Tag Archives | corporate interests

Delta Airlines pays zero tax on $2.7 billion in earnings in 2013

When people have a bad financial year, they generally don’t get any tax benefit. But when corporations lose money, the losses don’t disappear. For tax purposes, they are carried forward to future years, and can result in companies making billions but still owing nothing.

Case in point: Delta Airlines, which, as Bloomberg Business Week explains, won’t owe anything on its $2.7 billion in earnings last year.

Delta isn’t doing anything special here–the ability to carry forward corporate losses is an ordinary and well-established feature of the tax code. And indeed, in some cases an individual taxpayer could have such a bad year that he would have a loss that could carry forward to another year.

Mitt Romney famously said on the campaign trail that corporations are people. What he didn’t explain is that they’re people who sometimes have better tax benefits than actual people.

For privileged corporations, paying state taxes is increasingly becoming a thing of the past

States regularly offer tax incentives (or, depending on your point of view, corporate welfare) to major corporations in exchange for promises of expansion, corporate relocation, retention of old jobs, creation of new jobs, and anything else with the word ‘jobs’ in the sentence. If you think about it, it’s an almost mindless rush to the bottom: the more tax incentives that get offered, the lower overall corporate taxes paid to all states and the more states will have to look to other sources (that’s you, Mr. & Ms. Non-Corporation) to make up the difference.

Now at least one state politician is trying to reverse this trend, or at least slow it down. The New York Times reports that Missouri governor Jay Nixon has called for a halt to the tax incentive border war between that state and Kansas.

“That is bad for taxpayers,” Mr. Nixon said of the moving of jobs. “It’s bad for our state budget, and it’s not good for our economy.”

Meanwhile, the Washington State legislature has just passed what Seattle Times columnist Danny Westneat reports is the largest state tax subsidy in history—more than $8 billion-with-a-B in corporate tax breaks — almost entirely for Boeing-with-a-B — over 15 years.

Apple avoids billions in taxes, and it all looks legal; those guys really are smart

Lawmakers are using words like “gimmicks” and “schemes” to describe how Apple Corporation has used a web of subsidiaries spanning the globe to avoid taxes. There are hearings this week at which Congressmen are expected to say they are shocked, shocked, to hear of tax loopholes being exploited.

As The New York Times reported, Congressional investigators have determined that “some of Apple’s subsidiaries had no employees and were largely run by top officials from the company’s headquarters in Cupertino, Calif. But by officially locating them in places like Ireland, Apple was able to, in effect, make them stateless — exempt from taxes, record-keeping laws and the need for the subsidiaries to even file tax returns anywhere in the world.”

One of Apple’s Irish affiliates reported profits of $30 billion between 2009 and 2012, but because it did not technically belong to any country, it paid no taxes to any government, The Washington Post reported. Another paid a tax rate of 0.05 percent in 2011 on $22 billion in earnings, according to the report.

It’s not expected that any of this will be determined to be illegal–just a highly proactive use of the existing tax rules. Interviewed by The Times, University of Southern California law professor Edward Kleinbard, a former staff director at the Congressional Joint Committee on Taxation, gets the Quote Of The Week Award. “There is a technical term economists like to use for behavior like this,” said Kleinbard. “Unbelievable chutzpah.”

Corporations say DOMA is a big tax hassle

I always say that everything’s about taxes. The current legal wrangling about gay marriage proves it once again.

More than 200 companies have signed onto a brief filed with the Supreme Court saying that the Defense of Marriage Act has become an administrative hassle, forces them to discriminate against different classes of married employees, and should be overturned so that same-sex couples receive federal recognition.

I’ve written previously about United States v. Windsor, which the Court is likely to hear in March. Ms Windsor was married to Thea Spyer and inherited Spyer’s property in 2009, but also was hit with a large estate tax bill that would not have been assessed if She had be a He. Companies including Apple, Nike, Starbucks, Marriott International and Walt Disney, filed in support of Ms Windsor’s case.

As Erik Eckholm wrote in The New York Times in summarizing the brief’s argument, “Treating heterosexual and same-sex married employees differently under federal law, the brief said, imposed high administrative costs as companies maintained dual systems of tax withholding and payroll. It results in extra tax burdens for both companies and employees with health plans, and can affect payments including retirement, pension and life insurance as well as having a bad effect on morale.”

Tax pandering season in high gear

The tax pandering season got into high gear with both President Obama and Presumptive-Nominee-In-His-Own-Mind Mitt Romney coming out with tax reform proposals on Wednesday.

As The Washington Post points out, Romney would cut all individual income tax rates by 20%.

But beware! Here’s Joe the Tax Guy’s Rule Of Across-the-Board Tax Cuts: Across-the-board cuts favor the Top 1%. A 20% tax cut for someone earning $10 million is enough to pay cash for an extra vacation home or two. A 20% cut for someone earning $50,000 is enough for an extra Happy Meal or two.

Obama would cut the top corporate tax rate from 35% to 28%, with the loss in revenue made up by closing loopholes that already effectively leave most corporations paying significantly less than 35%. As The New York Times points out, Republicans and business groups want an even lower rate and no change in the current system of business breaks and loopholes.

Joe the Tax Guy’s Rule of Business Tax Cuts: When proposed rate cuts are supposed to be paid for by closing business tax loopholes, there will probably be new loopholes created…or no change to the old ones.