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Thread: Boeing Paid No Federal Income Tax Last Year: Analysis

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    re: Boeing Paid No Federal Income Tax Last Year: Analysis

    Quote Originally Posted by specklebang View Post
    The issue of the OP is not the tax rate. It is the taxable amount. Our corporate rates are relatively high.
    Yes, I got that, the poster was trying to poke fun at what many complain to be a high rate, but, when applied to Boeing amounts to nothing. I got it..

    Quote Originally Posted by specklebang View Post
    C Corps are more attractive, not less. How would you pass through current income to the shareholders?
    Well C Corps are only attractive if you want to go public, ie. if you absolutely need to be a C Corp, until then the C Corp is the absolute worst tax structure to be in in the US. I'm not sure how this question even makes sense. I mean you're asking, "How can shareholders be shareholders without a corporation to be a shareholder of?"

    Sure, I mean, they would be unit holders in an LLC or shareholders in an S Corp and I can assure you there are methods of ensuring that the money earned in an LLC or S Corp can flow to the shareholders/unit holders/managing members/owners, whatever you want to call them.

    Quote Originally Posted by specklebang View Post
    Comparing Boeing's tax liability to your 401K is invalid unless you are making more than I can imagine.
    No its very apt actually. Many people contribute to the 401(k) with the express intent of deferring taxes on the funds places into the 401(k). The government created a tax vehicle which creates positive incentives to do this and sure enough people do it. People don't say, "Gee, Richie Rich paid less taxes because he took advantage of the 401(k) loopholes". The same logic underpins Boeings actions. The government wants Boeing to make these investment and creates tax incentives, in this case a similar deferral scheme, for them to do so. Shocker, they do and now people are complaining that their current tax liability is zero. All I can say is that they should then remove it and find out if Boeing still finds the activity lucrative enough to engage in.

    Quote Originally Posted by specklebang View Post
    As for "Increasing the tax rate actually makes any offers to defer taxation potentially more lucrative" isn't that the objective? It is an incentive to invest in R&D.
    Well, its the objective if you think a soft command economy is the way to go. It isn't. The corporate income tax shouldn't exist and given that it does the deferral shouldn't either. BUT, the fact is it does exist, so when the government does create the equivalent of subsidies don't be surprised when people take them up on it. But make no mistake about it, what you have is a ridiculous distortion of how our scarce resources should be allocated.

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    re: Boeing Paid No Federal Income Tax Last Year: Analysis

    Quote Originally Posted by specklebang View Post
    Theoretically, they (Bombardier and Boeing) follow the same tax codes.

    By investment, we are already outsourcing aircraft construction to Europe. But you are correct in that these are the types of companies that manufacture domestically and that they present opportunity to those who have invested in education. Unskilled labor is becoming increasingly obsolete.
    What some fail to realize is that there is still manufacturing in North America it is just high-skill now. Bombardier has a Quebec layer to it, Quebec is rather, unique.

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    re: Boeing Paid No Federal Income Tax Last Year: Analysis

    funny that they still have to pay the taxes just not now. they pay them later after the plane is built. obama has passed that bill multiple times along with a wide swathe of people.

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    re: Boeing Paid No Federal Income Tax Last Year: Analysis

    Quote Originally Posted by Carjosse View Post
    If you obey all the tax laws you would party an average amount of tax money, if you wanted to pay zero dollars you would need a fairly large army of accountants. If an individual by themselves tried to offshore cash it might actually cost more.
    A person or small business need only a CPA who properly knows his job and applicable tax codes for the payer's financial situation. You're generally correct about off shore banking; for until certain income and investment levels are achieved offshore is of questionable value; again tho regs allowing such are in the legislated tax code which makes them fitting, proper and legal for all.

    Good eve to you Carjosse

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    re: Boeing Paid No Federal Income Tax Last Year: Analysis

    Quote Originally Posted by Carjosse View Post
    If you obey all the tax laws you would party an average amount of tax money, if you wanted to pay zero dollars you would need a fairly large army of accountants. If an individual by themselves tried to offshore cash it might actually cost more.
    I have a Bahamas IBC and a BVI IBC and a Delaware LLC and a NJ S Corp. With respect to my business operations in the US where I am 'doing business' in the United States, I have to be registered here of course. It doesn't make any sense to offshore the cash so to speak because once I make it, I've paid taxes here, now the money is here, this is where I want it.

    Now, the other two I'm NOT conducting business in the United States, I remain PERSONALLY subject to taxation on worldwide income, BUT I just leave the money IN THE CORPORATE FORM (and there are no corporate taxes there).

    That's why I do it.

    Earning money here as a worker, getting a W-2 or 1099, paying tax on it. There's little reason to "offshore the money!"

    You don't offshore the money, you OFFSHORE THE PROFITS! That's how you avoid taxation (avoidance is legal, evasion is illegal)

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    re: Boeing Paid No Federal Income Tax Last Year: Analysis

    Quote Originally Posted by newpublius View Post
    Yes, I got that, the poster was trying to poke fun at what many complain to be a high rate, but, when applied to Boeing amounts to nothing. I got it..



    Well C Corps are only attractive if you want to go public, ie. if you absolutely need to be a C Corp, until then the C Corp is the absolute worst tax structure to be in in the US. I'm not sure how this question even makes sense. I mean you're asking, "How can shareholders be shareholders without a corporation to be a shareholder of?"

    Sure, I mean, they would be unit holders in an LLC or shareholders in an S Corp and I can assure you there are methods of ensuring that the money earned in an LLC or S Corp can flow to the shareholders/unit holders/managing members/owners, whatever you want to call them.



    No its very apt actually. Many people contribute to the 401(k) with the express intent of deferring taxes on the funds places into the 401(k). The government created a tax vehicle which creates positive incentives to do this and sure enough people do it. People don't say, "Gee, Richie Rich paid less taxes because he took advantage of the 401(k) loopholes". The same logic underpins Boeings actions. The government wants Boeing to make these investment and creates tax incentives, in this case a similar deferral scheme, for them to do so. Shocker, they do and now people are complaining that their current tax liability is zero. All I can say is that they should then remove it and find out if Boeing still finds the activity lucrative enough to engage in.



    Well, its the objective if you think a soft command economy is the way to go. It isn't. The corporate income tax shouldn't exist and given that it does the deferral shouldn't either. BUT, the fact is it does exist, so when the government does create the equivalent of subsidies don't be surprised when people take them up on it. But make no mistake about it, what you have is a ridiculous distortion of how our scarce resources should be allocated.
    Yes, I got that, the poster was trying to poke fun at what many complain to be a high rate, but, when applied to Boeing amounts to nothing. I got it..
    ••OK


    Well C Corps are only attractive if you want to go public, ie. if you absolutely need to be a C Corp, until then the C Corp is the absolute worst tax structure to be in in the US. I'm not sure how this question even makes sense. I mean you're asking, "How can shareholders be shareholders without a corporation to be a shareholder of?"

    Sure, I mean, they would be unit holders in an LLC or shareholders in an S Corp and I can assure you there are methods of ensuring that the money earned in an LLC or S Corp can flow to the shareholders/unit holders/managing members/owners, whatever you want to call them.
    ••I was referring to the pass through aspect. If each year the shareholders received the money, there would be no capital for growth. The idea of the C Corp is to provide a way to retain earnings.


    No its very apt actually. Many people contribute to the 401(k) with the express intent of deferring taxes on the funds places into the 401(k). The government created a tax vehicle which creates positive incentives to do this and sure enough people do it. People don't say, "Gee, Richie Rich paid less taxes because he took advantage of the 401(k) loopholes". The same logic underpins Boeings actions. The government wants Boeing to make these investment and creates tax incentives, in this case a similar deferral scheme, for them to do so. Shocker, they do and now people are complaining that their current tax liability is zero. All I can say is that they should then remove it and find out if Boeing still finds the activity lucrative enough to engage in.
    ••You may have misread my post. I am in agreement with you. I was just kidding about the value of your 401K although I hope you have billions.


    Well, its the objective if you think a soft command economy is the way to go. It isn't. The corporate income tax shouldn't exist and given that it does the deferral shouldn't either. BUT, the fact is it does exist, so when the government does create the equivalent of subsidies don't be surprised when people take them up on it. But make no mistake about it, what you have is a ridiculous distortion of how our scarce resources should be allocated.
    ••I'd appreciate a bit more explanation.

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    re: Boeing Paid No Federal Income Tax Last Year: Analysis

    Quote Originally Posted by Carjosse View Post
    The last time I checked most small businesses and your average joe don't have the ability to off-shore money or other massive tax saving loopholes and take advantage of things only a large team of corporate tax accountants could do. What they they are doing could very well be illegal.
    Bingo.

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    re: Boeing Paid No Federal Income Tax Last Year: Analysis

    Quote Originally Posted by newpublius View Post
    It should just be eliminated altogether though. There already exist two pass thru entities in the US, the S Corp and the LLC, why do we make C Corps so unattractive. In this particular circumstance, Boeing simply gets to defer taxes so that their current liability is less than 0. The loophole here is actually an activity that the US Government wants Boeing to engage in. This isn't quite a loophole, what's happening here is that the government is saying, "Hey, Boeing, if you want you can pay what the law requires and that'll be the end of it, OR, if you do what we want you to do, we'll let you defer taxes"

    And sure enough Boeing took them up on the offer because now that investment became more attractive to undertake.
    What on earth are you talking about? (psst.... you and I both know that you don't know, but I won't tell anyone). This is not about Boeing, in particular. These "loopholes" are available to all multi-nationals, regardless of industry. The core multi-national loop hole is transfer pricing, which gives companies the ability to almost assign costs and revenues to particular country units that give you the best tax treatment. It allows companies to show much lower profits from US activities than is the reality.

    We need to drastically tighten transfer pricing rules and enforce them.... then we can lower the top marginal rate to about 25% ... resulting in greater tax receipts and a more fairer allocation of tax burden between the multi-national and domestic corporation.

    What is really interesting is that corporate tax receipts account for less and less of federal tax receipts.... In fact, the largest part of tax receipts now is from payroll taxes. You know, the tax that 47% that supposedly pays no taxes, actually pays.

    Tax Revenue - TypeTaxVsRevenue.jpg

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    re: Boeing Paid No Federal Income Tax Last Year: Analysis

    Quote Originally Posted by specklebang View Post
    Well, its the objective if you think a soft command economy is the way to go. It isn't. The corporate income tax shouldn't exist and given that it does the deferral shouldn't either. BUT, the fact is it does exist, so when the government does create the equivalent of subsidies don't be surprised when people take them up on it. But make no mistake about it, what you have is a ridiculous distortion of how our scarce resources should be allocated.
    ••I'd appreciate a bit more explanation.
    OK, the end result of the deferral in the case of Boeing is that Boeing engaged in an action and the tax consequence simply reduced the current cost of engaging that behavior. I'm not on Boeing's Board of Directors or a C-level executive so I can't be certain if the tax consequence was the difference that made the difference or not, honestly you'd have to ask them, but no matter how you slice it the government's impact on that decision made the decision chosen cheaper relative to whatever opportunity cost was presented to Boeing. General rule is that you really shouldn't be distorting prices like that, it results in less than optimal allocations.

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    re: Boeing Paid No Federal Income Tax Last Year: Analysis

    Quote Originally Posted by upsideguy View Post
    What on earth are you talking about? (psst.... you and I both know that you don't know, but I won't tell anyone).
    I have an MBA in finance, I know what I'm talking about.

    Quote Originally Posted by upsideguy View Post
    This is not about Boeing, in particular.
    But this thread is about Boeing.

    Quote Originally Posted by upsideguy View Post
    These "loopholes" are available to all multi-nationals, regardless of industry.
    Well, I'm not sure what Boeing took, but whatever it was it warranted a tax deferal.

    Quote Originally Posted by upsideguy View Post
    The core multi-national loop hole is transfer pricing
    That's not a loophole though, that's tax evasion, its illegal actually. There may be some wiggle room on the margin of course, but by and large costs and revenues should be allocated where geographically appropriate and when corporations deal with affiliated entities in other tax jurisdictions, pricing should be arm's length pricing. And if they don't, that's illegal.

    Quote Originally Posted by upsideguy View Post
    which gives companies the ability to almost assign costs and revenues to particular country units that give you the best tax treatment. It allows companies to show much lower profits from US activities than is the reality.
    I understand what it is and how it works, but that's not what this thread is about.


    Quote Originally Posted by upsideguy View Post
    We need to drastically tighten transfer pricing rules and enforce them....
    The rules don't need tightening, they exist. The enforcement is difficult. Drugs are illegal too, heroin/cocaine/marijuana are all grown abroad and then imported into the United States. Enforcement? Have fun at the UN. And I mean that, because unless foreign countries are going to let the IRS/FBI in to perform investigations on corporate subsidiaries, or for that matter, parent corporation with US subsidiaries, good luck.....There's also the flip side to it too which is that publicly traded companies need to report earnings and those stock prices are dependent on those earnings.

    Quote Originally Posted by upsideguy View Post
    then we can lower the top marginal rate to about 25%
    You're worried about the larger corporations of course, but who cares really? I mean even if we doubled the physical take on the C Corporations, we're talking 1-2% of GDP. The problem is the disincentive created to even becoming a C Corp. I'll never do it and there are many small/medium sized businesses who just will never become a C Corp, they will never raise capital to grow their businesses because to do so puts them in the double taxation regime. I would never become one, I'm never going to take a 35% haircut off the bat just in case I might grow by going public and raising capital. No thanks, I'm well enough off now in S Corp/LLC land to not bother.

    Quote Originally Posted by upsideguy View Post
    ... resulting in greater tax receipts and a more fairer allocation of tax burden between the multi-national and domestic corporation.
    I'm a conservative, I don't care about maximizing tax receipts. I want the government to command as few of our nation's resources as humanly possible. The government is a minimization problem. Nevertheless, in the pass thru structures, I pay tax on those of course, just on my individual return. Just get rid of the C Corp tax, reallocate the army of tax accountants to other various service industries, and let the chips fall as they may. You'll see an exposion in entrepreneurship emanating from the current crop of small/mid sized business looking at the palisades imposed by the C Corp double taxation regime and saying 'No thanks'

    Its no small amounts, you can google it too, we're talking trillions of dollars here though.

    Quote Originally Posted by upsideguy View Post
    What is really interesting is that corporate tax receipts account for less and less of federal tax receipts....
    Profits vary, believe it or not corporate income is at a nominal record, but really historically Fortune 500 isn't that profitable actually, their average margin is like 5-6% and in these years of higher profitability its 7 cents off a dollar in profit.

    Quote Originally Posted by upsideguy View Post
    In fact, the largest part of tax receipts now is from payroll taxes.
    Of course they are, labor is what? 20% of gross sales in most businesses. Do you realize that the payroll taxes paid by Walmart exceed the profit attributable to the shareholders? I mean, when you spend a dollar at Walmart or on a corporate product in the Fortune 500, more of that dollar goes to the various governments than to shareholders, and that's a fact actually.

    Quote Originally Posted by upsideguy View Post
    You know, the tax that 47% that supposedly pays no taxes, actually pays.
    Of course, Romney was discussing income taxes of course, but while the brightline off the cuff test doesn't work well, fact is there are relative makers and relative takers. We're all makers and we're all takers and that includes Romney's use of the roads. In politics of course you need a short snippet that the 50% of the population with below average intelligence can understand and discussing relative burdens, a political discussion the US really should be having as it ages demographically is a lost cause.

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