I wanna be a corporation, a really big corporation
Photo: Michael Fleshman, via Creative Commons, some restrictions.
With local land taxes skyrocketing, today’s NY Times article about corporate pass-through tax restructuring raised my blood pressure. But then I thought, heck, just make me a multi-national corporation and, like Apple, I can avoid paying my fair share.
From today’s article:
…the vast majority of American businesses, including some large, well-known companies and prominent Wall Street firms, actually do not pay corporate taxes at all…Beginning in earnest in the 1980s, millions of businesses shed their traditional corporate status to become what are known as pass-through companies. That led to a boon for business, but was a drain on the Treasury.
What the article makes clear is that the pass-through has helped smaller and mid-size companies grow and flourish, but has also enabled the mega-companies avoid paying as much, if any, corporate tax.
According to data from the Office of Management and Budget and the IRS, cited in the NY Times article, corporate income tax, as a percentage of GDP, has dropped from 7% in 1950 to 1.5% currently. Likewise, pass-through corporations have recently surpassed traditional corporations as a source of business income.
My mother was a tax consultant. Her favorite story at tax time each year was to remind me of what brought the iconic gangster Al Capone to his knees. “Not the FBI and J.Edgar Hoover, Ellen. No. It was the IRS. Sent him up the river.”
So I am comprised of molecules that scream, “work the tax rules to your maximum advantage, but NO cheating.” Maybe the large corporations aren’t cheating exactly, but if that’s the case, is it time to (finally) reform and overhaul our tax laws?
Until that happens, turn me into a humongous multi-national corporation before April 15. Special bonus: thanks to the Supreme court, I’m still a person.
Tags: corporate taxes, land taxes, taxes
Tax reform is sorely needed. Like the White House definition, it is simple. Lower the base rate and get rid of the loopholes. Why does the current administration insist on raising rates and THEN getting rid of loopholes? They can’t even follow their own guidelines. My guess is that it is because democrats have always been the party that has favored big business in their policies. For some weird reason it is always the GOP that appears to favor large corporations in the media? That is not true.
The administration does it in that order because they can never count on the other half of the process to happen.
Agreed, Ellen. Tax reform, like electoral reform, is sorely needed in the US.
I think it is unlikely true tax reform will happen unless the flow of campaign money from corporate america stops buying the politicians. And that will probably not happen because the politicians are the ones who are responsible for changing the system. And the only thing most of them appeared interested in is getting themselves re-elected.
Ellen, A tax rate increase would be one thing but what the management where you and I live have decided to do is to “readjust” the valuation of “land”, by more than doubling it in my case. I have a couple of parcels of swamp and scrub forest at the rear of my place that I bought at a tax auction for a total of $5000 about 7-8 years ago, simply to keep the area as a wild life habitat, which had a combined appraisal last year of about $25,000; however, this year the appraisal has jumped to almost $70,000 for two land locked parcels of brush and swamp that sans a D-6 Cat one cannot gain access to. The assessment on my farmstead parcel plus house and barn nearly doubled from $108,000 to just under $200,000 such that in one year my total assessment went from a bit over $130,000 to almost $270,000, with the greatest percentage applied to the least valuable land. A fellow tax auction procurer who bought about 75 acres adjoining one of my parcels came by a couple of weeks ago and offered to sell me his 75 acres for what he paid for it 4-5 years ago which is less than 8% of the assessed value for this year.
It appears to me that the townships have decided that they must increase the collectable tax basis so as to maintain the preferential dispersed schooling, by township, now that the State of NY is unable/unwilling to continue to fund the local townships/school districts at the rates to which they, said school districts, have become accustomed.
At risk of engendering the ire of parents and teachers throughout the North Country, perhaps it is time to discuss the actual cost per pupil to educate them in the schools built of size to accommodate 1000+ students populated at less than half that amount. The local school budget is nearly $10,000,000 to educate approximately 400 students; please correct me if I am wrong in my calculations but from my grade school arithmetic I believe that amounts to about $100,000 for 4 students or an eye pooping $25,000 average cost per student/year for the grades of K-12. For 13 classes and 400 students we find an average grade size of a little less than 31. Let us assume that each of those grades are further divided into two classes, of about 15 each, then for each class approximately $375,000 would be the average cost per school year per class room of 15 students. As I recall, when I graduated from Potsdam in 1960 our average class sizes exceeded 30 by a comfortable amount and although not gigantic the graduating senior class I believe exceeded 90 which dwarfs the graduating classes of 10-30 for many North Country townships school systems.
Whoops I believe I meant popping not “pooping”
The tax reform agenda is not a partisan thing. Politicians of any party who seek re-election need money. The people with that money are pandered to by the politicians who keep their taxes low and provide their accountants with tax gimics. That allows doners to profit from funding campaigns. Tax reform scares those donors and politicans need the big bucks to get their word out or suffer defeat from those who got the big bucks. The important thing for the rest of us to do is what Ellen is doing, talk about the elephant in the room and let the powers that be know that they’re being watched.
If only the politicians demanding action on the IRS scandal would leverage that mess into actual real reform of the tax code and the IRS itself rather than a partisan witch hunt, we’d maybe improve things for everybody except the accountants who make tons of money navigating the labyrinth of tax codes. But that’s probably far too much to wish for in dysfunctional Washington.