Companies avert paying taxes AGAIN before their taxes go up
The wealthy are scrambling to take advantage of the current tax code by exploiting the system in mass numbers and driving profits into their pockets before the tax hikes on the rich Obama wants go into effect.
Countless companies including Costco and the Las Vegas Sands have declared what they call “special dividends’ to liquidate tax free capital. This amounts to over $20 billion dollars in this last quarter alone. Other firms are shelling out bonuses, commissions, and dividends early before the wealth bombshell is to be dropped on the wealthiest few.
“We’re going to have a big jump in household income in the fourth quarter” said Crandall. “It’s going to be in excess of $50 billion.”
A majority of this scrambling is occurring in the uppermost crust of the elite. The 2% of the wealthiest Americans will be the benefits of this early cashout. President Barack Obama wants to target these wealthiest of individuals to help solve the fiscal crisis that lies before us by raising their rates.
Of interest in 2009 52% of the 124 billion dividends reported by federal government went to this 2% according to the IRS. A definite symbol of how backwards our world has become with income inequality.
This statistic alone proves just how unequal income distribution really is as the rich get richer and the poor get poorer. The wealth has shifted from labor income to capital income, an income with yields the benefit of lower taxes
How will this increase in taxes effect us in the long run? The rich typically save rather than spend so it is a good indication that a tax increase won’t hurt the economy by too much. It is about time that the wealthy began paying their fair share of this American Dream rather than being the gold tipped parasites that they are.
Categories: Federal Tax, Income Tax, Tax Law Tags: avoiding taxes, corporate tax, federal income tax, federal tax, federal tax fraud, income tax, tax code, tax court, tax evasion, tax fraud, tax law, tax reform
Reinvent the Tax Code
With the fiscal cliff looming and tax hikes on the inevitable rise it would seem that the most rational solution would be to revise the tax code rather than raise taxes. Now policymakers are trying to decide on whether or not they should extend 100% of the tax cuts or only 98% for a majority of Americans.
As a result of the fall elections President Obama has been insistent that we should raise taxes on the wealthiest of the American population, or those making $250,000 dollars a year or more. Republicans are completely soured by the idea of breaking their precious “no new tax” pledge to Grover Norquist. Republicans are stuck on the idea that if the wealthy pay a dime more in taxes then they have to they will stall the economy, lay off their employees, and screw the American people over in any way they can. They insist that taking away entitlements from the middle class and poor is the only way to fix this mess…even though the rich pay lower taxes than the middle class and poor and could easily afford it.
Nobody, I mean nobody, Republican or Democrat, is talking about reforming the tax code to make it fairer to the population. I mean a lot of the wealthy exploit loopholes in taxes to negate paying their fair share. This would only seem fair as the tax code is rigged so that only the very wealthiest can take full advantage of the loopholes.
Tax reform is a great option. But with a tax serviced based economy and the entire branch of the IRS being dependent on a complex tax code
Is this the right approach?
There was an attempt to fix all of these loopholes and deductions by implementing the 1986 Tax Reform Act. This act was passed in good faith but it didn’t work. Eventually the tax loopholes and deductions slowly crept in as lobbyists made their way to Capital Hill.
So what if we fixed the tax code by closing loopholes and eliminating deductions we could lower tax rates on the different income brackets. Also we would have a simpler tax code that will make taxes easier to understand and simpler to pay. Also this may encourage businesses to engage in better corporate behavior as they won’t have an incentive to exploit the tax code for their own gain. This will also lead to an overall sense of fairness amongst all individuals.
Wouldn’t this simple solution bypass all of the nagging and stonewalling in congress and make everything a bit easier for all of us? I sure would enjoy it. Wouldn’t you?
Categories: Federal Tax, Income Tax, Tax Law Tags: federal income tax, federal tax, fiscal cliff, income tax, tax code, tax law, tax reform
Google’s tax Gaggle
The world’s most well renowned and profitable company, Google, avoided paying $2 billion dollars in taxes around the world by utilizing Bermuda tax shelters. This amount is double than what the company paid a few years before. This growing trend among the wealthiest of companies isn’t helping solve the global financial crisis that lies before us. By using legal loopholes to funnel profits into tax sheltered havens, Google skirts paying corporate income tax. This results in a 50% reduction of their overall tax rate. With the success of this approach it’s no wonder Google shift 80% of its pretax profit into these shelters protecting its income from the hands of federales.
This recent finding could result in global outrage from this wealthy elephant in the room. Known as tax dodging these taxes are completely legal…for the time being. Now many countries including US, France, United Kingdom, Italy and Australia are beginning to take notice. Especially since the economic crisis that shook the world.
Just recently, EU’s executive body advised its member board to take a stand against these abuses by passing new legislation banning the use of tax havens. In Europe alone this accounts to $1.3 trillion dollars in forfeited revenue per year. This avoidance is “scandalous” and “an attack on the fundamental principle of fairness,” said Algirdas Semeta, the European Commission’s taxation commissioner.
“The tax strategy of Google and other multinationals is a deep embarrassment to governments around Europe,” said Richard Murphy, director of Tax Research in England. “The political awareness now being created in the U.K., and to a lesser degree elsewhere in Europe, is: It’s us or them. People understand that if Google doesn’t pay, somebody else has to pay or services get cut.”
So what is Google’s defense to this claim? Google, like other wealthy elite insist that they are abiding by all the tax rules relevant to them. Also they claim that their investment in the various countries is enough to bolster their economies. They also claim that they employ over 2,000 people in the UK alone that helps fuel the supply chain resulting in tens of thousands of new jobs.
The corporate search giant has avoided paying its share of billions of dollars in global taxes using a pair of tax shelter strategies known as the Double Irish and Dutch Sandwich. The strategy, which is 100% legal, moves pretax income to subsidies located in Netherlands and Ireland which are then moved to a Bermuda tax shelter. This tactic allowed Google to pay just 3.2% of its profit that it earned overseas, even though those tax rates ranged from 26-34%.
So what does America think of this? Senator Carl Levin a democrat from Michigan called out the tech industry for moving billions of dollars of profit overseas and thus not contributing to the American economy. Levin is attempting to champion legislation that deters outlandish tax abuses. Levin estimates that US global companies have over $1.5 trillion dollars in accounts outside of the United States. This amounts to over 60% of their cash holdings.
In the UK company execs were drilled as to why they don’t pay more taxes there. Google claimed that it paid taxes where it creates “economic value” or the United States
Still we have to wonder here in the states how much of these taxes we aren’t seeing. It seems silly for you or I to make any more sacrifices so that Google can retain its history of windfall profits.
Categories: Federal Tax, Income Tax Tags: avoiding taxes, corporate tax, federal income tax, google tax, tax code, tax evasion