How Top Executives Live...
#61
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Although, I will note if I could, I'd withhold every dime I pay to the federal gov't untill the last relevant tax day. Any interest given for free to the government is too much IMO. I'm just glad WA doesn't have an income tax, or I would probably get really hot under the collar about it.
#63
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Bob - Can you help me with this? I find reporting on taxes to be so frustrating because so many people confuse and mix up terminology (like effective vs marginal Federal income tax rates). I've seen you post some charts, and you may have cited a source, but I don't remember having a chance to look at the methodology used to come to that conclusion.
Specifically, I recently saw a chart that talked about companies "paying their CEOs more than they paid in Federal taxes." Their graphic showed CEO compensation vs Federal income tax refunds.
That, of course, is a flawed model using the language on their own chart legend. Other than Senor Perez, I would guess a majority of the taxpayers here receive tax refunds. I did. I also paid in more in taxes than I used to make in some years when I was younger, so anyone who says I didn't pay taxes is sadly mistaken or intentionally misleading people.
I'm with you on most of that: specifically, that hiring workers is based largely on current and expected future profitable demand for product. However, taxes can affect profitability, so there is some impact on the margins (i.e. diminishing returns, etc).
Specifically, I recently saw a chart that talked about companies "paying their CEOs more than they paid in Federal taxes." Their graphic showed CEO compensation vs Federal income tax refunds.
That, of course, is a flawed model using the language on their own chart legend. Other than Senor Perez, I would guess a majority of the taxpayers here receive tax refunds. I did. I also paid in more in taxes than I used to make in some years when I was younger, so anyone who says I didn't pay taxes is sadly mistaken or intentionally misleading people.
I'm with you on most of that: specifically, that hiring workers is based largely on current and expected future profitable demand for product. However, taxes can affect profitability, so there is some impact on the margins (i.e. diminishing returns, etc).
Big example her was Steve Jobs and his $1 annual salary but billion dollar compensation in stock options. The actual cost of those stock options to the company is negligible and it only dilutes the stock for shareholders. After a few years when the stock options are exercised making them eligible for capital gains tax break for Jobs they are expensed against company profits for tax purposes at the value they are exercised at far exceeding their actual cost to the company that they were issued at. It often times results in a bigger reduction in taxes than it actually cost to provide the ridiculous compensations for executives.
A paper describing how some big corporations pay negative taxes
http://www.ctj.org/pdf/notax2012.pdf
#64
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While "off-the-top" taxes don't make it more or less likely for a corporation to hire a new worker, "payroll taxes" (such as the employer's share of Social Security Tax) make hiring workers more expensive, and as those payroll taxes are increased or decreased on the employer, the ability for an employee to profit the company goes down or up respectively. Shifting all of those employer taxes to the employees would make the employer more willing to hire employees at the cost of a lower effective wage to the employee. Quite literally, as it stands now, the employee already pays the "employer's share" of social security taxes in the form of reduced wages.
#65
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A paper describing how some big corporations pay negative taxes
http://www.ctj.org/pdf/notax2012.pdf
http://www.ctj.org/pdf/notax2012.pdf
I honestly am not familiar enough with the tax deferral on a lot of those provisions to know how far out they push the tax obligation.
I am not dismissing that there are some skewed tax benefits in the corporate code or that it seems bizarre at best that some of these companies making record profits seem to have negative effective tax rates. However, my intuition is that looking at the past 5 years of tax data is like looking at the past 5 years of stock market data: they are likely both extra-ordinary and not reflective of longer term norms.
Specifically, in the S&P, you've had one of the worst peak-to-troughs in decades followed by one of the biggest cyclical bulls in decades. In the corporations, you had massive losses combined with tax incentives designed to spur or pull forward spending or reduce layoffs as part of various stimulus programs.
#66
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I have some thoughts on this subject, but it's honestly not an area of expertise for myself as I tend to work on the individual side versus the corporation side of things. I'll spend some more time researching before commenting.
Thanks. I am going to dig deeper into the methodology they use (source) but first glance seems to indicate that the vast majority of those corporations had low or negative effective tax rates due to deferred taxation. I would think of the deferred tax deductions like the taxation on your 401k or IRA: you get a deduction in the year you make the investment (in your case, to your retirement; in the corporation's case, in to R&D or capital expenditures) but you pay taxes later.
I honestly am not familiar enough with the tax deferral on a lot of those provisions to know how far out they push the tax obligation.
I am not dismissing that there are some skewed tax benefits in the corporate code or that it seems bizarre at best that some of these companies making record profits seem to have negative effective tax rates. However, my intuition is that looking at the past 5 years of tax data is like looking at the past 5 years of stock market data: they are likely both extra-ordinary and not reflective of longer term norms.
Specifically, in the S&P, you've had one of the worst peak-to-troughs in decades followed by one of the biggest cyclical bulls in decades. In the corporations, you had massive losses combined with tax incentives designed to spur or pull forward spending or reduce layoffs as part of various stimulus programs.
Thanks. I am going to dig deeper into the methodology they use (source) but first glance seems to indicate that the vast majority of those corporations had low or negative effective tax rates due to deferred taxation. I would think of the deferred tax deductions like the taxation on your 401k or IRA: you get a deduction in the year you make the investment (in your case, to your retirement; in the corporation's case, in to R&D or capital expenditures) but you pay taxes later.
I honestly am not familiar enough with the tax deferral on a lot of those provisions to know how far out they push the tax obligation.
I am not dismissing that there are some skewed tax benefits in the corporate code or that it seems bizarre at best that some of these companies making record profits seem to have negative effective tax rates. However, my intuition is that looking at the past 5 years of tax data is like looking at the past 5 years of stock market data: they are likely both extra-ordinary and not reflective of longer term norms.
Specifically, in the S&P, you've had one of the worst peak-to-troughs in decades followed by one of the biggest cyclical bulls in decades. In the corporations, you had massive losses combined with tax incentives designed to spur or pull forward spending or reduce layoffs as part of various stimulus programs.
Some of the tax credits for research and stuff are a joke. I work in that area. In the late 90’s we were working with Government labs on joint projects with in kind money expenditures on things that may or may not be useful or profitable but might stumble onto revolutionary things that might drastically impact energy consumption and emissions. Under the Bush administration the national labs were cut government scientist were laid off and the research money was given directly to corporations for whatever the corporate accountants called research. In practice the company went back to only doing projects for which ROI’s were pretty well determined ahead of time rarely even considering anything that might be revolutionary. Research credits are just being given out for basic product development which the company would do anyway.
The US became one of the most innovative countries in the world because at one time promoting science, education, and technology was a major government function. Most all the revolutionary technology that has been developed during the last century owes the seed of its existence in United States Government expenditures. At some point the US government switched to more supporting Corporations and Income for the wealthy. It has been very successful at that as well.
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#75
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It's unfair that Payton Manning gets to play professional footbal and get paid so well. I demand that I become QB for a professional NFL team, and get paid just as well.
No mind that ticket sales will drop 100%, and that the team will never win another game, and I will most likely die/fail. But hey, communism!
No mind that ticket sales will drop 100%, and that the team will never win another game, and I will most likely die/fail. But hey, communism!
#76
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It's unfair that Payton Manning gets to play professional footbal and get paid so well. I demand that I become QB for a professional NFL team, and get paid just as well.
No mind that ticket sales will drop 100%, and that the team will never win another game, and I will most likely die/fail. But hey, communism!
No mind that ticket sales will drop 100%, and that the team will never win another game, and I will most likely die/fail. But hey, communism!
#78
![Default](https://www.miataturbo.net/images/icons/icon1.gif)
It's unfair that Payton Manning gets to play professional footbal and get paid so well. I demand that I become QB for a professional NFL team, and get paid just as well.
No mind that ticket sales will drop 100%, and that the team will never win another game, and I will most likely die/fail. But hey, communism!
No mind that ticket sales will drop 100%, and that the team will never win another game, and I will most likely die/fail. But hey, communism!
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