Publicly Traded Companies Are Paying No Taxes

Plenty of the nation’s largest publicly traded companies are paying no taxes, even getting money back from the government in some cases, when they reap big profits. Thirty of the 280 Fortune 500 companies studied paid zero in federal income taxes or enjoyed tax rebates in 2008, 2009 and 2010. The question U.S. policymakers should answer is: Are the biggest and most profitable companies doing business in the U.S. paying federal taxes on their U.S. income? Is the 35% corporate income tax rate working as well as it should? This study demonstrates unequivocally it is not. For the 30 companies that paid no taxes or got rebates, their effective tax rate averaged negative 7% in that period. At the other end of the spectrum, 71 companies paid an average effective rate of 32%. Another 67 companies paid an average effective tax rate of zero, the study said. To come to their findings, the study’s authors focused on companies’ 10-K filings, public financial statements filed with the Securities & Exchange Commission that include current federal income taxes. The report focuses solely on companies that reported a profit in each of the years 2008, 2009, 2010.

Low IRS Interest Rates Can Help Reduce Taxes

Low IRS interest rates can help taxpayers reduce their taxes. The rates for October are the lowest on record. IRS resets every month interest rates to allows for private loans and various estate-planning transactions carried out. The resets can be a boon to taxpayers looking to make lemonade out of the current low-rate environment. The opportunity is tremendous for wealth transfer, especially with asset values low. For example, low interest rates make intrafamily loans especially attractive. It’s a wonderful time to lend to a child, say, to buy a house. It’s a great time to review and restructure loans, such as those between family members or a small business and its owner. Some business owners borrow money from their firms informally. Now is a great time to formalize the arrangement at low cost. Here are various ways to take advantage of the IRS’s lower rates. Some require more professional expertise than others, but none is for do-it-yourselfers. Experts also warn against making interest-free loans, which can prompt tax snarls such as the IRS calling the forgone interest a taxable gift. Make a loan to a family member. Some families like to help children buy a first home. One strategy: Make the child an interest-only loan, forgiving the principal as you see fit using annual gift-tax exclusions. The parents also could forgive the principal in smaller increments, or not at all, if they need the money. Or, if they are worried the marriage won’t last—they might refrain from loan forgiveness, so that if the young couple splits up, they will be splitting a liability rather than an asset. In order to get a mortgage-interest tax deduction for such a private loan, taxpayers need to follow details of state law, and the loan must be secured by the house.

Low Interest Rates Help Reduce Taxes

Small Businesses And Buffett Tax

Warren Buffett had everyone crunching the numbers this past week with his claim that he pays more in taxes than his secretary, and that millionaires need to their fair share in taxes. This assertion prompted President Obama to propose the Buffett Tax on Monday to make sure millionaires are taxed at higher rates than their secretaries. And so the Buffett Tax debate began. The Buffett Tax proposes that “those making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay.” But it might not just be high earners feeling the tax pinch. Small businesses could get hit with this tax, as many file as sole proprietors or S corporations, which is similar to filing as an individual. At least 75% of small businesses file taxes on business income at individual rates, according to the National Federation of Independent Business.

Warren Buffett calls for higher taxes on mega rich people

Investor and billionaire Warren Buffett has called on U.S. lawmakers to raise taxes for the ultra-rich and thus help to reduce the budget deficit. “My friends and I have long been spoiled by Congress, which came to meet us. While the poor and middle class Americans to fight us in Afghanistan and while most Americans struggle with the fact that ever came out, we continue to ultra-rich tax breaks, “he wrote in a commentary for the New York Times, Buffett, whose assets Forbes magazine estimated at 50 billion dollars. Warren Buffett said that last year he personally paid only 17.4% of his income in taxes, whereas many of his workers averaged at 36%. Buffett also argued that a higher tax-rate would not discourage investment.