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How US companies can avoid paying taxes (video)
- parfe 15y agoVideo is only 3m35s long and I thought it was worth a watch. Nothing shocking or new, but the video does a good job of tying all the steps together for how (drug) corporations can reduce their tax load.
- fierarul 15y agoThe key word being "(drug) corporations" since they are large enough to afford this. This is beyond the reach of your average small company / startup. 'Little people' do pay quite close to the 35%.
- parfe 15y agoDo the little people pay that? Or do they take all revenue as salary and zero out the profit? Which is what I assume every small business does.
- iuytghyjuyh 15y agoMost small business take 0 salary and all of it as profits. Generally capitalist countries tax dividends (investment income) at a lower rate than salary (worker income) and you also avoid paying social insurance taxes.
- natnat 15y agoAfter you make about 375k, you have to pay 35% tax on every extra dollar of salary too.
- deleted 15y ago[deleted]
- Nrsolis 15y agoSource?
- dangrossman 15y agoThe IRS, that's the top income tax bracket. They're listed in the form 1040 instructions if you want to see it on paper.
- Nrsolis 15y agoActually, I was referring to the assertion that you're in the 35% tax bracket when your salary hits ~375K. There is a lot of confusion in this area, especially when things like pass-through entities (like LLCs and S-Corps) are involved. Keep in mind that salary income from an LLC or from an S-Corp is also taxed by Soc. Security and Medicare (the dreaded ~15% self-employment tax) while capital gains from an LLC/S-Corp isn't necessarily subject to it. My point (and I do have one) is that the tax picture is considerably murkier when there is a business involved, be it a small one or a large one. Income taxes for salaried workers are a relatively straightforward matter. Income taxes for owners of businesses are another thing entirely. Deductions for business expenses are just a small part of that circus. The rules for businesses are a BIG part of the tax code and responsible for much of the shenanigans. If you think paying $250 for H&R block to prepare your return is steep, try paying something like $15-$30K for a moderately complex return for an LLC. (NOTE: My next-door neighbor just retired from the IRS after 30 years doing small business audits and my ex-fiance is a tax accountant. I've also owned and filed taxes for S-corps and LLCs as a principal. Shit just got real.)
- dangrossman 15y agoI pay my accountant $275 to do the returns for my LLC. I keep my own books the rest of the year. I've been audited by the IRS and owed no money after the audit. Having a business doesn't automatically make things super complex. It's only complicated if your business is complicated.
- 15y ago
- dangrossman 15y agoWith income taxes, self-employment tax, state business & income taxes and 3 kinds of local business taxes, I'm losing more than 35% of every dollar and I'm not even making enough to reach the higher tax brackets. About "little people" in general, "little people" don't form C-corps, they trade under their own name (sole proprietorship), a DBA (sole proprietorship), or as a pass-through LLC or S-corp. There's no distinction between a company's income and your own, so you don't get to decide what is salary and what is profit, they're one and the same on the tax return.
- cheez 15y agoAnother reason why income taxes are silly. Downvote? Do you enjoy bearing the burden?
- krschultz 15y agoWhile my car currently needs to be repaired, I don't go around saying that cars are silly. The US tax code is a broken mess, but that is just an implementation problem.
- cheez 15y agoWith all due respect, that's akin to saying my car would be a plane if it could fly. Tell me, how would you fix the incentives to loophole the hell out of the tax code?
- vaughanhedges 15y agoIMHO, a constitutionally mandated flat tax of no more than x% (with war time and emergency exceptions) and no deductions, credits, exemptions or any type of offset allowed is the best solution. Everyone pays the same % and can plan on that happening every year. But this will probably never happen because politicians can make many things happen through the tax code and many special interests make extensive use of tax code. There is both good and bad that these lead to. Anything else we do is tinkering, because new codes that close loopholes will eventually lead to new codes that create new loopholes. Still a tinker here and a tinker there and maybe your can create a teapot out of a cauldron. Tinkering a plane out of a car may be easier than tinkering our income tax into better system.
- cheez 15y agoSo now you see. The pragmatic side of me says that it is better to err on the side of the individual than the side of the ginormous government. That's why I support getting rid of the income tax altogether.
- mkr-hn 15y ago
- nhebb 15y agoThey single out the drug companies in this video, but really it's C corporations as a whole that can game the system. And the system is designed to be gamed. The US tax code is a rabbit's warren of incentives that accountants and tax lawyers get paid well to navigate. Meanwhile, most S corps and LLC's, with their pass through tax structures, bear the full load.
- DrHankPym 15y ago> Even though the American corporate tax rate is 35%, nobody pays that. Is she saying no corporation pays that or just drug corporations?