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>Effective tax rate 11% Absolutely obscene. Literally their entire Net Income increase from $5.4b to $9.4b is due to a tax cut from 20%. We will be paying for
by aphextron 9y ago
>Effective tax rate 11%
Absolutely obscene. Literally their entire Net Income increase from $5.4b to $9.4b is due to a tax cut from 20%. We will be paying for this Republican tax policy for the rest of our lives.
- l1ambda 9y agoThe US corporate tax rate is now more in line with the OECD average: https://taxfoundation.org/us-corporate-income-tax-more-competitive/ https://taxfoundation.org/us-corporate-income-tax-more-compe...
- alwaysthrowaway 9y agoNote that many US states have their own corporate income tax levies as well. California charges about 10% I believe. Thus a corporation domiciled in California is still paying a corp tax rate about as high as any in the world.
- jorblumesea 9y agoBut with just as many loopholes and ways to get around being taxed. Not sure what the tax rate even means if no one pays it anyways. Fixing our corrupt system is the real solution.
- alwaysthrowaway 9y agoUS tax system has very few loopholes. Double Irish / Dutch sandwich avoid EU taxes, not US. US tax on foreign income can be deferred - indefinitely - as it is only paid when the money is repatriated. But to truly avoid US corp tax is generally pretty limited (leasing IP from a foreign company etc). For example: If US company X makes $100B in foreign income in 2017 and repatriates that income in 2019, they will book 0% tax paid in 2017. Similarly, if X pays income tax to a foreign government they will receive credits for tax already paid - but due to accounting practices the US government will not count the credits when publishing the effective tax rate of X. That last point isn't germane to this particular article but it is something behind many of the 'Look at the low tax rate of X' articles you will see around.
- rifung 9y agoTrue but statutory tax rate matters less than effective tax rate. As a proportion of GDP the US was already lower than average. https://www.npr.org/2017/08/07/541797699/fact-check-does-the-u-s-have-the-highest-corporate-tax-rate-in-the-world https://www.npr.org/2017/08/07/541797699/fact-check-does-the... I don't know enough to argue for one side or the other, but I think the provided link could be misleading (not necessarily intentionally)
- tdb7893 9y agoI skimmed it and didn't see it compare effective tax rates. This article is very useful analysis but it misses a large part of the context once you start talking about actual amounts paid in taxes
- throw2016 9y agoYet the US lingers at the bottom of the OECD in terms of key criteria like healthcare, education, poverty, mobility. [1] The bulk of OECD have far stronger social indicators and spends. Perhaps a tax cut before achieving higher ranks on key criteria is misplaced. [1] http://www.sgi-network.org/docs/studies/SGI11_Social_Justice_OECD.pdf http://www.sgi-network.org/docs/studies/SGI11_Social_Justice...
- refurb 9y agoYet the US lingers at the bottom of the OECD in terms of key criteria like healthcare, education, poverty, mobility. In fact, it's so bad that there is a multiyear waitlist to immigrate!
- ninkendo 9y agoSorry for the low-effort post, but: Fuck this administration.
- product50 9y agoYeah - now blame the Republicans. I bet if Google's earnings weren't good, you would have completely bashed Google then. Always trying to find someone to blame vs. trying to give credit. For reference, also check that Google's revenue grew by 26% which had nothing to do with tax cuts.
- deleted 9y ago[deleted]
- skrowl 9y agoMaybe check Amazon's tax rate before "this Republican tax policy" went into effect prior to blaming low corporate tax rates on one party. If you think lobbyist-driven tax policy in America is ONLY done by Republicans, you should probably expand your reading beyond CNN / WashPo. You're right that the federal government that creates the tax policy is for sale, but it's not just the Republicans.
- deleted 9y ago[deleted]
- aphextron 9y agoIt's not just corporate rates. Doubling the standard deduction is the most reckless thing that has ever been done to our federal tax code for individuals. The fact that I am going to pay an effective 15% this year on a $100k salary is absolutely insane.
- deleted 9y ago[deleted]
- tristanj 9y ago>Literally their entire Net Income increase from $5.4b to $9.4b is due to a tax cut from 20% Hyperbole. Revenue is up $6.4B YoY from $24.75B to $31.1B.
- dindumuffin 9y agoSo... Literally their entire Net Income increase from $5.4b to $9.4b is due to revenue growth of 26%. Absolutely obscene.
- rayiner 9y agoCorporate tax raises relatively little revenue, and most Western European countries don’t rely on it much because its easier to tax individuals. If we don’t want to be getting more in debt we should raise taxes on middle class people to the level of say Germany. In a state like California, our taxes on rich people and corporations are already about as high as in Germany, its our taxes on people making sub-200k that really dramatically lower. That’s where most of the income is—in the 50-99% range.
- alwaysthrowaway 9y ago"In a state like California, our taxes on rich people and corporations are already about as high as in Germany, its our taxes on people making sub-200k that really dramatically lower. That’s where most of the income is—in the 50-99% range." It is truly astounding how few people realize this...
- okreallywtf 9y agoThat may be true (I haven't checked), but my guess is that germany (and most other western nations) offer a lot more government services for that level of tax. Taxing the middle class here the same as say, norway doesn't make sense unless you offer the same services. My half-decent insurance plan is one of my biggest monthly expenses and I'm lucky that it doesn't impact me too much. Many other "middle-class" people are barely getting by as it is.
- alwaysthrowaway 9y agoYou understate how shocking the situation is: "The U.S. spends more public money on healthcare per capita than Canada, Sweden, Denmark, Germany, Switzerland, France, Japan, Australia, New Zealand, and the United Kingdom. In fact, each year the U.S. government spends $4,197 per person, while the OECD median spend is $3,677." http://www.businessinsider.com/us-spends-more-public-money-on-healthcare-than-sweden-or-canada-2017-4 http://www.businessinsider.com/us-spends-more-public-money-o...
- rayiner 9y ago> Taxing the middle class here the same as say, norway doesn't make sense unless you offer the same services. My point is that the bellyaching in America is targeted at the wrong thing. It's not about how much taxes rich people or corporations pay. That's not why Germany has free education and we don't. It's that a household making $100k pays 20% taxes here and 40% in Germany. That's the major difference between the countries.
- teraflop 9y agoHow can it be true that their net income doubled because they went from keeping 80% of their profit to keeping 89%?
- alwaysthrowaway 9y agoOther posters report that it's due to an accounting change.
- prewett 9y agoYour assumptions are wrong, or you have confusion based on wording. By definition, net profit is after taxes and expenses. By definition, one always keeps 100% of net profits. If by "profit" you meant "gross profit" (i.e. after cost of goods, but before other expenses and taxes), I think that would go a long ways to explaining your confusion. A small increase in your net profit margin usually causes a large increase in net income (net profit), because expenses are typically a very large percentage of revenue.
- teraflop 9y agoAm I confused? I realized afterwards that I should have said "of their income" rather than "of their profit", but I think my point still stands. Corporate tax (at least in the US, and I assume in most other places) is calculated on income, i.e. revenue minus expenses. The original commenter was asserting that halving the company's tax rate, and nothing else, was responsible for a doubling of profits. My point was simply that it should be obvious that this is nonsense. Cutting the tax rate can't double the company's profit unless the company was already paying half of its income as tax. It's irrelevant that expenses are a large fraction of revenue, because expenses are already excluded from taxation.
- brink 9y agoCan someone without bias ELI5 on why I pay ~30% in taxes, but Alphabet pays 11%?
- DC-3 9y agoYou can't afford to lobby politicians. Alphabet can.
- rlanday 9y agoThis is not correct. The real reason is capital is more mobile than individuals are. Most Americans won’t (or can’t) leave the country if their taxes go up, but businesses are constantly making decisions about where to invest and hire people. Under the old tax code, the US had the highest corporate income tax rate of any OECD country: https://taxfoundation.org/us-has-highest-corporate-income-tax-rate-oecd/ https://taxfoundation.org/us-has-highest-corporate-income-ta... and also taxed corporations based on their worldwide income, which led to a number of high profile tax inversions.
- tedunangst 9y agoI'd start by revisiting the assumption that individual and corporate tax rates should be similar, or even comparable.
- prewett 9y agoWhy shouldn't they be similar? Seems reasonable that a "legal person" should be subject to similar taxes as a real person. And from a fairness standpoint, it doesn't seem fair that Google is taxed 11% on $billions of income after expenses while I get taxed 25% on $thousands of income sort-of-before expenses. Fairness is not always best for society, but it does seem like a reasonable default. In my mind, the default is that they should be similar, and any deviation from that requires a reason. This isn't a very helpful comment. The parent presumably doesn't have the information to make a different assumption (or they would have already). Telling them to revisit their assumptions without giving them any additional resources to do so is unhelpful. Besides, the rest of us (me, at least) would like to know your reasons.
- chrischen 9y agoI don’t get the whole issue with low coporate taxes. I get why people should be taxed so as to reduce consumption and increase production, but a coporation is not a person, so why hinder their ability to further productivity and economic output? It’s redirecting money earned that could be used to further economic activity and redirecting it to the hands of some highly corruptable bureaucrat in public office given the responsibility to handle way more money than their pay-grade should allow. I understand if the government is hurting for money, they may have to reach into coporations, but fundamentally corporations should not be the primary source of government income (or else government would be even more beholden to coporations instead of citizens). Maybe I’m missing something here (and I’m totally willing to admit that), so if someone can enlighten me behind the rationale please do so.
- Diederich 9y agoI get your argument, but consider this. Corporations generate activity that taxes support, such as the use of roads. That's really what it comes down to I think. > or else government would be even more beholden to coporations instead of citizens This is a real problem...perhaps one of the biggest problems we face, and I really don't have any reasonable ideas on how to fix it.
- chrischen 9y ago> Corporations generate activity that taxes support, such as the use of roads. That's really what it comes down to I think. For roads specifically, if a corporation causes increased usage of roads from say, more employees, the employees already pay for it through their personal income taxes (off of salary). If it's a trucking company, then there are weigh stations that weigh these commercial users and charge them extra for road maintenance.
- robryan 9y agoRegardless of the theoretical efficiency the US will be taking less in corporate taxes and we will have to wait and see if economic output increases enough to make up for it with other taxes.
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- briandear 9y agoHow? Google’s money doesn’t belong to you or the government. Taxes shouldn’t be confiscatory. Is Google using more government services than a less profitable company or a similar size? Of course not. So why should they pay more? How about the millions in taxes paid by their employees? Or the millions in sales taxes paid by employees, or the millions in property taxes paid by employees? Or all of the businesses who sell products to employees? Or the capital gains realized by shareholders that are then used to invest in other businesses or buy products and services? Even if Google paid 0%, they are a massive net economic gain for the country. Remember, corporations don’t pay taxes, people do. If Google paid more, prices for their services would rise and that would then increase customer acquisition costs for businesses which would result in lower profits for the businesses which means they hire fewer people and thus lower wages and higher unemployment which results in even fewer taxes collected and then, before long, you have the economy of France. Google would then lose business and contract in size and then they would pay even less in taxes. The Laffer Curve is a real thing.
- vibrio 9y ago"The Laffer Curve is a real thing." there are some assumptions about where on that curve we are. The balance sheets of most of these companies were at record levels before the tax cuts, and most of the tax benefits will go into share buy backs, which will not do that much to stimulate the weakest parts of this economy.
- Chriky 9y agoThe Laffer Curve makes a number of assumptions without evidence, most notably that tax revenue as function of tax rate is memoryless, when it obviously isn't. This is ignoring the issue, even when accepting the Laffer curve as true, that the revenue maximising rate would surely be well above what would be morally acceptable to enforce (~75%)
- s2g 9y ago> The Laffer Curve is a real thing. Parody account?
- pg_bot 9y agoI know it's politically unpopular, but most economists across the political spectrum believe that corporate taxes should be eliminated entirely.[0] It's more effective to tax people directly as the corporate tax is extremely volatile and it takes away money that could be productively reinvested. [0] https://www.npr.org/sections/money/2012/07/18/156928675/episode-387-the-no-brainer-economic-platform https://www.npr.org/sections/money/2012/07/18/156928675/epis...
- eganist 9y agoOr, rather than give corporations the option of reinvesting liquidity, we can incentivize reinvestment by taxing the crap out of corporations. I don't understand how the "tax cuts grow reinvestment" argument sways people. Investments into the business are deductible as expenses, meaning doing the exact opposite of a tax cut will actually drive reinvestment far more effectively. Cutting taxes allows for stakeholders to withdraw profits with much less of an incentive to reinvest. Want to drive up the velocity of capital? Cut personal taxes especially on lower bands since people in these bands are more likely to spend that money on essentials and personal luxuries to make life better. Increased spending -- be it at the corporate level on growth, hiring, and research, or at the personal level on necessities and occasional luxuries -- keeps the economic engine going.
- pg_bot 9y agoWhile corporations have the legal obligation to collect and pay taxes, only real people can bear the economic burden of the tax. The people who pay the tax are principally shareholders and workers of the corporation. It is up for debate how this responsibility is distributed but there is a growing body of evidence that the proportion is skewed towards labor, since capital can move more freely than labor.[0] We should expect to see higher wages for labor in that case which is what you seem to be advocating for. [0] http://www.taxpolicycenter.org/publications/capital-income-taxation-and-progressivity-global-economy/full http://www.taxpolicycenter.org/publications/capital-income-t...
- bearjaws 9y agoExcept the last tax holiday on corporations resulted in them reinvesting almost all of it into stock buy backs and dividends. The myth that lowering taxes on corporations results in economic growth needs to die. https://www.nytimes.com/2008/06/24/business/worldbusiness/24iht-24tax.13933715.html https://www.nytimes.com/2008/06/24/business/worldbusiness/24... "A 2007 academic study by Roy Clemons, then a graduate student at Texas A&M University, that was based on earlier data, found that the tax break did not stimulate investment in the United States economy and that repatriated money was often used for disallowed purposes, like stock repurchases." https://fas.org/sgp/crs/misc/R40178.pdf https://fas.org/sgp/crs/misc/R40178.pdf "While empirical evidence is clear that this provision resulted in a significant increase in repatriated earnings, empirical evidence is unable to show a corresponding increase in domestic investment or employment"
- mkempe 9y agoThis comment is factually wrong (as pointed out by other responses) and evinces sadly vile sentiments. The US corporate tax rate had grown until 2017 to be much higher than it is in Western European countries (and remains relatively high). If you, like many anti-Republicans, think that Sweden is an interesting model -- please note that Swedish corporate taxes are much lower than in the US. [1] As for the notion that profits, or their increase, are "obscene" -- this is the essence of the anti-capitalist mentality. [1] https://taxfoundation.org/how-scandinavian-countries-pay-their-government-spending/ https://taxfoundation.org/how-scandinavian-countries-pay-the...
- bitmapbrother 9y agoIf paying 11% is Absolutely obscene I would like to know what the adjective is for Amazon paying 0%.