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Old 08-22-2012, 06:11 PM   #61
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Because you haven't adjusted your Federal withholding levels to make you feel more comfortable?
Nope. And, frankly, I'm really not comfortable with getting into specifics about my taxes on an online forum, no insult intended towards you Scrappy. If either of us lived closer, I'd have zero hesitation to discuss tax matters face to face, so it's nothing against you at all I promise.

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.
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Old 08-22-2012, 07:03 PM   #62
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Taxes should be paid the last week in October. None of this withholding crap; you pay up, lump sum. Right before the elections. Then we'd see some real change.
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Old 08-22-2012, 08:46 PM   #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).
What is even more frustrating is how many giant corporations are allowed to account for stock option compensation to executives. It is one of the many reasons for the rapid rise in executive income starting in the 90’s. The shell game played is basically like taking money that should be paid in corporate income taxes and giving it to the executives instead and to top that off the executives’ pay the qualified capital gains tax rate on it as their personal income instead of like it was earned income.

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
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Old 08-23-2012, 10:44 AM   #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.
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Old 08-23-2012, 10:52 AM   #65
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What is even more frustrating is how many giant corporations are allowed to account for stock option compensation to executives.
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.

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A paper describing how some big corporations pay negative taxes

http://www.ctj.org/pdf/notax2012.pdf
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.
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Old 08-23-2012, 12:38 PM   #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.
While deferring taxes during boom years to offset them with losses during bust years is likely why Mitt won’t release his tax returns. It wouldn’t surprise me at all if he didn’t pay any taxes for ~2007 ~2008 so he could mix income with some losses For 09 ant 10 when the bubble burst. I don’t see how that works for 10 year or more periods of time as it seems to for some corporations though.

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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Old 08-23-2012, 04:47 PM   #67
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Gotta love velcro, invisible braces, battery powered power tools, and ear thermometers!
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Old 08-23-2012, 04:53 PM   #68
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Wrong thread perhaps?
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Old 08-24-2012, 10:58 AM   #69
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... in 1955. From a Fortune archive:
[indent]There are in the U.S. approximately 30,000 executives, with incomes of $50,000 or more [my note: CPI inflator translates to ~$427k/year].
Using this guesstimator from the WSJ, that would put those executives in the top 2% of modern income. I'd be curious as to where that would have put them in 1955.
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Old 08-24-2012, 01:09 PM   #70
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Gotta love velcro, invisible braces, battery powered power tools, and ear thermometers!
Modern computers and the Internet.
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Old 08-24-2012, 02:14 PM   #71
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NASA jumped on ARPANET in the late 80s. try again.
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Old 08-24-2012, 02:16 PM   #72
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NASA jumped on ARPANET in the late 80s. try again.
Incorrect.

HPCC INSIGHTS - Issue 2 - May 1997
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Old 08-24-2012, 02:20 PM   #73
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Get out of this thread with your NASA bullshit.
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Old 08-24-2012, 02:25 PM   #74
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Seriously, why not just go to other, rich nations and take all their money? It's unfair for China to have so much more money than the USA.
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Old 08-24-2012, 03:18 PM   #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!
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Old 08-24-2012, 03:23 PM   #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!
Payton Manning obviously gets paid so much because he is in bed with team owners who conspire to pay him more then he is worth because he provides the best sexual favors.
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Old 08-24-2012, 03:26 PM   #77
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insert any football player's name, in any position, on any team in the NFL.

it's not fair. I should be susidized.
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Old 08-24-2012, 03:30 PM   #78
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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!
I am quite confident if you looked at Payton Manning’s tax returns you would find he paid a fair share of his taxes. He actually earned most of his income. As do most sports stars and celebrities. not so easy for them to hide from the tax man and they spend much less lobbying in congress for preferential treatment.
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Old 08-24-2012, 03:35 PM   #79
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Get out of this thread with your NASA bullshit.
Satalite comunications, GPS
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Old 08-24-2012, 03:36 PM   #80
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i dont care what i man pays or doesn't pay in taxes. nor what his rate is.

it's meaningless.
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