The story about the GAO report was in every news outlet in the country. The PD did politically twist it by putting it the Editorial page instead of the National news page like all the other news outlets did.

We sure don’t need 4 more years of Ocarter.

I wish I had saved a link to an article I read that said that 68% of foreign corporations doing business in the US paid NO federal taxes,they have a way of showing their profits somewhere else.Our government runs on taxes,its such a mind boggling amount most of us can’t relate to that amount.But tax rates have to be set where there is still an incentive to invest here and not in some foreign country.I have worked for poor people several times and the pay was poor, but you can kill the goose thats lays the golden eggs for the employees also. LS

Here’s another perspective from the pages of the PD. The business pages, not the editorial pages.

http://www.stltoday.com/stltoday/business/columnists.nsf/davidnicklaus/story/3812DC3C90120824862574AA00087B81?OpenDocument

Quoting the original letter writer: “I would love to see some of the names of the companies that didn’t pay, but none were offered. I suspect you would find that those paying no taxes in 2005 had no earned income.”

I suspect you are quite wrong. Among the reasons a profitable corporation may pay little to no U.S. income taxes are (a) it is using net loss carryforwards from prior periods, (b) it has large noncash deductions such as accelerated depreciation on recently installed capital improvements, and the amortizable goodwill paid in acquisitions of other businesses, (c) it is paying out the earnings in the form of bonuses, as CJ noted in his/her post, or (d) much of its income is from sources outside the United States. It is part (d) that the GAO report is addressing, which justifiably asks how it is that a corporation can derive so much income from the Cayman Islands when it has only a small administrative office there.

And that GAO report needs to be addressed on its own terms, rather than snarked by disingenuous letter writers who suggest that the GAO must be wrong because Berkshire Hathaway and Conoco Phillips pay U.S. income taxes.

The comment of A# that we as consumers bear the corporate income tax when we buy products or services, is false. The consumer bears a portion of that cost that varies depending on the demand elasticity of the product or service in question; the remainder is borne by the enterprise itself and its owners.

Ron2 is correct when saying;

“The consumer bears a portion of that cost that varies depending on the demand elasticity of the product or service in question; the remainder is borne by the enterprise itself and its owners”

If you remember back to macro/mircoeconomics class, businesses are just the colletctor of the tax, and then submit it to the govt. Items which have a nearly vertical demand curve (highly inelastic) forces the tax incidence onto the consumer. This is partially the reason for the sin taxes. The activity produces a negative externality and the govt wants you to pay for that. i.e. cigarette tax.

See the graphical analysis in the following;

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

Liberals are either naive, or completely DUMB about taxes.

Corporations add all costs incured into the price of their products. Labor, materials, rent or cost of building, transportation, utilities, medical insurance, unemployment insurance, social security matching funds, local, state and federal TAXES, and who knows what else. They then tack on profit margins.

If any of the above mentioned costs increase (and that includes TAXES), the cost of the product increases, usually the same amount. Also if a shortage occurs, prices climb, a surplus occurs, prices decrease.

That also means, that a tax increase on ANY part of society, is ALSO a tax increase for ALL consumers, so everyone is affected.

“Liberals are either naive, or completely DUMB about taxes. …If any of the above mentioned costs increase (and that includes TAXES), the cost of the product increases, usually the same amount.”

I take it you did not read the helpful wikipedia link that AJ provided. Then again, maybe that entry was written by someone naive and dumb, and maybe all of my professors were naive and dumb.

“That also means, that a tax increase on ANY part of society, is ALSO a tax increase for ALL consumers, so everyone is affected.”

But the effect of taxes on everyone is not equal, and that’s one of the key points of difference between the two major political parties. It DOES matter what groups and individuals we subject to taxation.

It makes NO difference what group is taxed. WE ALL pay in the long run.

I agree the effects of taxes are not equal. It hits the lower wage earners the hardest, and they are the ones that suffer the most.

If your professors were pushing for higher taxes for anyone, they must believe in income distribution, which promotes a larger welfare state.

Ron2,

I don’t think that your professors were dumb, but I do think you did not absorb all of the material. Also, they say that a little knowledge is a dangerous thing. I have spent the last 20 years in the largest corporate tax practice in the world.

Depreciation and bonuses are expenses of the company. The fixed assets that are being depreciated had to be purchased with cash. Sometimes book depreciation is more than tax depreciation or vice versa. Either way the expense over time equals the cash paid. Depreciation is a legitimate expense just like any other. Bonuses are part of the compensation that a company pays its employees. I fail to see how that makes it different from any other expense. When a corporation has a loss, it can be carried back two years or carried forward twenty years. If a startup losses millions of dollars in the initial years, do you really think it would make sense to start taxing the company without letting the losses be absorbed? This would make us even less competitive. Such an arbitrary and punitive measure would be unique among the world’s economies.

Your analysis of who bares the ultimate costs of income taxes falls a little short. Your letter illustrates perfectly the danger in using a source such as Wikipedia. I would suggest reading Free to Choose by Milton Friedman. It might give you a deeper perspective on the effect of taxation. When you tax something less of it is produced. The cost is spread over a large number of stakeholders. The ultimate costs are often many times the initial cost of the tax. It is well documented that the U.S. is losing capital to other countries due to our vey high corporate income tax rates. Even Charlie Rangel and Barrack Obama seem to understand that our corporate tax structure is making us less competitive. Everyone is entitled to their own opinion. This forum would be more useful if opinions are based upon facts and not dogma