses, and housing expenses are absolutely not able to be written off. One part of my housing expenses may be able to be written off, but not anywhere near all of them. Some education expenses, but not nearly all. I get $5k of untaxed income for childcare for the year. How many weeks do you think $5k covers for two kids?
bobxmax · 58m ago
I always find "fair share" to be an odd argument. Who decides what's a fair share?
ceejayoz · 47m ago
That the line is hard to perfectly define does not mean “none is fine”.
kristopolous · 54m ago
It means they're not exercising loopholes and legal sleight of hand to pay less.
gruez · 51m ago
What counts as a loophole though? IRA, almost by design is a way to shelter your investments from taxes. Is it a loophole to put your investments in an IRA to avoid taxes? What about when Peter Thiel puts his paypal stock in an IRA, and paid no taxes on his paypal exit?
jcheng · 36m ago
And what about using the “back door Roth IRA” to get around the Roth IRA’s income test? What about when the IRS says the back door Roth is allowed?
Can you honestly say when the people were drafting how IRAs would work they were thinking this as an intended use-case?
gruez · 41m ago
"intended use-case" is just more fuzzy language. They probably thought everyone would buy mutual funds, rather than 3X leveraged Nvidia ETFs. Does that mean buying such ETFs (and making bank) mean you're not paying "your fair share"? Or for something more down to earth, what about meme stocks and bitcoin treasury companies, both of which are technically companies, but are definitely not what the authors of the bill had in mind.
lotsofpulp · 39m ago
Can you say why employees of large and well funded businesses get to save $23k+ per year in 401k, but employees of small and less well funded businesses can only save $7k per year in an IRA?
No comments yet
sneak · 43m ago
The rule of law, and the democratic lawmaking process is based on text, not mind reading.
kristopolous · 40m ago
Well I can pull up exactly what proponents of The Taxpayer Relief Act of 1997, which introduced the Roth IRA, stated their intentions were since this is very easy to find and widely documented but I strongly suspect you don't actually give a fuck about reality.
So my time spent on this ends now.
loloquwowndueo · 52m ago
*sleight
tekla · 52m ago
Damn, people who pay into their 401Ks are fucking evil.
> Food conglomerate Archer Daniels Midland enjoyed $438 million of U.S. pretax income last year and received a federal tax rebate of $164 million.
> The delivery giant FedEx zeroed out its federal income tax on $1.2 billion of U.S. pretax income in 2020 and received a rebate of $230 million.
> The shoe manufacturer Nike didn’t pay a dime of federal income tax on almost $2.9 billion of U.S. pretax income last year, instead enjoying a $109 million tax rebate.
If you think this is the same as someone putting $7k into a 401k then you are acting in bad faith and we have nothing productive to discuss.
tekla · 38m ago
How is it a loophole when it was literally legally allowed, not even as a slight of hand.
shermantanktop · 16m ago
Some loopholes are an accident. Some are intentionally put in place by parties interested in traveling through the loophole, benefiting from doing that, and then claiming they would be stupid not to do so.
Those cases are different, even though the legal status of them may be the same.
robinson7d · 32m ago
Loopholes are by definition legally allowed.
paulcole · 38m ago
It’s very easy. If I think I pay a lot then I’m paying more than my fair share. If I think you’re not paying enough then you’re not paying your fair share.
sneak · 44m ago
The bought-and-paid-for legislature and the military-industrial complex that both parties serve ceaselessly and unflinchingly.
mulmen · 47m ago
Congress.
asadotzler · 51m ago
Fair means the same playing field, the same rules, the same consistent outcomes from all the corporations subject to these laws and regulations, and not just one of them who does the right thing. Exercizing loopholes is the opposite of fair. It puts those with the best cheating strategies ahead of those who play by the rules. Because you can catch the ref with his back turned doesn't make you a fair player.
bobxmax · 48m ago
What is a loophole? Legally avoiding taxes isn't cheating.
What you're describing is tax fraud, and that's different from corporations using legal strategies to mitigate their tax burdens.
jodrellblank · 36m ago
> "What is a loophole?"
"A way of avoiding or escaping a cost or legal burden that would otherwise apply by means of an omission or ambiguity in the wording of a contract or law." - The American Heritage® Dictionary of the English Language, 5th Edition.
What they're describing is corporations using legal strategies to mitigate their tax burdens that you or I cannot do. Lobbying is legal, but you or I cannot lobby to any useful degree. Big-box store companies build their stores to be short-lived buildings, then will only sell them with a contract that says the next occupant cannot be a big-box store, then argue that since value is determined by what someone else will pay and nobody will pay much for the end of life of a short-lived store intended to be a shop but which now cannot be a shop, so their stores are low value and comparable to empty stores, therefore they shouldn't pay much tax on them. "In Wisconsin, new Gov. Tony Evers says his budget proposal will close the dark stores loophole in the state"[1].
> "Legally avoiding taxes isn't cheating."
Try arguing that you would only sell your houses with a stipulation that nobody can live in it, therefore you should pay the same taxes and rates that an empty lot would pay, and see if you still think that "legal is the same as right and fair".
So is using cheat codes in a game also not cheating? It's part of the game after all.
paulcole · 37m ago
Yes, that’s correct.
But if I’m playing a multi-player game, there can be rules of that game that ban the use of cheat codes. Breaking those rules would be cheating.
VoidWhisperer · 46m ago
Honestly with how it is in America, it feels more akin to slipping the ref a $50 instead of doing it when his back is turned
sneak · 46m ago
Loopholes are the definition of playing by the rules.
Laws are not enacted in spirit, they are drafted, voted on, and enacted in text. What the law says is what matters, not what people assume it wants to achieve.
To claim that complying with the law exactly as it is written is unfair is, quite frankly, undemocratic and an outright rejection of the rule of law.
bluefirebrand · 13m ago
No, criticising the laws for being written in such a way that allow loophole behavior is not undemocratic. In any reasonable democracy you're allowed to criticise laws however much you please
peterbecich · 27m ago
Why is a corporate tax necessary? It would be simpler to increase the income tax. EU has low corporate taxes and higher income taxes i.i.r.c.
dh2022 · 16m ago
By income taxes do you mean personal income tax?
In any case, corporations benefit from airports / roads / ports / law enforcement / defense / education / etc... which are funded by local / federal governments. So corporations have a moral duty for to contribute to these expenses by paying taxes.
(But it is only a moral duty, and not a legal obligation. So corporations end up paying nothing, or next to nothing.)
merth · 20m ago
I think because they don't get any dividend to trigger income tax, instead they get a loan against their shares and spend that and roll over the debt to infinity.
jazzyjackson · 17m ago
I feel like this is a myth people share without ever looking into. You service the debt with income that you make and pay tax on the income you service the debt with
merth · 8m ago
They do not need to service debt using taxable income, they can roll it over indefinitely or until death, at which point the tax obligation disappears due to the stepped-up basis (capital gains reset on death)
unstatusthequo · 20m ago
I wish you were kidding but I doubt it given how much taxes are loved on HN. Income taxes are too high as they are. Taxed when you earn, tax when you spend, taxed on property, taxed to use your car, to fill your car or EV, taxed on inheritance, taxed on capital gains, etc. It’s out of control and is making the income division worse. Corporations R posting massive profits, dodging fair tax payments through creative loopholes, and then our lawmakers mis-spend the taxes they do taken. The entire system is broken.
And I really don’t think the EU is a model for tax sanity. Look at eliminating loopholes, not squeezing the average Joe even more than they already are. Their shit salary isn’t even keeping up with inflation. But their taxes sure do.
ericpauley · 59m ago
Nit from the end-note:
> On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article.
Hard to imagine someone who invests would have no indirect positions in BRK. Any broad-market ETF would have substantial exposure.
ameliaquining · 51m ago
If you click through to the fine print, it says, "THIS DISCLOSURE POLICY DOES NOT EXTEND TO BROAD-BASED ETFS / ETPS OR MUTUAL FUND HOLDINGS."
rtkwe · 57m ago
I think that's still fair, market following ETF/mutual funds are kind of the gold standard for avoiding conflict of interest issues. It's what my job forces me into to make avoiding insider training easier.
almosthere · 37m ago
If you include the income tax of employees it is a lot higher.
Perhaps we need window dressing to make people happy. Stop doing "income" tax and convert it to "payroll" tax. Gov gets the same amount, people can stop complaining about companies not paying tax. But at the end of the day, it's all window dressing.
TZubiri · 30m ago
But that's not paid by the corp, it's paid by the employee.
jekwoooooe · 22m ago
And Amazon pays 0%
readthenotes1 · 43m ago
It appears that Berkshire Hathaway accounts for ~ 0.002% of income.
MichaelZuo · 56m ago
The corporate tax system is so complex it seems impossible to actually figure out what that 5% means though.
e.g. They could be highly concentrated in industries where tax accounting tricks are too hard to do effectively.
TZubiri · 28m ago
Corp income tax means the tax (30%) on profit(income-expenses) retained (not withdrawn to shareholders) year over year.
Berkshire hathaway is famous for not paying dividends and keeping profits and never selling shares, so this makes sense.
Most companies withdraw or reinvest as much profit as possible to reduce this tax.
twoodfin · 48m ago
Insurance. It’s pure inflow vs. outflow margin. There’s not a lot of capital or operating expense to invest in relative to the massive cash flows.
https://economicsobservatory.com/which-taxes-are-best-and-wo...
> "Raising the income tax rate has by far the least negative effect on GDP. In the long run, the simulation shows that the economy pretty much returns to baseline levels, with a slight increase in potential output.
The opposite is true for corporation taxes. A rise in the corporation tax rate leads to a severe and negative initial fall in GDP. Potential output also decreases. This leads to lower productivity, higher inflationary pressures and deteriorating economic circumstances in the long run.
A rise in indirect taxes (such as VAT) does not affect GDP quite as badly as a rise in corporation taxes, but it does affect GDP more substantially than a rise in income taxes. Indirect taxes operate largely through the price channel, increasing the prices of goods. By artificially raising prices, demand is curtailed."
It also doesn't mean that 0% is the correct tax rate. This gives pretty strong evidence that during boom (bull) years you should increase the corporate tax rate to prevent the formation of bubbles and then during bane (bear) years you should decrease it to stimulate growth.
You'd never want other companies paying as much tax if they didn't have the profit to back it up. It would bankrupt them.
https://taxpolicycenter.org/taxvox/tpc-number-those-who-dont...
They do have the profit in that the money they make doing things exceeds the money they spend to do the thing, but though a series of tricks of varying legality and ethics they make it so on paper they do not have "profit" and therefore successfully avoid taxes.
Amazon reported losses for the first 10 years while growing to billions in yearly revenue.
>It would bankrupt them.
It really wouldn't have. While Amazon was growing to dominate retail and putting very many competitors out of business, they were paying 0 corporate taxes. Many companies play these tricks and many people want them to pay fair taxes. If you need to be tax free to break even, you should go bankrupt. Especially in the Fortune 500 region.
IMO corporate tax should be zero, and we tax individual people instead.
Money is taxed (generally) whenever it moves between parties. You paid tax on your income; you give (some of) it to someone else for goods or services - they pay taxes on it again. That's not double taxation, that's how tax works.
Money flows to the corporation. They pay some to employees, who pay tax on their income. They (might) pay some to shareholders, who (might) pay tax on dividends or capital gains. What is left (very simply speaking), the corporation pays tax on as its income.
https://www.youtube.com/watch?v=VJzTsTU1xL8
Publicly saying "we paid lots of tax" would be career suicide for a tech CEO.
They are taxes on revenue, but with a set of allowed deductions (e.g. labor costs, R&D, capital expenditure, etc. etc.)
Whether you call that a tax on profit or a tax on revenue with business related deductions is really just a matter of perspective.
That's what the standard/itemized deduction is supposed to represent. The problem is that we obviously can't let you deduct everything, because if you can deduct everything there would be nothing to tax, aside from savings. And you really don't want to tax savings because savings (also known as "investment") is what makes the modern economy possible.
> The problem is that we obviously can't let you deduct everything, because if you can deduct everything there would be nothing to tax, aside from savings.
This is the point the parent poster is making. We say that it's ok for corporations to deduct everything, but not the people? Why are we ok with that?
Because companies, to some approximation, are pass-through entities, so it doesn't make sense to tax them. Most of the stuff you buy are for own use/consumption. Food is an obvious one, but so are movie tickets TV and last year's European vacation. Companies don't do any of that. It doesn't need food, movie tickets, or European vacations. It might buy flight tickets for its employees to go on sales trips or whatever, but it's not for the company itself. Moreover if you're buying stuff for business purposes (eg. you're a contractor and need a flight ticket to go meet your client), you can deduct it too.
More practically, taxing revenue or not allowing companies to deduct expenses would heavily encourage vertical integration. A vertically integrated widget factory will only have to pay such a tax once, but a widget factory that buys its sheet metal from a foundry, which gets its ores from a miner will have to pay the tax 3 times. That's bad for the economy because it discourages specialization and division of labor, which is basically the other pillar of the modern economy.
And yet they sure seem to cater a lot of lunches and dinners, pick up the costs for large corporate events, pay for suites at event venues, and fly executives around the world in private jets.
If they wanted you to deduct housing costs they'd just let you deduct housing costs. Instead they play games about mortgage interest deductions because they want to incentivize certain kinds of living arrangements over others and give handouts to some voters but not others.
I agree the idea of only having households pay taxes on savings is pretty much untenable with existing revenue structures and would be disencentivizing things we want to incentivize. Just pointing out how corporate taxes just seem pretty absurd from what households pay in comparison.
Let's imagine two groups of people. One group gets a bonus and takes that money to go on a cruise. Easily 30%+ of that money gets taken by income taxes (including FICA). The other group gets their company to just pay for them to go on that cruise as a team building exercise/corporate summit/planning meeting/whatever you want to call it. That's negative taxes in the end, the cost of the business operating, it's a cost that offsets revenues. Good luck getting that audited and declared taxable.
Totally seems fair.
How is that negative taxes? At best it's tax free, but calling it negative tax (because it's lower than the alternative?) is double-counting. Moreover AFAIK this sort of tax evasion mostly happens at the small business level (eg. a plumber buying a pickup truck and then using it to go to the grocery store and pick up his kids from soccer practice), but it doesn't really happen at the corporate level because 1) such spending will almost be in contravention of corporate governance policies and be flagged by auditors and 2) you need so many people in on the conspiracy that it's impossible to keep a lid on it. Plenty of companies get flak for their subsidiaries in tax havens, but I'm not aware of any serious allegations of corporate tax evasion by the way of fringe benefits.
The other reason is to tax the rich, but you can do that by simply taxing the rich directly. If we fear powerful companies, we can put some sort of scaling size tax on the largest ones.
Do you realize that won't produce more revenue, it will just bankrupt companies and produce less revenue?
Companies are already incentivized not to waste by competition. That's the whole point of capitalism. You don't need taxes for that.
My vacations, car payments, food expenses, and housing expenses are absolutely not able to be written off. One part of my housing expenses may be able to be written off, but not anywhere near all of them. Some education expenses, but not nearly all. I get $5k of untaxed income for childcare for the year. How many weeks do you think $5k covers for two kids?
https://www.currentfederaltaxdevelopments.com/blog/2018/7/12...
No comments yet
So my time spent on this ends now.
Some examples:
> Food conglomerate Archer Daniels Midland enjoyed $438 million of U.S. pretax income last year and received a federal tax rebate of $164 million.
> The delivery giant FedEx zeroed out its federal income tax on $1.2 billion of U.S. pretax income in 2020 and received a rebate of $230 million.
> The shoe manufacturer Nike didn’t pay a dime of federal income tax on almost $2.9 billion of U.S. pretax income last year, instead enjoying a $109 million tax rebate.
If you think this is the same as someone putting $7k into a 401k then you are acting in bad faith and we have nothing productive to discuss.
Those cases are different, even though the legal status of them may be the same.
What you're describing is tax fraud, and that's different from corporations using legal strategies to mitigate their tax burdens.
"A way of avoiding or escaping a cost or legal burden that would otherwise apply by means of an omission or ambiguity in the wording of a contract or law." - The American Heritage® Dictionary of the English Language, 5th Edition.
What they're describing is corporations using legal strategies to mitigate their tax burdens that you or I cannot do. Lobbying is legal, but you or I cannot lobby to any useful degree. Big-box store companies build their stores to be short-lived buildings, then will only sell them with a contract that says the next occupant cannot be a big-box store, then argue that since value is determined by what someone else will pay and nobody will pay much for the end of life of a short-lived store intended to be a shop but which now cannot be a shop, so their stores are low value and comparable to empty stores, therefore they shouldn't pay much tax on them. "In Wisconsin, new Gov. Tony Evers says his budget proposal will close the dark stores loophole in the state"[1].
> "Legally avoiding taxes isn't cheating."
Try arguing that you would only sell your houses with a stipulation that nobody can live in it, therefore you should pay the same taxes and rates that an empty lot would pay, and see if you still think that "legal is the same as right and fair".
[1] https://slate.com/business/2019/02/dark-store-theory-big-box...
But if I’m playing a multi-player game, there can be rules of that game that ban the use of cheat codes. Breaking those rules would be cheating.
Laws are not enacted in spirit, they are drafted, voted on, and enacted in text. What the law says is what matters, not what people assume it wants to achieve.
To claim that complying with the law exactly as it is written is unfair is, quite frankly, undemocratic and an outright rejection of the rule of law.
In any case, corporations benefit from airports / roads / ports / law enforcement / defense / education / etc... which are funded by local / federal governments. So corporations have a moral duty for to contribute to these expenses by paying taxes.
(But it is only a moral duty, and not a legal obligation. So corporations end up paying nothing, or next to nothing.)
And I really don’t think the EU is a model for tax sanity. Look at eliminating loopholes, not squeezing the average Joe even more than they already are. Their shit salary isn’t even keeping up with inflation. But their taxes sure do.
> On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article.
Hard to imagine someone who invests would have no indirect positions in BRK. Any broad-market ETF would have substantial exposure.
Perhaps we need window dressing to make people happy. Stop doing "income" tax and convert it to "payroll" tax. Gov gets the same amount, people can stop complaining about companies not paying tax. But at the end of the day, it's all window dressing.
e.g. They could be highly concentrated in industries where tax accounting tricks are too hard to do effectively.
Berkshire hathaway is famous for not paying dividends and keeping profits and never selling shares, so this makes sense.
Most companies withdraw or reinvest as much profit as possible to reduce this tax.