I don't recall much conversation around here about corporate welfare. This is not the same as jacking up tax dollars on the biggest corporations in order to balance budgets or grow gov't spending. I'm talking about the tax code as it is set up today and how companies are given "development incentives" to skirt the high corporate tax codes. This is very much in line with the desires of politicians having convoluted - and high - federal income taxes in order to use the power of the tax code to drive behaviour among the citizens. Some interesting reading:

Quote:Think about that. The largest, wealthiest, most powerful organizations in the world are on the public dole. Where is the outrage? Back when I was young, people went into a frenzy at the thought of some unemployed person using food stamps to buy liquor or cigarettes. Ronald Reagan famously campaigned against welfare queens. The right has always been obsessed with moochers. But Boeing receives $13 billion in government handouts and everyone yawns, when conservatives should be grabbing their pitchforks.

According to Good Jobs First, there are 514 economic development programs in the 50 states and the District of Columbia. More than 245,000 awards have been granted under those programs. I ask again, where is the outrage? The system is antithetical to the idea of free markets. A quarter of a million times, state governments decided what is best for producers and consumers. That should make us cringe. First, the government is inefficient at providing public goods, and it is terrible at manipulating the markets for private goods. But more importantly, those 514 economic development programs are almost all the result of insidious cronyism. Narrow business interests manipulate government policymakers, and those interests prosper to the detriment of everyone else. Free markets be damned.

http://www.forbes.com/sites/taxanalysts/...e-welfare/

Quote:The data show a very high degree of concentration: we estimate that at least 75 percent of cumulative disclosed subsidy dollars have gone to just 965 large corporations, even though these companies account for only about 10 percent of the number of announced awards.

http://www.goodjobsfirst.org/sites/defau...ercent.pdf


Consider this based on the statistics of the jobs that make up the U.S. private sector and where those jobs come from:

Quote:Small businesses comprise what share of
the U.S. economy?
Small businesses make up:
99.7 percent of U.S. employer firms,
64 percent of net new private-sector
jobs,
49.2 percent of private-sector
employment,
42.9 percent of private-sector payroll,
46 percent of private-sector output,
43 percent of high-tech employment,
98 percent of firms exporting goods,
and
33 percent of exporting value.
Source: U.S. Census Bureau, SUSB, CPS;
International Trade Administration; Bureau
of Labor Statistics, BED; Advocacy-funded
research, Small Business GDP: Update 2002-
2010, http://www.sba.gov/advocacy/7540/42371

https://www.sba.gov/sites/default/files/...t_2012.pdf

Clearly, a lot of crony capitalism going on, and it has nothing to do with tax burdens but everything about who gets the goodies from the gov't. Factor in the rules and regulations that result in large corporations getting an edge on small business, and it adds more to the notion of crony capitalism and corporate welfare.

(04-21-2015 01:59 PM)miko33 Wrote:  I don't recall much conversation around here about corporate welfare.

Perhaps because this is a 'made-up word' used to describe incentives for people or reasons that one side doesn't agree with.

The government gives a company an incentive to do things they otherwise wouldn't do... to further the goals of the government... It is called stimulus or incentives when one agrees and 'corporate welfare' when one disagrees.

I am not taking issue with your opinions on any of the specific projects... merely on the use of the word... and mostly not by you.

The tax incentive to move a company from China to the US is 'corporate welfare' if you disagree. The tax incentive to encourage the use of renewable energy is 'corporate welfare', as is the tax incentive to hire minorities or the disabled or veterans. Heck, government regulations like capital adequacy in banks encourage certain types of business over others... which is nothing more than welfare for those businesses as well.

While it is true that companies will lobby for their own desires, the VASTLY bigger issue is the government trying to get business to do it's social work for them. As would anyone else, when negotiating for the government support, a business will present the worst possible scenario to get the best terms, and then do all it can to reap the rewards while limiting those bad scenarios. Business doesn't go to the government begging them to pay them to let them hire minorities or veterans. They do what they want.

Again, not making a value judgement on the actions... many of which are good ideas... merely on the use of the term.

Businesss get over 300 tax exemptions.

Employees get only a handful.

(04-21-2015 02:39 PM)Fitbud Wrote:  Businesss get over 300 tax exemptions.

Employees get only a handful.

What are these exemptions that you speak of?

(04-21-2015 02:47 PM)GrayBeard Wrote:  

(04-21-2015 02:39 PM)Fitbud Wrote:  Businesss get over 300 tax exemptions.

Employees get only a handful.

What are these exemptions that you speak of?

There are too many to list them but just to name a few

Transportation gas, lodging,

Clothes, Uniforms, equipment

Food, dinning, business trips

Hiring family members

Home office supplies

Business cards

etc. etc.

(04-21-2015 02:53 PM)Fitbud Wrote:  

(04-21-2015 02:47 PM)GrayBeard Wrote:  

(04-21-2015 02:39 PM)Fitbud Wrote:  Businesss get over 300 tax exemptions.

Employees get only a handful.

What are these exemptions that you speak of?

There are too many to list them but just to name a few

Transportation gas, lodging,

Clothes, Uniforms, equipment

Food, dinning, business trips

Hiring family members

Home office supplies

Business cards

etc. etc.

LOL...what?

So, you are counting normal business expenses as exemptions? You do realize that corporations/companies are not taxed on revenue right (except in very rare cases)?

And what is an exemption for "Hiring family members"?

(04-21-2015 02:56 PM)GrayBeard Wrote:  

(04-21-2015 02:53 PM)Fitbud Wrote:  

(04-21-2015 02:47 PM)GrayBeard Wrote:  

(04-21-2015 02:39 PM)Fitbud Wrote:  Businesss get over 300 tax exemptions.

Employees get only a handful.

What are these exemptions that you speak of?

There are too many to list them but just to name a few

Transportation gas, lodging,

Clothes, Uniforms, equipment

Food, dinning, business trips

Hiring family members

Home office supplies

Business cards

etc. etc.

LOL...what?

So, you are counting normal business expenses as exemptions? You do realize that corporations/companies are not taxed on revenue right (except in very rare cases)?

And what is an exemption for "Hiring family members"?

Tax exemption refers to a monetary exemption which reduces taxable income. Tax exempt status can provide complete relief from taxes, reduced rates, or tax on only a portion of items.

http://en.wikipedia.org/wiki/Tax_exemption


Many self-employed people want to hire family members to work for them. But as with many things in life, there's a right way and a wrong way to do this. Doing it correctly not only promotes family togetherness, it can also create tax savings for you.

When you hire a family member your business can take a deduction for reasonable compensation paid to this employee, which consequently reduces the amount of taxable business income that flows through to you. I emphasize reasonable compensation because the IRS can question compensation paid to a family member if the amount doesn't seem reasonable given the services actually performed. Also, you must be sure your business complies with child labor laws when hiring a family member who's a minor.

There are other benefits to hiring a family member. As a business owner, you're responsible for paying Federal Income Contributions Act (FICA) and Federal Unemployment Tax Act (FUTA) taxes on wages paid to your employees. FICA is the law requiring employers and employees to pay Social Security and Medicare taxes. FUTA is the law that establishes federal unemployment taxes.

As with wages paid to all employees, wages paid to family members are subject to withholding of certain taxes in some states. Typically, the payment of these taxes will be a deductible business expense for tax purposes. But if you hire family member--a child, spouse or parent as an employee--to work for your business you may not have to pay FICA and FUTA taxes.

http://www.entrepreneur.com/article/81828

(04-21-2015 01:59 PM)miko33 Wrote:  I don't recall much conversation around here about corporate welfare. This is not the same as jacking up tax dollars on the biggest corporations in order to balance budgets or grow gov't spending. I'm talking about the tax code as it is set up today and how companies are given "development incentives" to skirt the high corporate tax codes. This is very much in line with the desires of politicians having convoluted - and high - federal income taxes in order to use the power of the tax code to drive behaviour among the citizens. Some interesting reading:

Quote:Think about that. The largest, wealthiest, most powerful organizations in the world are on the public dole. Where is the outrage? Back when I was young, people went into a frenzy at the thought of some unemployed person using food stamps to buy liquor or cigarettes. Ronald Reagan famously campaigned against welfare queens. The right has always been obsessed with moochers. But Boeing receives $13 billion in government handouts and everyone yawns, when conservatives should be grabbing their pitchforks.

According to Good Jobs First, there are 514 economic development programs in the 50 states and the District of Columbia. More than 245,000 awards have been granted under those programs. I ask again, where is the outrage? The system is antithetical to the idea of free markets. A quarter of a million times, state governments decided what is best for producers and consumers. That should make us cringe. First, the government is inefficient at providing public goods, and it is terrible at manipulating the markets for private goods. But more importantly, those 514 economic development programs are almost all the result of insidious cronyism. Narrow business interests manipulate government policymakers, and those interests prosper to the detriment of everyone else. Free markets be damned.

http://www.forbes.com/sites/taxanalysts/...e-welfare/

Quote:The data show a very high degree of concentration: we estimate that at least 75 percent of cumulative disclosed subsidy dollars have gone to just 965 large corporations, even though these companies account for only about 10 percent of the number of announced awards.

http://www.goodjobsfirst.org/sites/defau...ercent.pdf


Consider this based on the statistics of the jobs that make up the U.S. private sector and where those jobs come from:

Quote:Small businesses comprise what share of
the U.S. economy?
Small businesses make up:
99.7 percent of U.S. employer firms,
64 percent of net new private-sector
jobs,
49.2 percent of private-sector
employment,
42.9 percent of private-sector payroll,
46 percent of private-sector output,
43 percent of high-tech employment,
98 percent of firms exporting goods,
and
33 percent of exporting value.
Source: U.S. Census Bureau, SUSB, CPS;
International Trade Administration; Bureau
of Labor Statistics, BED; Advocacy-funded
research, Small Business GDP: Update 2002-
2010, http://www.sba.gov/advocacy/7540/42371

https://www.sba.gov/sites/default/files/...t_2012.pdf

Clearly, a lot of crony capitalism going on, and it has nothing to do with tax burdens but everything about who gets the goodies from the gov't. Factor in the rules and regulations that result in large corporations getting an edge on small business, and it adds more to the notion of crony capitalism and corporate welfare.

Are we talking about deals the tax free deals that Wal Mart and other commercial develops get or are we referring to corporations like Lockheed Martin United Technologies and Grumman?

Fitbud is correct in that it's a great tax planning tool to save money by hiring your kids for your business.

But trying to conflate exemptions and expenses is not representative of anything any tax accountant would attempt to rationalize. They are not the same at all other than that both can reduce your end tax burden.

And of course businesses are going to have more expenses that they get to deduct because they naturally generate them to create taxable income.

Did somebody say free government money?

(04-21-2015 02:53 PM)Fitbud Wrote:  

(04-21-2015 02:47 PM)GrayBeard Wrote:  

(04-21-2015 02:39 PM)Fitbud Wrote:  Businesss get over 300 tax exemptions.

Employees get only a handful.

What are these exemptions that you speak of?

There are too many to list them but just to name a few

Transportation gas, lodging,

Clothes, Uniforms, equipment

Food, dinning, business trips

Hiring family members

Home office supplies

Business cards

etc. etc.

Individuals get a single lump sum deduction (whether they actually earn it or not) and have the ability to itemize their deductions if those amounts are greater as a matter of simplicity (and for goals of the government like giving tax refunds to people who didn't pay taxes)...Corporations are generally required to itemize.

In other words, the number of 'exemptions' that each get is completely unrelated to the 'size' of them relative to their tax burden.

both are generally allowed to deduct the reasonable costs associated with producing the revenue upon which you pay taxes.

(04-21-2015 03:34 PM)Hambone10 Wrote:  

(04-21-2015 02:53 PM)Fitbud Wrote:  

(04-21-2015 02:47 PM)GrayBeard Wrote:  

(04-21-2015 02:39 PM)Fitbud Wrote:  Businesss get over 300 tax exemptions.

Employees get only a handful.

What are these exemptions that you speak of?

There are too many to list them but just to name a few

Transportation gas, lodging,

Clothes, Uniforms, equipment

Food, dinning, business trips

Hiring family members

Home office supplies

Business cards

etc. etc.

Individuals get a single lump sum deduction (whether they actually earn it or not) and have the ability to itemize their deductions if those amounts are greater as a matter of simplicity (and for goals of the government like giving tax refunds to people who didn't pay taxes)...Corporations are generally required to itemize.

In other words, the number of 'exemptions' that each get is completely unrelated to the 'size' of them relative to their tax burden.

both are generally allowed to deduct the reasonable costs associated with producing the revenue upon which you pay taxes.

I'm not disputing that.

I'm just pointing out that there are many, many , many ways to avoid paying taxes as a business owner.

(04-21-2015 03:34 PM)HeartOfDixie Wrote:  

Did somebody say free government money?

That's OK, because he's going to change the future!

/sarcasm

(04-21-2015 03:42 PM)vandiver49 Wrote:  

(04-21-2015 03:34 PM)HeartOfDixie Wrote:  

Did somebody say free government money?

That's OK, because he's going to change the future!

/sarcasm

(04-21-2015 03:39 PM)Fitbud Wrote:  I'm not disputing that.

I'm just pointing out that there are many, many , many ways to avoid paying taxes as a business owner.

Well, yeah. Most of them because the government wants to encourage something.

All of the things you mentioned, individuals can also deduct... or they can form their own little home 'business' and do thousands more... ALMOST as many as large corporations... and some that large corporations can't.


My point is that you can describe 'good' things using bad words, but that doesn't make them bad. It depends on what you're trying to encourage. Very rarely are these exemptions things that businesses went to government and asked for an exemption.... FAR more often than not, these are things where the government sought to make them do something and they resisted and this is where we ended up.

Businesses are generally allowed to deduct their expenses from their income because that is essentially how accounting works. Individuals can as well, but more often than not, they spend less than the standard deduction so they are better off claiming that. That doesn't mean they aren't taking deductions.

The right OFTEN argues that we need to encourage mom and pop businesses, while the left wants to 'tax big business and the wealthy'. As I've often pointed out with regard to how the wealthy shelter their income from those tax plans, it is the smaller mom and pop shops who live off of their earnings can't get around the government... but the wealthy, whether they are a company or an individual can, mostly because they don't need the earnings to pay their bills.

(04-21-2015 03:52 PM)Hambone10 Wrote:  

(04-21-2015 03:39 PM)Fitbud Wrote:  I'm not disputing that.

I'm just pointing out that there are many, many , many ways to avoid paying taxes as a business owner.

Well, yeah. Most of them because the government wants to encourage something.

All of the things you mentioned, individuals can also deduct... or they can form their own little home 'business' and do thousands more... ALMOST as many as large corporations... and some that large corporations can't.


My point is that you can describe 'good' things using bad words, but that doesn't make them bad. It depends on what you're trying to encourage. Very rarely are these exemptions things that businesses went to government and asked for an exemption.... FAR more often than not, these are things where the government sought to make them do something and they resisted and this is where we ended up.

Businesses are generally allowed to deduct their expenses from their income because that is essentially how accounting works. Individuals can as well, but more often than not, they spend less than the standard deduction so they are better off claiming that. That doesn't mean they aren't taking deductions.

The right OFTEN argues that we need to encourage mom and pop businesses, while the left wants to 'tax big business and the wealthy'. As I've often pointed out with regard to how the wealthy shelter their income from those tax plans, it is the smaller mom and pop shops who live off of their earnings can't get around the government... but the wealthy, whether they are a company or an individual can, mostly because they don't need the earnings to pay their bills.

I never said they were good or bad. I used to run a home business which is why I know about these things.

Just a thought on this...

My father worked many years at IBM. The federal government harassed IBM for decades with lawsuit after lawsuit because they were too successful. Meanwhile, the Japanese government subsidized IBM's competitors with trillions of yen per year.

IBM never saw any of that "corporate welfare". The truth was exactly the opposite. Our government is far more likely to harm business than support it.

(04-21-2015 05:57 PM)UConn-SMU Wrote:  Just a thought on this...

My father worked many years at IBM. The federal government harassed IBM for decades with lawsuit after lawsuit because they were too successful. Meanwhile, the Japanese government subsidized IBM's competitors with trillions of yen per year.

IBM never saw any of that "corporate welfare". The truth was exactly the opposite. Our government is far more likely to harm business than support it.

Not quite. The gov't picks winners and losers. The companies listed in one of the links in the OP showed which companies got a disproportional share of gov't aid. That plus favorable loans to solar companies are favorites of the gov't, or more accurately cronies of those currently in power.

(04-21-2015 05:57 PM)UConn-SMU Wrote:  Just a thought on this...

My father worked many years at IBM. The federal government harassed IBM for decades with lawsuit after lawsuit because they were too successful. Meanwhile, the Japanese government subsidized IBM's competitors with trillions of yen per year.

IBM never saw any of that "corporate welfare". The truth was exactly the opposite. Our government is far more likely to harm business than support it.

/\ And that gave us Microsoft, and decades of crappy operating systems.

(04-21-2015 06:31 PM)miko33 Wrote:  

(04-21-2015 05:57 PM)UConn-SMU Wrote:  Just a thought on this...

My father worked many years at IBM. The federal government harassed IBM for decades with lawsuit after lawsuit because they were too successful. Meanwhile, the Japanese government subsidized IBM's competitors with trillions of yen per year.

IBM never saw any of that "corporate welfare". The truth was exactly the opposite. Our government is far more likely to harm business than support it.

Not quite. The gov't picks winners and losers. The companies listed in one of the links in the OP showed which companies got a disproportional share of gov't aid. That plus favorable loans to solar companies are favorites of the gov't, or more accurately cronies of those currently in power.

There really should be an apolitical body which oversees these sorts of processes, but I don't see it realistically possible in the current political climate. Hell, that change to the CBOs reports that was approved pretty much showed that.