Where is the US economy headed?

@cicerone imposter,

we as a nation have not cared about living off of paychecks for 30 years, because we were supposed to be able to largely live off of financial manipulation.

Th best Idea I have heard is Al Gores (Friedman concurs) , which is that we lead the way in Green revolution, and market our wears to the rest of the world. That is we design and build the technology that will save the planet.

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@hawkeye10,

How do you "market your wares" with everybody working offshore? They also have good engineers in Japan, India, China, and many parts of Europe at much cheaper rates of labor.

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@cicerone imposter,

they are advocating setting up the industry from scratch, and resisting the efforts to do the manufacturing in cheap labor markets. American companies can choose to pay the higher production costs, and if the public sector finances the research (as they will) law can forbid moving the manufacturing off-shore.

If the American public sector pays for the research it does not matter that a lot of other countries could have done so....if they don't. The idea is to be first, and do it better, and they have faith that America can do both. If we get product to market first we can freeze out other countries efforts to establish green tech of their own.

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@cicerone imposter,

cicerone imposter wrote:

As has been found, over 60% of corporations pay no taxes.

I have never seen a source for that oft-quoted stat.

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This is moving in another direction, but here's an observation that MACs-conservatives fails to see.

During this period of long unemployment and the government's benefit for a much longer periods to keep people from becoming destitute, MACs-conservatives are still parroting their tax cut meme. That's not only unrealistic, but a total destruction of our future economy. These deficits must be recovered, and the only way that can be done is through tax increases.

That's the primary problem with MACs-conservatives when they latch onto an idea; they don't know how to be flexible with the changing times.

They're no better than parrots that fails to understand the consequences of not raising taxes in the future to pay for today's increased (necessary) spending. That's not to say our governments are spending all the money wisely, but we are the ones who elected them into office.

So quit your belly-aching, and look at the real world of economics.

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@realjohnboy,

Some corporations that show no profit don't pay taxes, but there is a limit how long the law will allow people to write off losses so they don't have to pay taxes. You can't do that indefinitely.

There are a fair number of corporations in our area that are active but dormant--doing no business. Contractors for instance keep up the general liability insurance and the corporate status active until the statutes of limitation on any possible lawsuits run out, but they have no current business activity, no income, and therefore owe no taxes. Others aren't doing any business but are kept active in case a lucrative contract opportunity comes up and they need to put together a bid in a hurry.

But 60% seems really high even including all of these. I'm pretty sure that the large majority of corporations that are actually making money are paying taxes.

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@Foxfyre,

But that's how they play the tax evasion game; they know they can't stay non-taxable beyond a certain number of years, so they play the game to the fullest with over 60% not paying any taxes every year.

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@Foxfyre,

I can account for 6 corps that are not paying taxes, Fox. My retail operation is a Sub S. That means that the Corp pays no tax, but the owners report the income on individual tax returns. So when my brothers and I each owned 1/3rd, we would add that 1/3rd to our incomes.
LLC's are "Limited Liability Corporations." I might form one with you to buy a piece of land and another with your husband to buy land next door. There are thousands upon thousands of these LLC's. Not paying taxes because they are not earning any income.
The "60% of corporations pay no taxes" is absolutely bogus.

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@realjohnboy,

Not only that, an S-Corp that doesn't zero out it's accounts (minimize profits) ends up paying double taxes on the remainder. Once, as corporate earnings on the owner's K-1 which carries over onto their 1040, and then again when the funds are paid out as salary - a lesson I learned the hard way. True - you can't operate at a loss year after year but an S-Corp doesn't pay corporate taxes other than payroll withholding, FICA, and Medicare taxes. There the owner/employee gets to pay both halves.

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@realjohnboy,

I don't count LLC's as corporations--they're more like fancy proprietorships but spreading the liability more efficiently. And you're right that technically the S Corp doesn't pay taxes, but you and your brothers did didn't you? If you were making enough income to tax at all?

But okay, if you add in the LLCs and S corps, plus the not-for-profits, I will concede that a lot of corporations are technically not paying taxes. If you add in the LLC s and not-for-profits I could even see how you get to 60%.

But honestly Johnboy. Do you think you aren't paying enough in taxes? Both as an individual and as a business owner?

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From the Center for Corporate Policy:

Quote:

2006 Budget Analysis
Corporate Crime

PO Box 19405, Washington, DC 20036
1.202.387.8030 V. 1.202.234.5176 Fax
Email: [email protected]

The U.S. budget is a kind of national balance sheet. It reports on past and future (expected) cash flows into and out of the U.S. Treasury. The Bush administration's 2006 budget proposal includes deep cuts in social services and community development programs, while increasing military spending (without counting the cost of the war in Iraq) and preserving his first-term tax cut for corporations and the nation's wealthiest.

In just a few years, the U.S. budget has dropped from a surplus to a dramatic deficit. While corporate tax avoidance is just one of many contributing factors, it is one indication that when it comes to paying their fair share, "profits trump patriotism."

Do Corporations Pay Their Fair Share?

Although most of the budget debate focuses on which programs gain or suffer, another equally important question is who pays? The steady decline of corporate taxes as a percentage of revenues over the past four decades rarely receives the attention it deserves in budget debates.

According to a 2003 report by the Congressional Budget Office, corporate income taxes fell from $207 billion to $132 billion in the first three years of the Bush administration’s first term. The U.S. Treasury Department reports that the number rose to $ 183.8 billion in 2004. That figure represents just 9.6 percent of total revenues. And although it is up from just 7 percent in 2003, and only slightly down from 10.0 percent in 2000, it is still way down from 28 percent in 1950. Moreover, that figure ($184 billion) falls $47 billion short of the $230 billion paid to corporations (including foreign companies, repeat lawbreakers, and corporate tax dodgers) through defense department contracts in 2004.

According to the Congressional Budget Office’s Historical Budget Data, when compared to the size of the economy (i.e. as a percentage of GDP) corporate income taxes declined from 4.2 percent in 1967 to 1.2 percent in 2003, rising to just 1.6 percent in 2004.

[/b]

Even with the small increase from 2003 to 2004, our country collects less in income taxes than most developed countries as a percent of GDP.

I'm not really sure about the 60% of corporations not paying any income taxes, but I am sure that the taxes as a percentage of our GDP has fallen. That is still a big problem for our country when our government continues to spend more while tax revenues drop.

Also, I think that 60% may be inflated simply because many small businesses, the mom and pop operations do not really make a profit.

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@cicerone imposter,

some links you might find interesting
http://www.heritage.org/research/features/BudgetChartBook/Corporate-Income-Tax-Receipts-Stay-Constant-As-Tax-Rates-Decline.aspx

http://www.heritage.org/research/features/BudgetChartBook/Social-Insurance-Taxes-Account-for-36-percent-of-All-Revenues.aspx

http://www.taxpolicycenter.org/briefing-book/background/numbers/revenue.cfm

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@hawkeye10,

It only confirms what I've been saying; tax receipts as a percent of GDP has dropped. Tax rates do not mean anything; it's what corporations actually pay in income taxes. That's the reason why so many (60%) go without paying anything every year as government expenditures continues to escalate, and our deficit grows. No country (or anybody) can sustain this kind of imbalance between revenue and outgo.

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@cicerone imposter,

Quote:

No country (or anybody) can sustain this kind of imbalance between revenue and outgo.

some people do it with their credit card - paying 30 cents on the dollar - but usually their credit rating is gone also .
countries trying it , have usually had a rude awakening (and often had a dictatorial government/leader thrown in for free) .
how long will china be willing to wait for repayment of debt ? perhaps someone might ask them . (i don't speak their lingo - don't count on me) .
hbg

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Quote:

Eighty-two of the 275 companies, almost a third of the total, paid zero or less in
federal income taxes in at least one year from 2001 to 2003. Many of them enjoyed
multiple no-tax years. In the years they paid no income tax, these companies earned
$102 billion in pretax U.S. profits. But instead of paying $35.6 billion in income taxes as
the statutory 35 percent corporate tax rate seems to require, these companies
generated so many excess tax breaks that they received outright tax rebate checks from
the U.S. Treasury, totaling $12.6 billion. These companies’ “negative tax rates” meant
that they made more after taxes than before taxes in those no-tax years.
# Twenty-eight corporations enjoyed negative federal income tax rates over the entire
2001-03 period. These companies, whose pretax U.S. profits totaled $44.9 billion over
the three years, included, among others: Pepco Holdings ("59.6% tax rate), Prudential
Financial ("46.2%), ITT Industries ("22.3%), Boeing ("18.8%), Unisys ("16.0%), Fluor
("9.2%) and CSX ("7.5%), the company previously headed by our current Secretary of
the Treasury.
# In 2003 alone, 46 companies paid zero or less in federal income taxes. These 46
companies, one out of six of the companies in the study, told their shareholders they
earned U.S. pretax profits in 2003 of $42.6 billion, yet received tax rebates totaling $5.4
billion. In 2002, almost as many companies, 42, paid no tax, reporting $43.5 billion in
pretax profits, but $4.9 billion in tax rebates. From 2001 to 2003, the number of no-tax
companies jumped from 33 to 46, an increase of 40 percent.
# After 2001, the average effective rate for all 275 companies dropped by a fifth, from
21.4 percent in 2001 to 17.2 percent in 2002 and 2003, less than half the statutory 35
percent corporate tax rate that corporations ostensibly are supposed to pay.

http://www.ctj.org/corpfed04pr.pdf

somewhat old, but I don't expect that the situation is better now.

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@hawkeye10,

The one biggie I didn't see on your list was the oil companies. They made record profits last year, and the government gave them money.

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@cicerone imposter,

cicerone imposter wrote:

No country (or anybody) can sustain this kind of imbalance between revenue and outgo.

If a family looks at a situation like that, the first thing they do is to cut spending. That is the obvious solution first. If Obama is not willing to cut spending, and he isn't, I would say we have the wrong people running the country. We need people with some common sense.

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@okie,

okie, You haven't kept up; many US families spent using their plastic, and paid those atrocious interest rates. When the recession hit, they we so much in debt, they lost their jobs, homes, and cars.

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@cicerone imposter,

So, a quiz question for you, did those families then spend more money, or did they cut spending?

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@okie,

okie, You wrote:

Quote:

If Obama is not willing to cut spending, and he isn't, I would say we have the wrong people running the country. We need people with some common sense.

You have no common sense. Obama can't cut spending when he must save the banks and try to recover from this recession. I don't agree with all the spending, but spending is necessary. Many Americans would be destitute if not for expanded unemployment benefits; many children would starve.

If he had cut back on spending, we would be headed into a depression. You have no common sense or any knowledge about economics. Your posts only shows how ignorant you are.

However, most financial pundits are confident our economy is improving for the better with many banks and companies beginning to show profit.

Without the Obama spending, many more Americans would have continued to lose their jobs, homes, and cars. All the stimulus plan money has not been distributed, and many who have received it hasn't started spending it.

You're about as ignorant as they come without knowing what you are talking about.

Your bashing of Obama is very tiresome.

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Where is the US economy headed?

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