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1. jamminj
   Member Profile

   That's not a 2.9% rate, it's a -2.9%.

   "Verizon enjoyed some $14 billion in federal and state corporate income tax subsidies in the 2008-2010 period even though it earned $33.4 billion in pre-tax U.S. income during that time."

   So with those cuts, did they reinvest in workers and capital expenditures? Nope, cuts a billion from expenditures and laid of tens of thousands of employees.

   Maybe if we gave them a -5% rate, maybe -6%, maybe -10% tax rate will they actually invest in workers and research/development... you know, that wonderful trickle down theory.

   How's that working for us(a)??

   Posted 6 months ago #         

2. cjboffoli
   Member Profile

   

   Well, putting aside the debate as to whether or not Verizon and other corporations should pay higher taxes, and whether or not they should preserve jobs at the expense of making necessary changes to keep the company efficient and competitive, your view doesn't take into account the full picture.

   Verizon does invest billions of dollars in infrastructure improvements every year. And those technology improvements pay dividends in productivity for every company that is a Verizon customer. They probably also give $50-$100 million a year away to charity, including the amounts they match for their employee giving. Like other Fortune 500 companies, they create income for their employees (generating payroll taxes), pay dividends to their shareholders (who pay capital gains taxes) and collect all manner of telecommunications taxes (from Federal on down to regional and local taxes). A company like Verizon generates a massive amount of tax revenue that is not reflected the one corporate tax figure you present.

   Posted 6 months ago #         

3. kootchman
   Member Profile

   Hmmm... I wonder, how much local and state taxes they paid too? How many school districts count on their property taxes. Now, if they were able to write down 14 billion, could it be they were expensing 15, 20, billion in capital equipement investments? Y'know jobs creating things? Maybe they bought some of those Obamacars from the publics newly owned General Motors? Some "green" tax credits? Good-eye redblack.. finish the job, what were the charges against earnings? Let me see if I can find their campaign donations....

   Posted 6 months ago #         

4. kootchman
   Member Profile

   Just as I suspected..moneyy, money, money, spread it around nice and thick, spread it around where it will stick. Congress, locals, politicos of every stripe, buying votes and favors they all are ripe. Not to worry, or fret, we have the 10% to pick up the bet.

   WASHINGTON, September 29, 2005 — Telecommunications companies spent $60.3 million* on political contributions over six years and a minimum of $83.4 million* on lobbying over two years in an attempt to curry favor with elected officials in the states, according to a new Center for Public Integrity analysis

   What's this" House keeping Accounts???? For the uninitiated, these is the money to underwrite conventions, big donor hospitality suites, donor breakfast and dinners... all the cool stuff.

   Missouri Democratic Senatorial Committee $1,500

   New York State Democratic Committee - Housekeeping Account $50,000
   New York State Democratic Senate Campaign Committee
   - Housekeeping Account $25,00

   Lots and lots of republicans too... lots

   http://responsibility.verizon.com/images/vz_uploads/VZ_Political_Contributions_2010.pdf

   So there was a rewrite of the telecommunications act of 1996...looks like it paid off. Once again, millions mean billions in lobbying and campaign expenditures... and of course they are write offs.... the real question is who didn't get a bribe?

   Let's revisit that evil doer, that Wall Street banking bastard, the poster child for Occupy Wall Street..

   "In the 2008 campaign, you got a lot of money, about $1 million from employees of Goldman Sachs," Harwood said. "Your former White House counsel Greg Craig is apparently going to represent Goldman Sachs. In light of this case, do either of those things.embarrass you?

   "No" (Obama)

   Ready for that flat tax yet?

   Now that was years ago...redback, got something new? Want me to post the billions the investors in GM lost to the bailout? When Obama jumped right in with taxpayer money... that was 3 year ago too... old news..

   Posted 6 months ago #         

5. DBP
   Member Profile

   jamminj: Could you please cite your source for the quotation you used? I'd be interested in following up to see if I can figure out exactly why Verizon got a tax break.

   Thanks.

   CJ: Good points.

   kootch: I honestly can't follow what you're saying. Gotta connect those dots for us a little better, dude.

   Posted 6 months ago #         

6. JoB
   Member Profile

   cjboffoli...

   those thousands of dollars of proprietary infrastructure investments are what keeps customers like me from switching to a more ethical carrier...

   while they make very good business sense from their point of view they do not justify a -2.9% tax rate...

   Posted 6 months ago #         

7. redblack
   Member Profile

   

   regarding the telecommunications act of '96, kootch, i have told you on more than 10 occasions that i think clinton is a republican. at least he governed like one. he talked a good game to the democratic rank and file, sure, but his policies all favored the plutocrats. union membership declined on his watch, too, you know.

   obama is something a little bit different, and i think that his ties to wall street are kind of like paying the local mobster not to break your legs - more like a protection racket.

   TARP, though? that was outright extortion.

   back to verizon... they're becoming comcast: "give us a sweetheart deal on leasing public equipment and keep our taxes low, and we'll invest some of our mammoth profits in improving it for you."

   hmm. another racket.

   hey! i know! let's put duke energy in charge of the BPA!

   Posted 6 months ago #         

8. JV
   Member Profile

   Simply put, the only way to end these conversations about who paid what tax rate and who bought off which politician is to simplify our tax code. Flat rate, no loopholes. Everybody pays the same amount, but they actually PAY it without favorable loopholes. At a 10% rate, somebody making $1million pays $100k in taxes. Somebody making $30k pays $3k in taxes. The "rich" will pay more, but everybody pays something.

   Posted 6 months ago #         

9. JV
   Member Profile

   When/if that occurs, watch how much money leaves the political lobbying game.

   None of us like crooked politicians playing with our money!

   Posted 6 months ago #         

10. redblack
    Member Profile

    

    even herman cain eventually acknowledged that you can't do away with the standard deduction with wreaking further havoc on the poor.

    to your point about bribing and lobbying politicians, how many poor people do you see in the capitol lobbying congresspeople for favorable tax rates and the removal of penalties for offshoring their money? how many poor people have tax attorneys to shelter their money from the IRS to avoid paying what they owe their country for the privilege of doing business here?

    yeah, it is class warfare. and the poor have been taking it in the teeth.

    Posted 6 months ago #         

11. JoB
    Member Profile

    JV...

    simply put..
    a flat tax rate raises effective taxes on the poorest
    and lowers them on the richest

    simply put

    Posted 6 months ago #         

12. redblack
    Member Profile

    

    and to the original topic, whatever happened to that old saw about how we have the highest corporate tax rates in the world?

    it seems to me that we taxpayers have been subsidizing the biggest corporate players in the world - while the latest reports show that around 30% of our population's income is near or below the poverty line.

    and to verizon specifically, i was shopping smart phones the other day. i see that you can pay verizon $749 for a new droid razr 4G. meanwhile, motorola is asking $299.

    for that money, verizon had better cook me dinner every night, serve expensive wine, and do the dishes, too.

    what spectacular value-added service is included in that exorbitant markup? is it all for their massive advertising budget and congressional lobby so that they can pay no taxes?

    Posted 6 months ago #         

13. Bostonman
    Member Profile

    I would like to see you cite the source you got this from. Not because I doubt you but because I couldn't find it and I am curious if what you say is true.

    I don't use Verizon because I can't stand the customer service. I also would never pay that much money for a smart phone, I wouldn't pay $300 either. If the poor aren't paying taxes they aren't subsidizing anyone, the rich and upper middle class are since they are paying the bulk of the taxes. When the guy making $25k a year starts paying the same tax rate as me he can say he is subsidizing the corporations.

    Flat tax is the way to go. Sorry the guy making $30k a year needs to pay something but thats just the way its going to need to be to fix this mess. The rich don't have enough wealth even with finding a way to tax corporate earnings earned offshore.

    Posted 6 months ago #         

14. JV
    Member Profile

    JoB, I apologize, it was not simply put enough for you. Help me understand how you lower taxes on a company that is paying zero or negative taxes?

    If there was a 25% or even a 99% tax rate on corporations, but they were able to get through allll of the loopholes and pay zero (or -2.9%) then what good is that tax rate? The rate is meaningless if we have all of these loopholes!

    My point is, if there is a flat rate that everybody paid, dispite their political connections, then billion dollar companies would pay hundreds of millions or billions in taxes.

    JoB, help me understand how that example lowered taxes on the richest. Please keep it simple for me.

    Now, to your point about raising taxes on the poor, yes you are correct. Currently 47% of Americans pay zero federal income tax, so a flat tax would raise the rate of somebody currently paying nothing. But it might actually make people demand more of their government to spend our tax money more wisely. And even if it's $10 per year, everybody should have to pay something.

    Posted 6 months ago #         

15. kootchman
    Member Profile

    Yea redblack.. and for what we pay bus drivers in this city.. I would expect to get picked up at the door, with a fresh WSJ, a foot massage at the end of the day, and my hedges trimmed...

    Posted 6 months ago #         

16. redblack
    Member Profile

    

    i don't know about your hedges, kootch, but i'd like to see some hedge funds trimmed.

    btw, "we" in this city don't pay metro drivers. king county does. the 13th most populous county in the u.s., with one of the largest bus service areas.

    snappy comeback, though. changing the subject to deflect attention from corporate largess, as usual.

    for bostonman:

    A new measure of poverty has revealed that a staggering ten per cent of the American population is ‘near poor’.

    The figures mean one in three Americans is in the poverty zone or in the group hovering just above it.

    The new Supplemental Poverty Measure, set by the Census Bureau, considers disposable income – wealth after taxes, health care, transportation and childcare – whereas official figures do not.

    http://www.dailymail.co.uk/news/article-2064031/US-poverty-10-Americans-officially-nearly-poor.html?ito=feeds-newsxml

    regarding the smart phone prices, i got numbers from amazon, verizon, and motorola's web sites.

    JV: everyone in this country who collects a paycheck pays income taxes, including medicare and FICA.

    your real beef is with the standard deduction.

    Posted 6 months ago #         

17. skeeter
    Member Profile

    Federal taxes are incredibly complex. And corporations, unlike individuals, pay tax on their profits, not their gross revenues.

    Also keep in mind that Congress passed an immediate write-off (100%!!) of assets placed in service during 2011. (In 2010 the rate was 50%.) This accelerated depreciation was enacted to boost corporate spending.

    Example:

    Corporation has revenues of $100 million and expenses of $90 million. So normally, it would pay tax on $10 million at 35% rate equals $3.5 million tax. However, if corporation placed a $12 million asset into service, it can immediately write-off the $12 million. So taxable income falls to -$2 million. Net operating loss. Corporation pays no income tax.

    Now.... down the road.... this corporation has a $12M asset that will hopefully be productive. That creates income. And since the cost was written off in a prior year, there is no writeoff remaining in a future year. So the corporation will hopefully have future taxable earnings.

    When you read an article about corporate tax rates, unless you have a firm understanding of how the calculations work, it is very easy to draw an incorrect conclusion. I am not saying our tax laws are fair. Or unfair. I'm just saying they are complex.

    Sorry to be brief. Gotta run.

    Source: I am a CPA employed full time as a tax accountant for a multi-national corporation.

    Posted 6 months ago #         

18. redblack
    Member Profile

    

    thanks, skeeter. so you're saying we can stop conflating tax-paying wage earners with people whose income is derived from capital, because the two aren't anything alike?

    two americas! go figure. i thought we were all equal citizens of the same country.

    Posted 6 months ago #         

19. EmmyJane
    Member Profile

    

    JamminJ - Not sure where you got that statistic from, but Verizon's 2010 Annual Report shows a 2010 effective income tax rate of 19.4%. I'm wondering if the difference is because the majority of their tax provision is deferred (from timing differences between corporate book accounting, i.e. what is shown in your financial statements, and when those amounts are due to the government).

    Here is a link to the details, which also has a reconciliation of the statutory tax rate of 35% to what they actually paid so you can get an idea of where they get their benefits from.

    Scroll down to Note 13 - Income Taxes:

    http://www.sec.gov/Archives/edgar/data/732712/000119312511049476/dex13.htm

    Skeeter - I'm a CPA also, but on the non-tax side. Maybe you can translate FAS 109 for us? :-)

    Posted 6 months ago #         

20. kootchman
    Member Profile

    We in this city are also King County taxpayers..in case this has escaped you. So size means what?. It so large it loses money and has to be subsidized by auto fees and increased fares to the point that it is cheaper to drive than take mass transit. I am fine with corporate largesse. I don't have to pay for it. If I do business with any company it is by choice. Hell, I don't even use metro.. but still pay for it.. Verizon looks like Santa claus in comparison.

    Posted 6 months ago #         

21. JoB
    Member Profile

    JV...

    I am too tired to go find a link you won't read...
    so how's that for making it simple for You?

    Posted 6 months ago #         

22. redblack
    Member Profile

    

    okay, kootch. let's take a little detour.

    king county council writes metro's budget.

    60% of its budget comes from sales taxes collected in king county, 3.4% comes from property taxes, and 4% comes from the state. the rest is funded by users of metro and sound transit.

    KC council just approved a $20 car tab fee to close metro's budget gap under the auspices of reducing congestion. the budget gap widened because of metro's reliance on sales tax: the less people buy in a weak economy, the less metro receives.

    http://metro.kingcounty.gov/am/budget/revenue.html

    king county council could not have possibly closed metro's $60 million budget gap by reducing operators' pay, even if they weren't union.

    besides, why punish the bus drivers because of a weak economy?

    to bring it back on topic, you pay far more for cell service than you pay to metro.

    "but i don't use metro!"

    neither do i. much. but it's there if i need it, and it keeps cars off of the streets and out of downtown.

    to me, that's a far wiser use of my money than paying verizon exorbitant fees and letting them collect taxes - which effectively go right to their profits.

    Posted 6 months ago #         

23. skeeter
    Member Profile

    EmmyJane, FAS 109 is what keeps a roof over my head and food on the table :-)

    A corporate tax department must book all the current, noncurrent, and deferred tax assets and liabilities before the books are closed. We stay up late at night drinking coffee and arguing with auditors.

    I didn't read this whole article, but what I did read sounds like a pretty good background.

    http://findarticles.com/p/articles/mi_m6552/is_5_52/ai_67152668/

    Posted 6 months ago #         

24. skeeter
    Member Profile

    Redblack (#18)

    It is difficult to compare income taxes of a corporation to income taxes of an individual. A corporation has to buy machinery, pay workers, invest in plants, etc. So the corporation only pays income tax on its earnings. If the corporation is losing money, it doesn't pay income taxes. I don't know of a better way to do it.

    When the corporation earns income, it pays income tax, then typically issues dividends. The dividends are then taxed again at the individual (or trust or estate) level.

    If you don't like the current corporate tax laws, I encourage you to discuss with your elected legislators. Our current federal tax code is from 1986 and many feel it is time for a fundamental reform.

    Posted 6 months ago #         

25. Bostonman
    Member Profile

    My god, please don't explain FIN 48 as its now called. Last year when I needed to put together 14 FIN 48 calculations for deferred tax liability I almost jumped off a roof.

    A competitor of ours is actually involved in a lawsuit against the IRS for how they calculate the FIN 48 liabilty. I would be happy if I never needed to do them again but alas its coming up soon.

    This despite the fact that I tell my CEO that all CPA's are not tax experts and I am one of them. Big difference between GAAP accountants and Tax accountants.

    Posted 6 months ago #         

26. skeeter
    Member Profile

    Bostonman - FIN48 was a huge task to undertake. We had to hire a contractor just to help get our arms around it. I feel your pain.

    Posted 6 months ago #         

27. Bostonman
    Member Profile

    Oh I wish we could have hired someone. The CEO things just because I am CFO I should know everything about everything. I tried to explain that this isn't something we should guess at. We need to be able to support our calculations at the highest level.

    In the end I think I succeeded but man oh man.

    Posted 6 months ago #         

28. EmmyJane
    Member Profile

    

    Oh my gosh, someone just threw out FIN48 on the WSB! Greatest day of my accounting nerd life. :-)

    Boston - I try to explain to my friends/family every April 15th that I'm busy because of Q1, not taxes, and no one understands. CPA does not equal tax knowledge. :-)

    Posted 6 months ago #         

29. JoB
    Member Profile

    skeeter...

    if in fact corporations only pay taxes when they make profits can you explain why in record profit years corporations paid little or no taxes?

    i know this is how it is supposed to work...
    but the plain facts show that reality is not matching intention here...

    Emmy Jane...

    it's the small victories that really make or break a day ;->

    Posted 6 months ago #         

30. skeeter
    Member Profile

    JoB, give me an example of a corporation making record profits and not paying income taxes. I'll try to figure out why.

    Usually, it is the result of:
    1. Prior year net operating losses carrying forward.
    2. Writeoff of assets (worthless, etc.)
    3. Large investment with accelerated tax depreciation.
    4. Profit are earned overseas and income is not taxable until the funds are repatriated (brought back to the U.S.)

    Or some combination of the above...

    Posted 6 months ago #         

31. Bostonman
    Member Profile

    Some companies can also earn certain segments of revenue that is tax exempt. I know when I was an Accounting Controller for a large public garbage company there was income earned that was not subject to taxes.

    I know its a big thing for people to look at income statements but I will give you a hint. You will get more information out of the cash flow statement. The cash flow statement is going to give you a good idea of how the company handles cash flow. Income statements have a lot of noncash items and cash items paid for in different periods.

    Posted 6 months ago #         

32. kootchman
    Member Profile

    "thanks, skeeter. so you're saying we can stop conflating tax-paying wage earners with people whose income is derived from capital, because the two aren't anything alike?" Redblack?

    They aren' alike, not one bit. Capital gains has two functions. One, as originally conceived, capital gains brings stability to the market. One used to have to hold capital instruments for an extended period of time. The Financial Modernization Act of Messer Clinton tore that concept apart, and successive tax code exceptions have now made that pragmatic concept moot. A great deal of the market volatility is derived from that. A direct effect is short term return planning in lieu of growth and investment. Your 401K is a particularly hard hit instrument.

    Second, most capital investment are made with after tax earnings. Investments that were made after satisfying a tax burden. It is also where you get your jobs from. Get much employment from speculation? No. Steady, invested capital, is how companies get money to invest in production, new plants, new products, R&D.. etc. Capital goes ever to where it gets the best return. Count on it. A low capital gains rate, coupled with a statutory holding period is how we finance our industry and jobs base. It encourages investors to take a long term perspective when allocating those resources. Enron, United Healthcare, Global Communications, GM, etc... all have short term stock price manipulations at their heart. Imagine, trading models based on volume and momentum.. and nary a look at the financials.

    Now, if you want to discuss "hold em', fold em'" speculative trades, of days or even hours, that is discussion of merit. You can make a great case for raising income rates on speculative trades.. those made without a true "capital intent"...financing the capitalist engine.

    Posted 6 months ago #         

33. kootchman
    Member Profile

    redblack..connect the dots.

    "neither do i. much. but it's there if i need it, and it keeps cars off of the streets and out of downtown.

    to me, that's a far wiser use of my money than paying verizon exorbitant fees and letting them collect taxes - which effectively go right to their profits."

    If that was the intent... the investment in Verizon is even better. 30 years ago, I was downtown everyday, stopping multiple locations. Today? Skype, e-mail, and immediate accessibility allows me to work from a home office. Generating more income, creating less congestion, minimizing my carbon footprint. We should be discouraging metro, not supporting it. Metro is an investment in a technology and work model that is 100 years old.

    Posted 6 months ago #         

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