Post by Jaga on Apr 13, 2008 9:32:38 GMT -7
I like so called intelligence report in Parade magazine.
Here is about a fact that private citizens pay more taxes that the rich corporations and this trend is getting worse and worse since the big corporations are getting offshore and the CEOs are getting bigger and bigger bonuses even if their performance is bad:
www.parade.com/articles/editions/2008/edition_04-13-2008/Intelligence_Report#newsmakers
Are You Paying For Corporate Fat Cats?
As you file your tax return this week, you may think you’re paying off the tax obligations for just your household. But you’re also footing the bill for American companies that are dodging billions of dollars in taxes. “Most major corporations have a tax department not just to comply with the tax code but also as a profit center,” says Charles Cray of the Center for Corporate Policy, a nonprofit watchdog group.
A 2004 U.S. Government Accountability Office (GAO) study found that 61% of American corporations, including 39% of large companies, paid no corporate income taxes between 1996 and 2000. Last year, corporations shouldered just 14.4% of the total U.S. tax burden, compared with about 50% in 1940.
While companies are getting off easy, thanks to loopholes, ordinary wage earners are getting stuck with the tab. The tax burden on individuals is expected to climb from $1.16 trillion in 2007 to $1.21 trillion this year, according to the Congressional Budget Office (CBO), while corporate tax receipts are expected to decline from $370 billion to $364 billion. By 2013, the CBO estimates, ordinary taxpayers’ bills may climb to $1.86 trillion while corporate tax bills drop to $327 billion.
One strategy of corporations is to create “shell companies” in places like Bermuda, Gibraltar and the Caribbean to avoid federal taxes. Corporations “set up an offshore division that has nothing more than a post office box,” says Rep. Richard
E. Neal (D., Mass.), the chairman of a House subcommittee probing tax breaks. Experts estimate that the U.S. Treasury may be losing up to $100 billion a year due to shell corporations.
In one recent case, KBR—a former Halliburton subsidiary and the largest Iraq war contractor—admitted to “reducing tax obligations” through two Cayman Islands divisions, reportedly avoiding hundreds of millions of dollars in Medicare and Social Security taxes. A 2004 study by the GAO found that 24 of the largest federal contractors used Cayman Islands units to shave their tax bills.
Oil and other multinational companies also benefit from tax breaks, some specially written for them. Most are perfectly legitimate, but companies sometimes push the envelope too far. Pharmaceutical giant Merck paid $2.3 billion to the government last year for profits related to a Bermuda partnership.
In their defense, businesses say that U.S. corporate tax rates are the second highest in the developed world, making our country less competitive. But a study from the nonprofit group Citizens for Tax Justice found that, because of loopholes, the corporate tax burden in the U.S. is actually the world’s third lowest when measured as a percentage of gross domestic product.
Efforts to change the system are under way. In February, the House of Representatives passed a bill to end $18 billion in tax breaks for oil companies, and Rep. Charles Rangel (D., N.Y.), head of the House Ways and Means Committee, has introduced legislation to trim corporate tax rates while reducing loopholes.
Here is about a fact that private citizens pay more taxes that the rich corporations and this trend is getting worse and worse since the big corporations are getting offshore and the CEOs are getting bigger and bigger bonuses even if their performance is bad:
www.parade.com/articles/editions/2008/edition_04-13-2008/Intelligence_Report#newsmakers
Are You Paying For Corporate Fat Cats?
As you file your tax return this week, you may think you’re paying off the tax obligations for just your household. But you’re also footing the bill for American companies that are dodging billions of dollars in taxes. “Most major corporations have a tax department not just to comply with the tax code but also as a profit center,” says Charles Cray of the Center for Corporate Policy, a nonprofit watchdog group.
A 2004 U.S. Government Accountability Office (GAO) study found that 61% of American corporations, including 39% of large companies, paid no corporate income taxes between 1996 and 2000. Last year, corporations shouldered just 14.4% of the total U.S. tax burden, compared with about 50% in 1940.
While companies are getting off easy, thanks to loopholes, ordinary wage earners are getting stuck with the tab. The tax burden on individuals is expected to climb from $1.16 trillion in 2007 to $1.21 trillion this year, according to the Congressional Budget Office (CBO), while corporate tax receipts are expected to decline from $370 billion to $364 billion. By 2013, the CBO estimates, ordinary taxpayers’ bills may climb to $1.86 trillion while corporate tax bills drop to $327 billion.
One strategy of corporations is to create “shell companies” in places like Bermuda, Gibraltar and the Caribbean to avoid federal taxes. Corporations “set up an offshore division that has nothing more than a post office box,” says Rep. Richard
E. Neal (D., Mass.), the chairman of a House subcommittee probing tax breaks. Experts estimate that the U.S. Treasury may be losing up to $100 billion a year due to shell corporations.
In one recent case, KBR—a former Halliburton subsidiary and the largest Iraq war contractor—admitted to “reducing tax obligations” through two Cayman Islands divisions, reportedly avoiding hundreds of millions of dollars in Medicare and Social Security taxes. A 2004 study by the GAO found that 24 of the largest federal contractors used Cayman Islands units to shave their tax bills.
Oil and other multinational companies also benefit from tax breaks, some specially written for them. Most are perfectly legitimate, but companies sometimes push the envelope too far. Pharmaceutical giant Merck paid $2.3 billion to the government last year for profits related to a Bermuda partnership.
In their defense, businesses say that U.S. corporate tax rates are the second highest in the developed world, making our country less competitive. But a study from the nonprofit group Citizens for Tax Justice found that, because of loopholes, the corporate tax burden in the U.S. is actually the world’s third lowest when measured as a percentage of gross domestic product.
Efforts to change the system are under way. In February, the House of Representatives passed a bill to end $18 billion in tax breaks for oil companies, and Rep. Charles Rangel (D., N.Y.), head of the House Ways and Means Committee, has introduced legislation to trim corporate tax rates while reducing loopholes.
