The Big Companies Pay Low Tax Rate
A newly released government report states that big U.S. companies pay far less in federal income tax than they want the public to know.
Back in 2010, big money corporations paid taxes at a rate of 12.6 on their income. This report was put together by the General Accountability Office. When the GAO office added up the companies, state, local and foreign taxes and they discovered they paid a rate of right around seventeen percent.
In the report the General Accountability Office states that “The average effective tax rates for profitable corporations were well below the federal statutory rate even when foreign and state and local income taxes were included.”
Tax experts say that one of the biggest abusers of tax law loopholes is Apple. Reports on Apple show that the company got away with not paying any taxes again this tax season on their profits from their subsidiaries in Australia.
The new report has fired up the debate on tax reform. “Today’s GAO report provides more stark evidence, if any is needed, that large, profitable U.S. corporations as a whole are not paying their fair share in taxes. When some U.S. corporations use unjustifiable loopholes and offshore gimmicks to avoid paying Uncle Sam, their tax burden is shifted onto hardworking American families and small business. Today’s GAO report quantifies just how much of the corporate tax burden has been shifted onto other taxpayers: America’s large, profitable corporations are now paying a lower tax rate than our teachers and firefighters.” said Sen. Carl Levin of Michigan in a press release.
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Tobacco Tax Hike: What it means to all
If there’s anything local convenience stores like, it’s a flurry of eager customers hoarding packs and packs of cigarettes before taxes skyrocket on July 1st, 2013.
On the said date, Minnesota’s tobacco taxes have increased by $1.60 per pack which adds up to the total state tax to $2.83 per pack. This increase means a Marlboro will now be at a state minimum of $7.83 per pack of 20’s.
What it means to the business
According to local stores and gasoline stations, their sales Sunday night saw the most dramatic spikes in their sales. Most of the stores have even reported doubling their monthly sales in the last week of June, just in time before the taxes go crazy. Another store reports selling 10 cartons in less than 20 minutes, and a woman claims to have bought stocks amounting to approximately $500, a definite steal compared to when Monday’s taxes go up.
Unfortunately for these stores, the almost sell-out performance of that week was met with very disappointing results come Monday.
What it means to the smokers
The increase in taxes was met with mixed inputs from the public’s end. While it was expected that smokers will react negatively, there are some heavy smokers who commented that the taxes may not impact their smoking habits, although they expect that it will affect their monthly budget.
A small number of smokers though, commented that higher taxes be considered as a sign to quit, or at least to motivate them to do so. Some also noted that they may resort to using electronic cigarettes, which are taxed less than tobacco.
Categories: Federal Tax, Income Tax, State Tax, Tax Law Tags:
WHO’s programs not only improve overall health – taxes too
Smoking-related diseases claim at least 6 million lives annually and the numbers are projected to increase another 33% in less than 20 years. With this, the World Health Organization (WHO) spearheaded the Framework Convention on Tobacco Control in 2005 which aims to prevent premature deaths all over the world caused by smoking.
The program is designed to curb and minimize tobacco use, through raising taxes to 75% of the retail price, limiting smoking areas on public places, printing of warnings on cigarette packages, and banning of promotions and advertisements that encourage the act of smoking.
Of these methods, increasing taxes on cigarettes may prove to be more effective in lowering smoking-related deaths, based from an independent study conducted by the WHO.
According to this study, limiting designated public smoking areas could potentially prevent 2.5 million smoking-related deaths, while increasing taxes could prevent another 3.5 million fatalities.
Since its implementation in 2005, the said program has saved many lives in over 40 countries worldwide. In addition, higher taxes paid to purchase a pack of cigars can be redirected by the government to improve health and education systems.
Apart from impacting mortality rates and government taxes, the program, if effective, could eventually result to more affordable health care cost and healthier babies that do not suffer from the harmful monoxides from the outside environment.
According to Dr. Douglas Bettcher, from WHO’s non-communicable diseases department, “it is a win-win situation for health and finance ministries to generate revenues that have a major impact on improving health and productivity.”
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