Teaser: Corporate Tax Reform


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On December 31 of this year, the Bush Tax Cuts will expire, and the spending cuts under the Budget Control Act of 2011 will begin. This is what is known as the fiscal cliff. At the same time, total US public debt totals more than $16 trillion. As the president and congress work to mitigate the damage of the fiscal cliff, any increase in revenue or decrease in spending is important.

US corporations are currently the most most profitable they have ever been, making more per dollar in sales than any time in history. The current corporate tax code is outdated, inefficient, and unfair to the rest of tax-paying society. Through loopholes in tax deductions, many of America’s biggest corporations are paying next to nothing in taxes. At the same time, the US tax code encourages corporations to funnel their profits out of the country into tax shelters. As foreign companies invest abroad, economic growth in America stagnent.

It is time to reform US corporate taxation. By removing loopholes, the changes can benefit businesses, government, and society.

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Corporate Taxation Proposal 3: Government


For my last proposal, I looked at the government side of the issue. Corporate taxation is a highly important issue in politics right now, especially because it will play a part in any upcoming budget changes. The Bush Era Tax Cuts are set to expire at the end of the year, and as the fiscal cliff looms closer, corporate tax reform (CTR) will certainly be up for debate.

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Corporate Taxation: Proposal 2


My first proposal mainly focused on the societal side of the corporate tax rate issue and public disgust with the minuscule and some times negative tax rate some american corporations are paying. For my second proposal, I took a look at the business side of the argument.

My image for this week’s post showed a couple protesters dressed in “Tax Dodger” uniforms, carrying a banner that listed the names and logos of a dozen US corporations who pay significantly less than the listed corporate tax rate. One point that I brought up was the idea that corporations shouldn’t hold the blame for this issue. The government sets the tax rates, and if there are loopholes in the system, it is within the power of those corporations to exploit them. It is just another way to remain competitive in what is an increasingly competitive corporate atmosphere.

GE responded to a 2011 NY Times about GE’s history of tax avoidance. Gary Sheffer, VP of Communications and Public Affairs, stated that their historically low tax rate in 2010 was attributed to losses at GE Capital during the financial crisis and not tax avoidance strategies. He states that in the next year tax rates will return to rates similar to other multinational corporations. While this statement does carry an ounce of truth, it also does a very good job at twisting the truth. GE actively participates in tax avoidance and has a 975 person tax accounting and legal team for just that purpose. Furthermore, the tax rate paid by the average multinational corporations is near half of the 35% set rate.

While it was difficult finding a public statement by any corporation on why or how they avoid paying taxes, their public filings show that they aren’t doing anything illegal and that they fully comply with the IRS. For many companies, GE is a role model. Between 2008 and 2010, the company received a tax benefit of $508 million.

The truth of the matter is that GE, while gaming the tax system, has created an environment where they actually owe minuscule taxes to the government. In the Business Insider article, it is clear that they have complicated the situation with a variety of PR mishaps which have further victimized the company. Every company would like to pay less taxes, much like most individuals in the country. They are being attacked because they are good at it.

John Samuels, head of GE’s tax department and former Treasury tax official, stated that that corporate tax rate in America is too high and as a result deters business in America. He also states that it is within the company’s best interest to keep money abroad in countries with lower tax rates.

Going forward, this will probably be the most difficult of my paper because corporations that pay low tax rates are secretive about their practices and public statements are hard to find.

http://features.blogs.fortune.cnn.com/2011/04/04/ges-taxes-a-case-study/

http://www.propublica.org/article/5-ways-ge-plays-the-tax-game

http://www.businessinsider.com/ge-taxes-2010

http://www.nytimes.com/2011/03/31/opinion/l31ge.html

http://www.ctj.org/corporatetaxdodgers/CorporateTaxDodgersReport.pdf

Federal Corporate Taxation


For my “White Paper” I plan on looking at Corporate Taxation in the United States. Corporate taxation is the process of taxing business entities that are classified as a corporation. The United States, with a corporate tax rate of 35%, taxes corporations more than almost every other country. In the United States, corporate taxation has come under fire for being inefficient and detrimental to the growth of business. On the other side of the argument, corporate tax has drawn criticism because of how avoidable it is. Deductions and loopholes results in a much lower tax rate paid by US corporations that is nowhere near 35%

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Entrepreneurial Spirit


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Last night at the Tech/no seminar, Biz Stone spent a good amount of time talking about stories from his life that led to his success. One of my favorite stories was about his high school sports career, and the idea that if an opportunity isn’t there, you can always make one for yourself.

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Philip Morris


Philip Morris is the worlds second largest tobacco company, and by nature has some serious ethical issues. Tobacco has been around since 6000 B.C. and was a cash crop that helped build America into what it is today. Despite all this, Tobacco is responsible for 1 in 5 deaths per year in the United States and Philip Morris is making billions of dollars off of it.

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