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Microsoft and Cisco Don't Pay Taxes?
Perseus_Moebius writes "Neither Cisco nor Microsoft paid a single dollar in federal taxes last year! if there was any doubt we have a federal government run by corporations this should end it. read the article on SF Gate. " Pretty scary. Apparently they get to write off stock options.
... because the profit of the person who exercises the options is taken from the market, not the corporation. That is, if a person makes a 100% profit on a stock option, the company dosen't lose any capital, it looses a potential capital gain from the market. Thus, the taxes that are paid by the individual, though they may end up putting more money in the gov't accounts, are actually taxes on capital from the market, not the company. ... of course, IANACA
I'd think the obvious would be that they would then get money from the government to go there. As many people have said, it isn't going to happen - but not for lack of want.- -------
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There are some odd things afoot now, in the Villa Straylight.
Have you ever paid taxes on dividends before?
Ahem.
The payment you calculate in Schedule B
is the second time you pay taxes on
your dividents.
1) They are not getting away with it, read some of the other posts or take a basic finance course.
2) If capitalism sucks so bad, why is the US:
a. The richest country in the world
b. The country with the highest standard of living
c. One of the countries with the highest standard of living for the poor.
3) Your logic is based on a false premise, by giving stock away at less than market value, they are diluting it, and costing themselves future financing.
Mayhap you should consider a re-read of the article? It states (quite clearly, I might add) that by having employees exercise enough of their stock options, the company giving out the stock options gets a huge tax break.
For Cisco, this amount to some 4 billion US (roughly). For Microsoft, it came out to 5.25 billion US (roughly).
Every employee who exercises a stock option gets paid more. As an example, suppose I could exercise an option to buy MS stock for $15, and the actual price is $90. I, as an employee, have just made $75 (and I will be taxed on this $75). Furthermore, since this is actual income for me, tax law makes that into a deduction for the company (ie: They take $75 off of their tax bill). Have enough options exercised, and watch your tax debt go away, while your employees pay for it later. Again, go read the article. It's quite informative.
GPL made simple: What was my stuff is now our stuff. If you improve our stuff, please keep it our stuff.
But these arguments are fallacies, and here's why:
First of all, the supposed "loss" that the corporation takes by giving the stock options to the employee doesn't exist. There may be an opportunity cost, but there is no loss. If you say there is a loss, you're assuming that the company would have done just as well with unmotiviated, uncompensated employees as with happy, well compensated employees, which I think is obviously not true. So in fact, by giving the options to the employees, the corporation is increasing its productivity, and therefore (at least theoretically) its stock price. So, there is no loss.
Besides which, you can't take a deduction for money you didn't make -- for example, I can't go to the IRS and say, "Well, I could've sold short Apple shares and made $50,000, but I didn't, so I'm taking a $50,000 deduction."
Since the supposed "loss" does not exist, the corporation should owe federal income tax according to current law. From here it's a simple argument: if the goverment doesn't tax that money, it has to tax something else, and guess who that will be? Yup, middle-income workers. So corporations, which enjoy the benefits of government (trade agreements, roads, protection of law, work visas), make campaign contributions, and pay lobbyists, make absolutely no contribution back to the government. And of course this mostly benefits the largest shareholders, who are, pretty much by definition, rich.
Putting the entire tax burden on the workers might make sense if the entire profit of the company went to the workers. Since most of the profit usually goes back into the corporation (often to do things like buy houses and planes for the executives and board members -- tax free), the corporations should clearly pay taxes.
...to all you liberals out there who will complain bitterly about such an injustice....let it be known that the emplyees who excercised those options paid through the nose. So its not like the money wasn't taxed.
I'm still working on a clever footer.
here's the deal:
corporations keep two sets of books: one for the tax man, one for their shareholders. there is nothing illegal about it, it's completely kosher.
understandably, the book that goes to the tax man tries to understate profits as much as possible. the other one attempts to make the corporation look as good as possible, so as to improve interest in the company.
when counting stock options as a business expense, these corporations *also* happen to come out at a loss. as i understand it, there's no way for a company with positive earnings to evade taxes completely.
so this is all a result of keeping two sets of books.
jon
-- http://www.cerastes.org
So, for guidance, you want to look to big business. Big business never pays a nickel in taxes, according to Ralph Nader, who represents a big consumer organization that never pays a nickel in taxes...
-- Dave Barry, "Sweating Out Taxes"
Well, no. You see, stock represents the value of the company. If they sell the stock, they are converting some of that value into cash. Same-Same, as a great physics professor used to say. So no tax deduction.
If they give the $90K cash to the employee, (presumably as compensation for work performed,) it becomes an expense -- a cost of doing business, money they have to spend to make more money. (And in fact, stock options are pretty much the same as the company selling the stock themselves and giving the money to the employees, hence the deduction.)
If you have a lemonade stand and sell 20 glasses of lemonade for 5 cents each, you had a gross profit of one dollar. If the lemons cost you 75 cents, however, and you had to pay your little brother 50 cents to squeeze them, you've actually lost 25 cents, a net loss.
One reason companies don't just say "we'll pay you a $90k bonus" is that if the company doesn't do well, they would still have to pay the employees their bonus. With stock options, the employees only do as well as the company. (Which is why stock options should be treated as a bonus, not an integral part of your compensation package.
Stupid people will be persecuted to the fullest extent allowed by law.
Maybe you're thinking of the Microsoft Financial Pyramid page. The stock market thinks Microsoft is making money because those stock options are not listed on the financial statements as expenses.
Shhhhh, we don't want the sheep, er people, with Socialist Slave Numbers, er SSN, to find out the truth about SSN being completely VOLUNTARY, or the fact that it is NONE of the governments fucking business how much we do or don't make. Let them dig their own grave, because they refuse to seek out the truth.
/. :)
BTW, nice to see another sovereign on
--
"The issue today is the same as it has been throughout all history, whether man shall be allowed to govern himself or be ruled by a small elite." -- Thomas Jefferson
Yes, indeed, the notion that corporations "pay taxes" is a fiction. If they don't either "charge it back" to their customers, or pass it on to their owners, then the tax essentially demolishes their ability to be profitable on behalf of the owners, making them unviable. (I've actually prepared corporate income tax returns, so I quite know that this needs to be couched in all sorts of "legal ums and ahs" in order to be treated as true...)
On The Other Hand. Corporate "taxation," such as it is, exists for two reasons:
By providing something that pretends to tax the corporation, and which potentially hits up the individual for two tax bills rather than one, this forces the individual to make the company disburse incomes sooner.
If you're not part of the solution, you're part of the precipitate.
This is just the tip of the iceberg. see Ralph Nader for more.
First, the reason these corporations exist is to shield shareholders from personal liability for the business's debts. This is a rather major benefit to the shareholders of having a separate legal entity (instead of directly owning portions of a business and declaring revenues and expenses on their personal returns). However, people who want the benefits of a separate legal entity should not complain when those benefits come with costs (taxes).
Second, money gets taxed many times as it moves through the system. Why should we care about the "double" corporate/shareholder taxation more than about "double" income/sales tax, or about various other combinations?
I think it's interesting that we have mutated into a society that now utterly dependant on corporations to survive. Let's face it, it would only take something like the price of oil tripling, for example, to send this little economic roller coaster ride off the rails and plummetting into a deeper chasm than the Great Depression. And damn me if we don't have another bloody war to kickstart the economy again...
--
NO TOUCH MONKEY!
Actually, I only wanted to make one comment. Which was about the outrage many people express when they learn that many very large corporations do not pay income taxes. I just wanted to correct the misconception that money was being made without (God Forbid!) Uncle Sam getting his cut.
You are correct about the idiosyncratic way in which the legal fictions which surround a corporation shield the actual owners from debt. However, you could really just imagine that a corporation is a mechanism which allows an individual to issue unsercured debt.
Democracy is doing just fine, thank you. American democracy, however, suffers from the two-party system, which is only slightly better than a one party system.
A democracy is not a system that has elections; hell, the USSR had elections. A democracy is a system where a party can be voted out of power. The Reps or Dems can't be voted completely out of power; all that can happen under the current system is that one has slightly more power than the other in one branch or another. They both always have a lot of power.
A vibrant, healthy democracy requires more than this.
An accountant who has been tracking Microsoft's (and Cisco's) accounting practices.
He thinks it's fraud.
I'm not an accountant, but I know if my small company makes money (and even if it doesn't), it has to pay taxes.
I don't have a problem with the fact that stock options are tax deductible. And don't have problem with the goal of eliminating double-taxing (corporate pays tax, then the shareholders pay again).
However, there must be a limit to this scheme.
This can only widen the gap between the haves and the have-nots. Look at how much John Chamber (and any other CEO as a matter of fact) took in last year by exercising his option. These ultra-rich people have all kinds of ways to pay less tax, thanks to the convoluted tax system.
If these CEOs take in $100M/year, do you think they pay half of that as taxes? No, only those Joe SixPacks who have no personal tax accountant have to pay the full amount for taxes.
In the end, the losers are those who can not participate in this trickle-down scheme.
It's a shame!
Tax law should be clear, and easy to apply. Should have one single formula to calculate everyone's tax bracket. Then another single formula to redistribute back to the population, to achieve wealth distibution.
Actually this isn't entirely true.
In Ohio (where I live and work for an incorporated company) We are entitled to protection if we go bankrupt. But keep in mind we do have to pay monies owed. What happens when you are incorporated is that someone can't come and take my car, or my house that are in my name. Anything that is in my companies name can be siezed, but it protects me from losing my personal belongings (providing I didn't use them as colateral on loans etc.)
Otherwise banks can repo computers, business vehicles, etc..
Just though I'd clear that up.
When I was just learning about different economic systems, I was impressed that the Scandanavians paid over 50% of their annual income in taxes. I sure didn't want to live in one of those socialist countries. I was proud to be an American, living in the land of the free, the home of the brave and the last bastion of low taxes.
Some years later, I found out that the top US marginal tax rate was 70% or so. Whoops!
Many years and several tax reforms later, we still have marginal tax rates over 50% (State, Federal, Local plus Sales Tax and on and on).
If people had to write a check to the IRS every month, instead of having the money withheld, we would be making do with a much smaller government.
Only the interest conferred by
See above.
I don't think I even understand the question. The company has operations and staff in the area. For these people, everything that happens in the area affects the way they operate their business. Maybe a simple example will help-
Pretend for a moment that you own a company with 20 employees. I don't know if you've ever worked someplace that small, but if you haven't you don't understand what loving work can be like. When there are only 20 of you, everybody is friends. You babysit eachother's kids, you go to barbecues, everyone's children are in the same soccer leagues--it's almost like having a family that you got to pick.
Now say that there is a measure on the ballot that would raise the property tax by some exorbitant amount. After this happens your rent is going to go up by some amount.
Unfortunately, the company can't afford to have its rent go up right now. You're having a rough year. The employess were good about it and willingly accepted a year with no raises--they understand having hard times, like last year when Denise's husband was hurt and you her gave a bonus equal to his salary for 3 months so that they'd be ok. But the fact remains, if rent goes up the company is going down.
Do you think that in these circumstances the company has an interest in the legislation? If so, how should they express it other than by supporting one of the candidates? If not, how else do you propose to give the voice of these 20 people a chance to be heard?
daniel
All I needed to know in life I learned from
Whoever Is Their Tax Man, I Want Him! If Microsoft can get out of a few million in taxes, maybe i can get a few hundred bucks back So i can be forced to spend it on microsoft products and be taxed on that. Hey! wait a minute!
If a company does a large amount of business in the US, they are usually incorporated in the US (Toyota, Sony etc..) This is more affordable than paying import taxes.
Corporations are greedy, selfish, power-hungry organisms with zero care for the human condition, so the better watched they are, the happier I am.
But the fact is, it would probably be more fair if MS was taxed. As you pointed out, when those share holders try to capitalize on their holdings, (which they certainly maintain in lieu of a bigger salary), the government will get a bigger chunk than if the money was taxed at the source. MS doesn't care, since their pay-out remains constant; only as much as they would otherwise be paying in normal salaries. Shift the tax burden to the mules. Clever.
Win, win, fucking win.
Corporate America:....2452
The Individual:.......14 and falling.
-Fantastic Lad
You just now figured this out?
Many corporations pay very little in income tax.
well, in a perfect world the taxes would go to setting up regulatory bodies that watch & prevent the corporations from running roughshod over your rights, but in our country(America) the money goes to regulatory bodies that are so drenched in corruption that they sell your rights to corporations for the highest price.
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this is slashchomp
This case, in particular, is a very bad example of corporate "welfare." Cisco enriched its employees by about 7 billion dollars in exchange for 1 billion and change in tax savings. This 7 billion dollars is not "free" money that came out of no where either; every additional share dillutes original shareholder's piece of the pie. It represents a net transfer of wealth from the bigger shareholders and institutional investors to the employees. Frankly, everything else being equal, they'd do better taking that tax on without that writeoff, and skipping stock options entirely.
Oh come on. I'm no fan of corporate percs, but it's the SHAREHOLDER that pays the bulk of these costs, not other tax payers. Let the shareholder's deal with it. As if Gates' reason for existence is to live off of percs; he doesn't need them, they're a drop in the bucket for him.
Ahem, Funny you should bring that up. You do know that the "rich" pay most of the tax burden, right? The top 1% pays roughly 32%, the top 5% roughly 50%...and the bottom 50% only pays something like 5%. So let's be clear here, there is _no_ doubt that the rich plenty of taxes in actuality. Insofar as Bush goes, although I don't agree with his income tax proposals (not at this point anyways), it's hardly a transfer to the rich. Any tax cut across the board, is going to disproportionately benefit the "rich", because they already are bearing most of the load. Furthermore, the marginal tax rates for the rich have actually _increased_ since Clinton took office, this is because a number of writeoffs and such were removed by Clinton and company.
In defence of Bush's tax cuts, his reducing taxes hardly means you'll bear a bigger burden than you already do. Did you know that we're paying more taxes as a percentage of GDP than we did even in WWII? Why would we possibly need that much? I don't think we do, at least if we get sensible. [I disagree with him for other reasons]
Uh no. I actually stand a pretty good chance. Of course, i'm willing to do more than bitch and demand some sort of personal welfare....
There are actually many different ways, I suggest you read your statistics to account for the rapid rise in them. In any event, one is major way is to start a business, which I can tell, you're so clearly opposed to. Not every businessman or multimillionaire is a elitist or sinister as you would have the slashdot's juniors believe.
oh well. fight flame with flame. g'night
FYI, Nader is worth at least 3 million now. Did you know that? If he is so high principled, why hasn't he transferred all that money, in accordance with his platform (i.e., a progressive tax rate of 100% at 10x minimum wage...well he's well over), to a charity or something?
Nothing personal `;^)
uh...
since when did microsoft start paying out dividends?
i've certainly never seen them (nor just about any "high tech" (whatever that means) stock do so)
Peter
Clues for the clueless: M$ (Or any public corp, for that matter) Dosn't really make any money. Amazing, that. See what you said? 33c earnings per share? That goes to the shareholders. NOT to the corperation. Cool, that.
OK, since you're so clued in...what did Microsoft pay in dividends to their shareholders last year? How about the year before?
Give up? Nothing. Microsoft doesn't pay dividends, like most tech companies. They invest their profits back into the company (or other investments).
--jbThat system won't work. Professional traders would never have to pay any taxes.
A company can incorporate in any of several ways in the US. Each has its own merits and tax advantages/disadvantages. Some pay no taxes. However in all cases, the owners are taxed on *most* of the money they take.
Specifically, S-CORP and LLC/LLP are "flow-through entities" --- income/loss is attributed to the owners and the entities themselves can show no profit/loss for tax purposes. Other entities, such as C-CORPs can have profit/loss and are taxed (but at a fixed rate -- I think 30%). The company owners choose the structure that fits their needs best. (e.g., If you are in the 49% tax bracket, the corp pays less on the dollar.)
Does anyone know if corporate structures are similar in other parts of the industrialized world?
--- -- - -
Give me LIBERTY, or give me a check.
sorry, i don't agree.
see, this is a matter of book-cooking.
you can't have it both ways...
either you:
1) have made no (or very little) profit due to the stock options you've granted, or
2) you have turned a profit ($0.33 per share, in this case)
this is a long-standing convention on the accounting balance sheets that i think is truly a scheister's game through and through. its an interesting system that allows its corporations to have vastly different accounting practices than we individual taxpayers can squeak by with.
i wish i could do such shady deals and hide under the guise of "but everyone is doing it! it's a 'best practice'!"
Peter
I know! I mean, with the kind of money those consumer organizations rake in, they ought to be in the 50% bracket! Plus, they totally rip you off. Like, what has Ralph Nader ever done for the people?
I think you need to adjust your meds again!...
Pitty the oppressed wealthy of America! They get such a raw deal (that's why they are all flocking overseas)...
Am I paraphrasing you correctly, or did you write what you meant to say? If you mean what you have written, then you are out of touch with reality.
Turn off Rush Limbaugh, take a walk in the fresh air and then check your facts.
Your fantasy about the loss of the franchise for the poor being the logical consequence of progressive taxation suggests that you may be experiencing a psychotic break.I just hope the people who moderated you up did it out of appreciation for the artisitic quality of your fiction--It's disturbing to think that more than four people share this delusion.
Just on the off chance that some of you aren't complete wackos and would like to check the facts:Census tax data
Census income data
State income & tax data
For those of you who don't like reality, please on your meds and don't play with firearms!
DING DING DING!
give this man a prize.
it has nothing to do with the *amount of tax paid by the corporation*.
it has to do with the profit & loss on the balance sheet at the end of the fiscal quarter (the only thing that matters any longer), and the dilution of the shareholder's stock value.
cheers.
peter
Oh shut up.
True, what I'm paying in taxes scares the SHIT out of me, but then again, after all that, I'm still stinkin' filthy rich beyond my wildest dreams ever.
You bastard.
:wq
Duh. No, it does not automatically go to the shareholders. A C-corporation (public companies all fall into that category) has to give dividends for shareholders to make money, and some companies do not. Those that do give out dividends do not usually give out everything they make in dividends. In fact, they usually only give a very small amount of their profit out in dividends. The rest goes into their bank account or other interest-making accounts and becomes assets on the balance sheet.
Now, someone here said Microsoft and Cisco do not pay dividends to their shareholders. If that is the case, then no one is paying taxes on the corporate income. And even if Microsoft was paying dividends, Microsoft made the money. They should pay the taxes. We're talking about a very damned large company that could buy most countries that doesn't pay a cent to the U.S. government. And the shareholders do not either. Talk about the taxpayers being ripped off. Meanwhile, while this giant faceless entity is making tons of money and not paying taxes, people who live under the poverty line still have to.
It's time to end corporate-welfare. Stop giving money to corporations. Stop paying out more welfare to corporations than to individuals who actually need it. And, stop creating huge loopholes that allow giant filthy rich corporations to get away without taxation.
Americans, vote Nader. Canadians, vote Green in the next election.
Corporations should not be people. A person is a human being.
From the guy claiming that Microsoft was the largest Pyramid scheme ever conceived, and it only profits through clever books w/ regards to stock options.
Actually, accounting fees are tax-deductible, not only for corporations but for individuals.
- Robin
Lets get this straight - trading shares causes money to flow between shareholders. Shares are still just a piece of Cisco. Shareholders pay everything out of their pockets - Cisco does not pay these employees, they get paid by the stock market.
If Cisco doesn't pay these employees, why do they have to pay $2b in taxes on this income they don't receive from Cisco? If Cisco doesn't get to deduct it, employees shouldn't have to pay tax on their options (above the regular capital gains tax). Tax law should have some semblance of fairness. Cisco and its employees shouldn't both have to pay taxes on the same income.
This is more or less the reason why that corporations exist, so it doesn't follow from anything... rethink.
I'm french canadian. A lot of the compagnies doing business here are owned by americans. Since Canada can't taxe americans for the money they make on their shares I guess we just get screwed.
The problem is with the way free trade is currently done in north america. No political or social arangements are done before we allow trade to go on. Europe is a less insane model. Minimum social values have to be met if one wants to be part of the union.
The "laissez-faire" attitude shown by posts like yours is indeed very dangerous for the futur of democracy. Never forget that your liberty ends where other peoples liberties begins. And that even if the others are a minority.
Incorporate Family.com. Give stock options to Chief Wife Officer, Chief Kid Officer 1 and Chief Kid Officer 2. Heck I'll even give options to Individual Contributors dog, cat and goldfish. I'm sure the car and house would want some too. Did I leave anyone out? How about Chief Dead Relative, late Uncle Bill.
And when exactly was your last visit to scandinavia?
-- look, cheese ahoy!
The article notes that companies write-off options granted to employees, but do _not_ account for the options expense against revenues. See http://www.billparish.com/msftfraudfacts.html arguing that this practice constitutes real fraud.
At least not directly: taxes are always, always, always passed on to the consumer. it's just another cost of doing business.
what, do you think the guys sit around the boardroom when a new tax gets passed, and they think, "well gee, we're gonna have to bite the bullet on this one." hell, no! they raise prices, pure and simple.
FYI, Nader gives the vast majority of his income to charities. Or, did you think that a man with the name recognition of Nader, who runs several big non-profits (I live near one--the building alone, right off of Connecticut Avenue in a neighborhood which has gone posh since Nader's folks moved in, must be worth twice Nader's personal worth), could only earn that much after all these years?
Fact is, $3 million is small change in the political world. The Democrats raise three times that at a single fundraising dinner. The head of a gay Republican lobbyist group--surely a fairly small constituency--just paid $2 million cash out of pocket for his new house, so you'd figure he's worth substantially more. Nader has made a million dozens of times over, and has given all but a small fraction of it to charity.
So, don't try to impugn him, when it's you who needs impugning. I'm not even a Nader supporter--I usually vote Republican, because I think it's the federal government's job to stay out of everyone's way and only regulate what the Constitution provides for--but I'm tired of people who malign those who give most of their income to charity, calling them hypocrites for keeping anything for themselves and their families, while they themselves are usually resource hogs who give away only a tiny percentage of what they get.
Corporations have been granted, through legal fictions instituted within the last century and a half, the rights of individuals. With those rights they were also supposed to have all the responsibilities of individuals. However, they no longer live up to their responsibilities, and in so doing shift them back on the rest of us. For example, corporations are supposed to pay federal taxes, just as an individual would; but few do, because most corporations can afford to hire lobbyists to make loopholes and attorneys to exploit them--yet few individuals can. So, the tax burden gets shifted to the individuals, when corporations aren't paying their fair percentage.
The corporations buy loopholes from the government, and we should put a stop to it. There is more pressure for a viable third party--a populist party--now than there's been for a century. The day is coming when there will be accountability, and when corporations suddenly start having to pay the $400 million here and $120 million there that they should have been paying all along, they'll likely collapse from not being accustomed to it. I look forward to that day...
"The more corrupt the state, the more numerous the laws."--Tacitus, *The Annals*
Yeah, except that lower and middle class families generally buy more and save less than the upper class, resulting in people who make less money paying a higher percentage of their earnings to taxes, since they won't have as much saveable income.
Sorry, next idea...
Does the company claim the loss when the options vest? Or when they are exercised? I'd be a bit surprised if MS were able to fully offset income with losses from exercised options.
Assuming the loss is taken when the option vests, what price is used for this computation? Is this adjusted later on when the options if finally exercised? (Or not exercised, in some cases?)
If the loss is booked when the options are exercised, then the taxes-are-paid argument makes some sense. But if it is based on the vesting schedule, then the argument holds a lot less water. Anyone know the answer?
The poor in the united states are actually very well off relative to the parts of the world that subscribe to your economic theory. Yes, they may be poor relative to some of their fellow countrymen, but in an absolute sense they are not poor at all. Take a trip to parts of the former Soviet Union...
So, your argument that these people are not poor in an absolute sense is to show that they are well off, compared to someone else. Huh?
This certainly does not mean that corporations should be exempt from tax--even if the individuals who own the corporation are taxed for money made from owning stock. Here's why:
* Corporations draw on public infrastructure. Are you going to argue that a company's usage of public resource is only as great as the sum of its stockholders? That is lunacy. Corporations use natural and public resource as an entity in and of themselves; therefore they need to compensate the public accordingly.
* In a time when corporate profits are at an all time high, and labor is payed the lowest (in real dollars) amount since the 1970's. 1/3 of the United States's labor force makes less than 10 dollars per hour, and many of those make right at the minimum wage.
Do you propose that these people should pay a higher percentage of their income in taxes than the 2nd and 4th most valuable corporations in the United States? It doesn't sound so good when you look at it that way does it?
* Finally, I do have another major beef with corporations. This is it: they are not a person; they have limited liability; they are not citizens, and yet they seem to have much more pull in government than ordinary citizens.
I think that the least corporations can do is pay their fair share.
I also think that the tax structure needs to be reset to be a true progressive tax. As it is a disproportionate burden falls on those least able to pay.
I would say that it's just mush-headed libertarianism to say that corporations should not pay taxes, but that might be misconstrued as flame-bait
Check out Ralph Nader if corporate interests seem a little too strong. VoteNader.org.
Check out this funny piece of we b animation by Tom Tomorrow while you're at it
. Penguins Surely Ca
Yeah, shareholders can't get their homes seized to pay corporate debt, but everyone who loans money to corporations knows that. They know that the loan isn't secured, and they take the risk. Besides, coporations get loans from other corporations, not individuals, for the most part. The individuals who loan money to corporations are likely to be wealthy investors who should know what we're doing.
I am not a tax accountant, but I think that a deduction means that the $75 is deducted from their net profit before figuring taxes, not from the total tax due. In Cisco's case, the number last year exceed total profits for the year which left them with $0 in taxable federal income and, thus, $0 in tax due.
daniel
All I needed to know in life I learned from
Maybe I can right off R&D costs for Kid Version 3.0.
If Microsoft or Cisco ever paid divedends in their corporate histories, your argument might have a little more merit. As they haven't, I don't see the point. thad
I love Mondays. On a Monday, anything is possible.
Thank you. In all honesty, I only worded my post the way I did because of how so many Red-Blooded Americans worship their Freedom of Whatever and their Democracy. Yet somehow, they label everyone that's fighting to take their rights back from Megacorps as radicals and outcasts.
I admire counties where political parties actually come and go. It shows growth, and not the stagnation that the US system shows.
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It's a
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It's a
-- Danny Vermin
We all have to pay taxes. Imagine there's a fixed amount each year that the government requires to provide and maintain facilities, the more corporations pay the less individuals are required to pay. I don't buy people who own a corporation make money because 90% of the wealth generated by corporations goes to about 5% of the population who have the ability to put it back into more corporations, family trusts and other schemes to avoid paying tax on it again.
I like to think the human race is evolving past the selfishness of pure capitalism.
:wq
I'd rather say: don't put tax on profit made by investing in stocks (or rather companies). This, first of all, removes the double taxation part. But not only does it do this, it would greatly increase the amount of money that is invested in to companies. Whether we like "big evil corporations" or not we must keep one thing in mind: without them we have no job, no food, no infrastructure and not even a slashdot.
There is a reason that capitalism is growing, it was explained a long time ago by a man named Darwin.
Karma: 2.71828182846 (Mostly due to small, fun pills)
So vote Nader (and I think Browne would agree on ideological terms too).
Um...while the Libertarian party might disagree with the limited liability aspect of corporations, it certainly would allow them to give money to political causes and be named in lawsuits.
or does this article have 200 posts saying the exact same thing?
--
Be different, just like everyone else.
Donate background CPU time to fight cancer.
Conversely, until very recently if you lived in, say, Connecticut and commuted into New York City to work -- as hundreds of thousands of people do every day -- you'd pay NY State and NY City income tax and then get to deduct that from your home state income tax. Even though you rely largely on government-run services (schools, fire departments, and whatnot) in your home state.
As far as I can see, what happens with these cross-border situations is that there's always some imbalance one way or the other. Either the residents get a tax advantage from the commuters/expats at the expense of their home jurisdiction (as in the NYC case), or the home jurisdiction of the commuters/expats gets a tax advantage over the jurisdiction where they work (as in U.S. citizens working in Canada, it sounds like).
"Biped! Good cranial development. Evidently considerable human ancestry."
I totally agree :)
>>Yes, you're correct, Pedersen is wrong.
Even if he is wrong in some details, I would tend to agree with the gist of his post. The government will get its tax money, whether it be from Corporation X or the employees of Corporation X. The corporation is only allowed to deduct the difference from its net profit because the tax burden is distributed among the employees. Nobody is getting away with anything, as Fervent implied. It's just a clever way to make the employees pay the corporation's taxes and make them thing they're getting hooked up to boot.
Do not teach Confucius to write Characters
Today's Sesame Street was brought to you by the number e.
Microsoft and Cisco are not cheating Uncle Sam, and their deduction is well deserved, as many here have wisely explained.
However, they are fleecing their small shareholders ( all those about to retire baby boomers who got intoxicated with the stock exchange and think NASDAQ will take care of them when they are old and frail ).
That is because the real losses born by options are not deducted from their earning statements, which fuel their stock share price.
The reality behind is that it costs Cisco and Microsoft so much to retain talent that they have Zero revenues, and if enough people figured that out, their stock would sell at around 5 rather than around 50.
Now, Microsoft is a leader of high tech companies that don't distribute dividends in principle. The whole value of their stock lies in its speculative potential. So the well hidden fact that they don't make money should be twice as damaging to shareholder interest.
At bottom, the stock market has become a rather socialist beast, and of a particularly amusing nature. Think of it, in High Tech, a large group of employees, well placed, but still employees, is using the market to fleece the so called 'capitalists' who are mostly other workers dreaming of early retirement. I'd say it is pretty cool.
-- look, cheese ahoy!
Any taxpayer can do the same thing. Simply form a corporation, and sell your stock to selected people (e.g., your employees whom you wish to reward) for less than its fair market value (i.e., what you could sell the same stock for on Wall Street).
The difference between the value of your stock and what the employee paid you for it is legitimately termed "compensation." Compensation to employees is a legitimate corporate expense that can be written off on yours, or my, or Microsoft's taxes. Why? Because the recipients of the compensation pay the tax.
You'd probably be a pretty unhappy camper if your employer cut your salary by 40% because they suddently lost the ability to write you off as a business expense. Stock-option compensation works exactly the same way. If you have a problem with this accounting rule, take it up with Congress, not Microsoft and Cisco. It's only a few hundred years old.
Dahlmann tightly grips the knife, which he may have no idea how to use, and steps out into the plain.
If you don't agree with this, and you were a shareholder of Microsoft as of September 8, 2000, be sure to vote NO on proposal 2: To approve the adoption of the 2001 Stock Plan. I need to read over the details before I decide how to vote my shares. Just think, if every one of us would just put our money where our mouth was we could have a hostile takeover of Microsoft, submit a shareholder proposal, and GPL the product. Or would we do the same thing if it was our money on the line? [Disclaimer and Disclosure - author of this post is a shareholder of Microsoft Corporation]
ok then your [sic] infringing on my copyright! Could you as [sic] me next time before STEALING my comments for your own?
The way it works in Canada and here to some
extent is that a lot of the taxpayer's money
goes to companies. The amounts given are
disguise as help to enterprises.
In Canada they call this "Subventions à
la petite et moyenne entreprise", in anglo
provinces they have similar giveaway programs
as well. I don't remember the name they got
for here in Michigan but it is a similar
shaft of the taxpayers.
Canada is one of the most generous in that
area but they've managed over the years to
convince people that the high taxes are caused
by the high cost of medecine which is actually
much lower than here.
By the way, who is that jackass on TV bashing
the Canuck medical system? He claims to have
been a Canadian MP, I don't remember seing the
MF's face before.
'cause I believe in trickle-UP economics!
With trickle-down economics, you have a large amount of money circulating among the individuals & entities which already have a lot of money, and the other elements of society get along with whatever happens to "leak" from that small club. To me, this seems like a very stagnant situation.
On the other hand, if those large flows of money are systemically injected as low in the financial "class" structure as possible (perhaps through really strong & inexpensive educational programs?), then I believe that there are MANY individuals who could take advantage of that kind of help, but who are currently regarded as non-productive members of society because they are "resource-starved" and can't get beyond a survival existence to really achieve their full potential.
I think that policies based on "trickle-up" economics would result in a much more dynamic & equal-opportunity-oriented society.
It's this kind of approach (setting up the system so that the "lower" entities in any system tend to get the benefits) that made me propose the above alternative.
I guess at least it was a reallocation of capital from uncle sam to people like you or me. Granted, they are microsoft employees (along with many other corporations that use this method as a "tax break"), I but at least the money wasn't used for uncle sam to fund another "Carnivore" and FUD-spreading of Carnivore. must be nice to be on the receiving end of the deal... I've been wanting a cool rackmount from VA Linux or the similar... *drool*
So basically these companies dump their tax burden onto their own employees. A useful thought to keep in mind for those hyped up on relatively low salaries, with stock options.
Only if you use it, in which case it is a valid statistic, in that you are an IE user, regardless of how you obtained it.
No, they get taxed on the sales of Windows98. It cost them nothing unusual to generate those sales, so they only deduct their normal costs and pay taxes on what the net profit. They pay no taxes on the copy you pirated, since they received no income for it. If, however, they could identify that you did indeed pirate it, they might be able to deduct something as lost income, but IANACPA! (Certainly, if they found out, you would probably go to jail.)
As for the benefit you provided to Microsoft by being another IE user, that doesn't show up on their books -- it shows up on yours. You are spending time/effort/money to promote someone else's product, in effect. Generally, one would only do this if they get some benefit from so doing (i.e., free t-shirt, some agreement, etc.), but these days there are morons going around paying to have Nike logos slapped all over their cars, or to have the Fila logo shaved into their heads. Go figure. (Of course, I'm one to talk -- I've got Land Rover t-shirts that I paid for.)
Stupid people will be persecuted to the fullest extent allowed by law.
Not to rain on your little parade, but Microsoft is not the richest company in the world. If I recall correctly their revenues are approximately $30B. Compare this to say Ford or GM with around $150-170B. In fact, if I recall correctly, Microsoft is only around the 100 mark on the Fortune 500 list in terms of revenue. In terms of pure profit, Microsoft is higher up in the list, but it still has a ways to go.
And of course, (as I recall) the Fortune 500 is only for American companies. Figure in some Japanese, Russian, Chinese, or European companies and Microft sinks still lower.
So, what you are saying is, if Microsoft didn't exist, everyone in the US would be $14 richer per year? Microsoft brings billions of dollars per year of revenue from other countries into the United States. This is money people in other countries had in their pockets, which they then gave to Microsoft in exchange for software. Microsoft puts it into the bank for a while, and then they pay it to their employees (in the form of wages or stock options) and then those employees pay taxes to the government which uses it to build roads, educate children, etc.
A quick recap:
1) Billions of dollars is outside of the USA.
2) Those billions are given to Microsoft (which resides in the US) in exchange for products.
3) Microsoft pays its employees wages, who in turn pay taxes to the government, which then doles it out to the citizens of the USA.
Now, if Microsoft ceased to exist tomorrow, would each American be $14/yr richer? Or did I misunderstand you?
Well, I have no real economics training, but I seem to do as well predicting the direction of the economy by pulling numbers out of my ass as any of the so-called "expert" economists, so pardon me if I think your degree is as worthless as the quotes you used. Your government-can-do-no-good attitude just highlights your irrational bias. I prefer to treat the subject as a massive systems-analysis-and-design problem, where money is just an extremely potent resource for whatever elements of that system which happen to have it.
Your so-called criticism of the US education system is primarily an indictment of those elements of US society who DON'T WANT the general populace to be highly educated (mass-marketers, demagogues, social-conservatives and yes, bureaucrats, for example). Highly-educated people tend to think about what they're being told before accepting it (or worse yet, take the initiative to solve problems). That's highly annoying when you just want a bunch of followers who you can lead around by their noses, or expect them to keep out of trouble when you don't have anything for them to do.
Should they tuck you into bed at night and tell you everythings going to be ok too?
;-)
That would be a good incentive to go work for one of those tech startups. If someone came out to my house and tucked me in at night after giving me milk and cookies I'd work harder and be more productive for their company. There are probably plenty of non-skilled people available that could be used to fill this care-giving role for the tech startups. Hell.. I'd be more inclined to work for a company that offered the milk'n'cookies+bedtime story+tucking you in benefit than I would for someone giving me a bunch of worthless stock options I will never be able to profit from. Look at the VA Linux employees. They're probably all sitting there with worthless stock options at a price 3 times the current market value.
>I'm no fan of trickle-down economics, but which >would you rather have:
>
>1) $1b paid by Cisco, employees get zip
>2) $7b in stock options "paid" out by Cisco, $2b >in taxes paid to the govt. Employees wind up >with $5b in their pockets.
The argument is not that Cisco and MS made bad decisions given the current tax law. And in fact, if I were Cisco - I would say #2 all the way, and expect everyone to be happy. The argument is that the tax law is outdated and unfair in todays economy. The real options are your #2 (the logical action w/ this tax law) or a #3 (if this law didnt exist):
3) $7b in stock options earned by Cisco employees (Cisco stops giving options + Cisco has no more employees, so this isnt going to change), $4.5b in taxes paid to the govt by Cisco, $2b paid by employees.
As the article points out, giving out lots of options will dilute earnings per share. But given that options are status quo in the new economy, and given that without them, employee retention rate is significantly lower (although options are definitely not everything) - I doubt that without this tax loophole options would disappear.
Lets get this straight - trading shares causes money to flow between shareholders. Shares are still just a piece of Cisco. Shareholders pay everything out of their pockets - Cisco does not pay these employees, they get paid by the stock market.
projects - probably only the government would be able to afford stuff like this
Well I for one wouldn't have a job if it wern't for privately owned chip fabs, we certianlly wouldn't have slashdot and a public internet. Without the ability to spread and limit risk in the legal structure large commercial ventures would be impossible and we would have to rely on the government for large capital projects. I point to the former USSR as an example of why that's a BAD idea, along with former east germany, north korea, most of mainland china etc... Marxism has never and will never be a successful or effient means of running a government/economy, history has proven this, over and over again. The USSR which has more and richer farmland than the US, and more mineral resources was barely able to feed itself by the end of the cold war and broke the back of it's economy trying to keep up with us on the weapons front. On the other hand we capitalist pigdogs from the west were exporting grain to the USSR, feeding ourselves plenty, building a globe stratteling empire (and the armed forces to control it) while civillains barely felt the pinch as the US standard of living rose. Yes we had recessions during this time, and a bad gas shortage, but even during the worse recessions average Americans were better off the average soviet citizens.
While it is possible even for a large nation to survive and feed itself with only small farms and cottage industry but that's all it'll do, survive. Without economies of scale afforded by large corporations, and the massive, government rivaling capital they can raise our modern economy and way of life would vanish. Incidentally you also get dis-economies of scale as an organization grows to large to easily control. This does a pretty good job of keeping corporations from becoming too large and dominate in a free market, to exist beyond a certain size a company needs government assistence to prevent competition (the old local phone monoplies, the entertainment cartels RIAA, MPAA etc can only continue to exist by bribing a large and corrupt state to build a legal shield to protect them from competition.) As far as leaving high capital projects solely in the hands of a state organization, which also BTW tend to suffer from the same dis-economies of scale, may I direct your attention to NASA and the space shuttle?
"Listen: We are here on Earth to fart around. Don't let anybody tell you any different!" - Kurt Vonnegut
Isn't the real reason this is wrong is that this doesn't count as a liability for the company? In other words, the company doesn't report this until the time of stock option exercise, not at the time of stock option grant. I think that the company ought to tell shareholders and potential shareholders the amount of outstanding options, if exercised. If CSCO were holding that amount on their books, they would have lost money, a lot of money, last year.
Recipe for tax simplification in the U.S. (and possibly elsewhere):
Step 1. Require that all politicians complete their taxes by themselves (no help interpreting the laws from CPAs, accountants, or lawyers) and by hand (no TurboTax wizards, although I suppose we should allow Excel spreadsheets and calculators to be fair). Let them see just how difficult they have made the situation for the average citizen.
Step 2. Sit back and wait as the moans mount from Washington D.C. and the respective state capitals.
Basically, my problem with U.S. income tax laws is that they are so complicated that no human being can actually hope to comprehend them (unless they happen to have a super-simple life, like $20K in salary and no income from savings, investments, etc.). But the politicians who create the laws don't *have* to comprehend them, because they can hire a bunch of accountants to worry about it for them. And even though I think Gore is probably a more viable candidate than the other goofball, the complexity he wants to add to the tax code scares the crap out of me.
I support Harry Browne, Libertarian for President.
"Biped! Good cranial development. Evidently considerable human ancestry."
Except for the fact that the Supreme Court ruled in 1886 (Santa Clara County v. Southern Pacific RR Company) that corporations had the same legal status as people under the 14th amendment. "That's nice," you might say, "but that doesn't mean that the government should exert the same financial control over corporations as people."
Well then, why do corporations get welfare? Each year the federal government hands out more money to large companies than it does to individuals. Free market economy? It doesn't exist. No matter what fiscal libertarians may tell you (I consider myself a social libertarian, btw) it simply doesn't exist because there is no legal playing field.
So please, get your facts straight before attempting to act condescending towards your readers. Someone may know what they're talking about and make you look stupid.
Disclaimer: The above comment is not the be-all and end-all of US tax laws. If anyone has more info, feel free to correct me. Just don't spout coporate propaganda or catchphrases unless you have facts (laws, court cases, etc) to back it up.
-jdm
the whole thing is a huge fucking scam.
I have discovered a truly remarkable proof which this margin is too small to contain.
And these people put money into various investments and what not, and often these investments end up in banks. And then the banks in turn loan the money to people wanting to buy cars, houses etc...
The basic point here is that the more the government takes out in taxes means the less money that circulates through the economy, and this is a good thing.
If you don't like this, well then tough, its been that way in the US for a long time, and probably isn't going to change much in the near future. I'm sure you could probably have a warm welcome in either China or Cuba if you wanted to defect..
Besides, you assume that a corporation will charge a lower price than the maximum the market will pay if only the taxes were lower. Problem is, that would be welfare and company executives are prohibited from doling out welfare cause it aint their money. A company that would do it would be sued by its shareholders for breach of fiduciary duty.
About nice fuzzy words like double: If I pay 20% taxes, isn't this double taxation ( calculate it as 11% on top of 10% ) already. In the present tax code capital is taxed in two stages, whereas labour is taxed once but at a higher level ( unless you factor sale taxes too ). Why call it double? It is nothing but a sound byte.
It would be nice ( and naive) if people who complain about 'double' taxation would offer to double the tax on shareholders in order to get rid of corporate tax. But they don't. What they really want is for labor to shoulder a larger part of financing the public budget. Prey explain to me why this is fair?
As a matter of public policy taxing capital at the corporate gate makes some very good sense:
etc.
-- look, cheese ahoy!
So, please stop. Corporations are not people, the shareholders are and we already pay lots of taxes.
yes, they are people. read this
A while ago during the middle of the antitrust trial, there were lots of rumors about micro$oft moving to Vancouver, BC, about 100 miles north. The British Columbia government was also offering perks with taxes and other benefits, way more than what they're getting from the US government.
__
Grrrrrr.... I don't get this corporate bashing mentality. Sure corporations 'do bad things' from time to time and that should be dealt with. However, our plush first world lifestyle is due to groups of talented individuals who formed corporations to get legal protection to 'do business'. So sure, let's bash corporations into submission. Let's tax them out of existance. Wow, now doesn't that -feel- good? At least up until the time you realize you killed the very thing that makes your freedom from starving to death or dying of exposure to the elements possible.
And this whole notion of corporate welfare is a bad metaphor. Welfare is about transferring wealth from those who generate it to those who do not. Corporations (specifically the individuals part of those corporations) generate wealth. Not the government, not the freeloaders. Corporate welfare is an oxymoron.
Life is about... balance.
You're supposed to pay them EVERY year?
This sig intentionally left blank.
Second of all, I don't understand what the big debate about 'paying twice' is. Without doing any calculations whatsoever (!), I'd venture a guess that making corporations pay or not for this or that wouldn't result in a more fair tax code. The tax code is too convoluted for that to be possible.
Money flows. It circulates! How on earth can taxes be paid on it only 'once'?? The more money flows, the more chances there are to tax it. For example, I get my paycheck, I pay income tax. I use some money to buy a pair of shoes. I pay sales tax. The owner of the store pays income tax. He also pays the kid who sold me the shoes. The kid pays income tax too (maybe). The kid goes and buys stuff somewhere else...
That is interesting... Although it still does not cover the other part of getting a free ride...
As I understand it corporations pay from 7% to 0% in taxes (directly). What I would like to know is how much tax money do corporations take in lawsuits (money spent on judges and juries), versus how much money they pay in taxes. If they cost the US more then they pay in taxes, then the US needs to change its corporate tax policies to match the cost that corporations impose. How much of a free ride they are getting greatly depends on this information. It would also be interest to see how much tax money is spent on information property lawsuits (as a seperate cost), as a means to calculate how much money to charge for information property.
The things that would be different would be: 1) stuff which requires insane amount of capitalization, such as massive chip-making foundries or huge construction projects - probably only the government would be able to afford stuff like this, and 2) the "mass" media would probably be a heckuva lot more diversified, since you wouldn't have the "homogenizing" effect that a large corporation would have.
There's also economy of scale to take into consideration. Stuff is cheaper at large stores than tiny shops. Also, I don't now where small shops would find distributors.
Wow, big suprise. Of course, if I didn't pay income taxes, I would be as rich as Bill Gates, too!
And on the way down to the IRS office you'll probably drive on one of those horrible no fee roads that were payed for by...
You start off on the right foot, almost. Could there not have been a private solution to building roads?
And maybe you'll go vote against more taxes, courtesy of a democracy that is payed for by...
Do some research. Our government is not a democracy. It is a constitutional republic. When was the last time citizens were able to vote on the passage of a law?
And then there's the saturday afternoon entertainment, heading down to the Cape and getting a good look at yet another exploding space shuttle, payed for by...
And the wasteful space program which I do not like is something I'm supposed to be thanking the government for?
And when you get horribly ill and your treatment runs far more than you or your family can afford, and it all end with a previously healthy middle class all american family broke and you dead since you couldn't afford to treat your illness, then you can at least be happy Microsoft didn't have to pay no taxes. But ofcourse, that could never happen to you, now could it? All scare tactics aren't they?
The implication here is that we need to suck on the government teat in order to get health care, as if health care was a "right." Tell me, how can anyone have a right to health care without having a right to someone else's property? Also, tell me where health care is listed as a right in the constution.
Beyond that, tell me of *any* corporation that pays taxes instead of collecting them on behalf of the government.
I don't make the rules. I just make fun of them.
The BC government allegedly offered a large tax break to MS would they choose to move from Seattle to Vancouver upon the negative result fromt the Anti-trust case. Before this news was known, it was already thought that they would not accept. Now it just makes sense that MS did not.
Some things are better said in a dark room... Keep those comments to yourself at the dinner-table.
Just a thought. Many IT companies' stock values have plummented thereby making many (but not all) stock options worthless. They might then have to raise the base salaries to keep their valued employees. This will then lower their reported profit margin, which will likely lower the company's stock value. Additionally, they also lose the benefits of this tax break.
BTW, I said not all stock option will be worthless for a specific reason. Take a company like Microsoft. Many of their executives are exercising options at a purchase price below $10 a share.
Microsoft isn't "losing" $90,000 in your example. They are expecting to recover that through work done by the employee.
Yeah, but if they just paid you a straight $90,000 salary, they'd get to deduct that, which is the whole point.
yes, it is a loophole, but it is not like the money completely disappeared.
So if they sold that them selves and made the $90,000 themselves, then gave the $90,000 to the person, they wouldnt get the deductuction.
Of course they'd get the deduction. It would be your salary. Paying employees is a deductible expense.
Legally, in many ways, corporations are people (OK, I think that is a stupid legal ficton, but that's the way that it currently is).
They get the benefits of being 'people' so they should pay the costs. This includes accountability to the law and paying taxes. At least until we get some sanity in how corporations are regarded, and what rights/power they are allowed to have.
and you'd be right.
Look, the US is strongly biased in favor of corporate welfare, and tech firms are the worst offenders. Major corporations even have special loopholes written for them by Congress and the Senate, and then write off the vacations they give said members as a business expense.
Every time Bill Gates goes on a trip to China to see the Great Wall and play bridge with his buds, the entire trip is a tax write-off for Microsoft, under the guise of "doing business".
When I was a kid, corporations paid three-quarters of the income taxes. Now, people pay almost all of the income taxes. And, it's a scam for the rich, because we get to set up trusts to hide our income legally, and if you elect George Bush, we'll get an even bigger slice of the pie.
And face it, no matter how innovative you may think you are, you're quite unlikely to become a multi-millionaire. There are very few ways to do it - one is to save more than 10 percent of your income (I save 20 percent, much in tax-deferred or tax-exempt accounts, the rest in tax-efficient single stock purchases), another is to steal it (Bill G), a third is to inherit it (most inheritors waste it all, because they spend more than they save).
--- Will in Seattle - What are you doing to fight the War?
Then again, there's the story of an experiment in cooperative living at a small, rural midwest liberal arts college that may or may not appear in my email address...
So Un-named Liberal Arts College (henceforth ULAC) has co-op living available for students. Good deal, as long as everyone does their part and cooks and cleans, yadda yadda. So one year, at one co-op, someone has the bright idea that the rules are too complicated. So they're going to fix the co-op. So at the next co-op meeting, they decide to abolish all of the old rules, and then only add new rules as needed. Needless to say, this is not the sort of experiment you want to try at home. But they did. It didn't work so good. After about a month or two, they decide to go back to the old rules... But the point still carries, eh?
itachi
It is scary that the largest corporation in the United States is able to get away with not paying federal taxes while you and I, mere citizens, have to pay taxes every year.
From the article,
Cisco Systems, the second-most valuable company in America, paid no federal income taxes for its latest fiscal year thanks to a little-known corporate tax break on employee stock options.
Microsoft, which ranks No. 4 in market value, did not pay any federal taxes either, it seems.
Little-known, maybe to the typical man on the street, but *well known* to pretty much any tech startup or tech corporation of any size.
The tax code in the USA is more complex than the Win2000 codebase, and has twice as many bugs. I have lost any hope of a simplified tax code, because representatives cut out special tax incentives and benefits for their constituents. In essence, it's their job to make the tax code more complicated, favoring the represented people AND corporations.
[
It seems logical that they wouldn't have to pay taxes. If you look at it in the right way of course. The Tax serves the purpose of government fundraising. Giving the government the ability to pay for its debts. A company, which in the world of borderless trade (or so it might seem) , can exist either in the US, canada, mexico, or any other democratized country you could name. SO, how does the united sates compete with foreign economies to keep these companies within our borders? Simple, waive their taxes. Taxes take up a large portion of a companies usable income, and taking them out of the equation would make billion-dollar corps very happy. It happens all the time in local and state governments, states waiving taxes for particular business for so many years to get them to build and create jobs for their state. It happens in my state all the time (South Carolina). Property tax here is high, so when BMW wanted to build a production plant a few years back, SC offered them 20 years of no property taxes (and a few other taxes, some of which i can't remember) just to build in our state. There are many other examples, but i dont wish to take the time to type them out.
What the frick are you talking about? Do you actually know what you are saying? Have you ever paid taxes on dividends before? If you have, you'd know how to spell them. You would also know it is not a "corporate income tax." It is an "ordinary dividend tax." They are calculated on Part II of Schedule B. And FYI, this is part of the progressive personal income tax in the USA. Larger amounts of taxable income (dividends included) are paid at a higher rate.
I have the feeling you are also trying to talk about capital gains taxes too (that's when you sell your AT&T stock), but I don't want to confuse you even more than you seem to be already.
This has nothing to do with a corporate tax! Sorry for the ranting, but I am proud to pay my taxes and actually understand what I am doing.
Who modded this up?
--
dman123 forever!
--
dman123 forever!
Filtering out the -1s and 0s since 1999.
> because corporations can't vote.
Planet earth to little green man. Corporation don't vote, they can do well enough by just picking up the candidates.
Did you ever wonder who made Bush a presidential contender ( hint, it wasn't Jane taxpayer) ? Did you ever wonder why no journalist ever asked Gore about his position on the AOL - Warner merger
( hint, journalists have bosses ).
You are damn right that government and politicians invest in deluding the public, but you may want one day to get one level up the evolutionary ladder and figure out who orders and pays for the manufacturing of these delusion, big time.
-- look, cheese ahoy!
Cisco employees are taxed at the top bracket for personal income taxes whereas Cisco gets taxed at a lower corporate rate.
This is not necessarily true. There are (at least) two kinds of stock options: ISOs (incentive stock options) and NQSOs (non-qualified stock options). ISOs, under the right circumstances, are taxed at the long-term capital gains rate, which is something like 18%; in any case, it's significantly lower than the higher income tax rates (31, 36, 39.6%).
There are restrictions on a corporation's ability to grant ISOs; dollar limits how many ISOs an individual can be granted each year; restrictions on exercise and sale dates (if you want the preferred, i.e. non-income-rate, tax treatment); and furthermore there are circumstances where ISO exercises can trigger the dreaded AMT (alternative minimum tax). So it's basically a big complicated furball. But the bottom line is that ISOs can result in much lower taxation for an individual than an equal amount of income paid as salary. I'm afraid I don't know what the comparable corporate rate would be so I can't say whether it's more or less than that.
"Biped! Good cranial development. Evidently considerable human ancestry."
In the case of Cisco, they have pushed the tax burden from themselves onto their employees. Moreover, as a result of this, MORE taxes are being payed. Cisco employees are taxed at the top bracket for personal income taxes whereas Cisco gets taxed at a lower corporate rate.
Remember that news organizations present you with the Blue Pill: the story you want to believe in. In this case, it is that big bad corporations aren't paying taxes. The Red Pill is that taxes are indeed being paid. Trust me: if the IRS isn't up in arms over this issue, then you have nothing to worry about.
However, there are controversial issues surrounding this debate. The important one is that Cisco is operating their business at a loss, and has been for years as their stock goes up. From a certain set of accounting principles, you can prove that Cisco has never made a profit but has instead lost billions of dollars year after year. Moreover, roughly 15% of its value is owed to employees who own stock options. As an investor, you should understand the implications of this. Most investors don't, and are just keep piling money into this pyramid/tulip scheme.
From another perspective, maybe this doesn't matter. Almost identical accusations were made about Microsoft 10 years ago with proofs of how the entire house of cards was ready to collapse. I listened to the doomsayers then, much to my chagrin.
Even though the corp itself didn't pay taxes, the options themselves were taxed at the time of sale at the rate of 50% (or what ever the percent of thecurret capital gains tax). For once it seems like a fair deal as a tax was paid only one time instead of the normal 2 or 3 times that this country has a way of getting.
This is the fundamental problem with the way that options are currently treated under US tax law. The options obviously have value (otherwise Bob would not care about them,) and therefore there is an immediate cost (i.e. loss) for BigCo.
The options' value can be computed at the time they are granted. While the restrictions on the options may make Black-Scholes pricing infeasible, the price is still determinable based on a) the strike/spot of the options, b) the volatility of the stock, c) interest rates, and d) time to expiration of the option.
If the tax system was rational, Bob would pay taxes each year on the gain in the value of his options, and BigCo would show a corresponding loss equal to this gain. Shareholders would therefore always have an honest picture of BigCo's liabilties and real earnings.
Unfortunately, such a scheme would tend to bankrupt employees of successful companies: Bob would be unable to pay his tax bill because his earnings are in the form of option price gains that he cannot realize.
To make the system equitable, BigCo must either allow Bob to sell enough of his options to meet the tax liability on the remaining options, or alternatively, give him a restricted loan to cover the tax liability. Either of these produce the effect of giving an accurate picture of BigCo's finanacies to the shareholders, and at the same time allowing BigCo to reward Bob for long-term work and loyalty.
Kramer: "These big corporations, they just write it off, Jerry!"
Seinfeld looks nonplussed.
Kramer: "You know, they just take it and they write it off!"
Seinfeld (accusing): "You don't even know what that means!"
Your right to not believe: Americans United for Separation of Church and
You know they'd just pay their accountants in stock options :-)
What bothers me is, if these companies paid no tax that should mean they effectively made no income last year. So what is keeping their value up? There has to be a missing piece somewhere.
Do you even read what you post? How can you possibily argue that we didn't have food, jobs, infrastructure before "big evil corporations". Corporations didn't exist as recently as 200 years ago, yet people managed to feed themselves and do work. Also, there were no "big evil corporations in the USSR (just a big evil State), yet the Soviet Union managed to feed itself, even becoming a super power.
And no, Darwin never explained why capitalism was growing. You have a reference for that one? What you are attempting to say with your half-baked logic is that capitalism is a result of mysterious but eternal natural forces. It is however a modern economic system which did not exist even 400 years ago.
I really expected the average /. reader to understand this premise. NO Corporation pays taxes. For those of us who own or have owned a company it is well understood that corporations do not pay taxes, they merely collect revenue from reduced employee compensation or increased profits and submit it. The only entity that can pay taxes is the individual, a person. Corporations are not living entities and therefore by definition not capable of producting wealth. Only individuals "produce" wealth, only people pay taxes. A corporation is a legal entity on paper it doesn't exist any where else. A corporation can't be sent to prison, but it's board of directors can. Beginning to understand? All taxes any corporation pays is merely revenue collected from its employees and submitted. The corporation did not produce that wealth and therefore can't pay it, but the people did and therefore did pay the taxes on that wealth produced. In this specific case the employees paid the tax on the exercised options. They also created the wealth / taxable event. Taxes are never escaped, they are either paid by the employees via the company acting as proxy or directly by the individual. Corporations are not capable of paying taxes. I hope one day you can own your own company and this will all make sense. Until that time remember that with every "perk" you receive from your employer your effective salary is reduced to compensate the employer for providing that perk. It has to come from somewhere and it doesn't just disappear into thin air.
I realize here on slashdot its hard to imagine that there are people in the US who don't work for public companies, but they are out there. They are the ones who lose in this. Cisco Employees make out great, Cisco makes out great. The guy driving the cab that takes all out to dinner gets to help pay for the gap. So there is a loser in this situation.
We shouldn't have an income tax, we should have a federal sales tax instead. That way, when we're sick of something the federal government is doing, we could stop all unnecessary spending (and put our excess money into savings instead) for a while to starve the fed gov of income. That way the citizens will once again regain control over our government.
You should vote for Nader because he wants to destroy the american way of life before its too late!
I felt Nader was a serious candidate until he chose his VP. Winona Laduke is a great activist, and has fought hard for indigenous peoples in Minnesota and elsewhere, but she has absolutely no business being the 2nd in line for the top spot (especially with a guy like Nader in the top position who i would think would have a great propensity to attract bullets)
So that being said, he has some good points -- the biggest point being killing big money influence in government through campaign finance reform. Everything starts there. that is the first step toward making corporations responsible. He also has some good points on ending our reliance on foreign oil by encouraging alternate energy sources and sustainable living practices... (im a really big fan of this)
I'm not sure about his ideas on trade. There is a balance there somewhere, and i think he's a bit off. We can't "quit" nafta and the wto without screwing ourselves. No trade deficit but hey, no trade either... there's a balance there somewhere...
What about healthcare for every american? yeah. that'll work. sure everyone wants it, but as long as we are paying $30 for a tylenol @ the hospital and as long as pharmaceutical companies continue to rape us for their new wonder cures, err.. I mean recoup research costs... and as our hmos and insurance plans continue to decide what is worth paying for, all the while we continue to ignore the way-out-there concept of "PREVENTION" (oooooh scary... don't get sick in the first place by exercising and eating right? That's such a stupid idea... that will never work) what was my point??? I forgot... hmmm...
Yeah Nader's got some good points. He's awesome and inspiring. He gives a damn and has real opinions, not a horde of handlers and pollsters who tell him what to think.
Voting for Nader is a first step. (the least of the 3 evils easily) Sure he'll never win. You have nothing to worry about... It's a win-win situation. The more votes he gets, the more attention the real issues will get. Plus, the green party gets a nice chunk of $ next time around. Then you can vote for Hagelin in 4 years.
"Tension is the great integrity" -- R. Buckminster Fuller
Those pages base a supposed lack of obligation to pay Federal Income Tax on a very bizarre redefinition of what it means to be a United States citizen. What a load. This might work in Waco, but it probably won't fly in most of the U.S.
I do not have a signature
The federal government can survive on it's current excise taxes and tariffs alone if all unconstitutional functions were eliminated. Get rid of income taxes! The very idea that government has the right to your money before you do is slavery, and an infringement on your privacy and rights to your property.
Get rid of the SEC too. Without them there would be no loopholes like stock options which allows companies to avoid accounting such transactions as cost! Without the SEC 3rd parties would report TRUE earnings!
---
>80 column hard wrapped e-mail is not a sign of intelligent
>80 column hard wrapped e-mail is not a sign of intelligent
>life
I know that this is slightly off-topic here, but in our economic system, the amount of tax that taxpayers as a group must pay is only weakly connected to what is required "to provide and maintain facilities." What determines the level of "facilities" that the government can provide is not how much tax the government collects but rather how much in the way of goods and services people/corporations are willing to provide it (and those it provides payments to) in exchange for the money it puts into the economy.
Now why should people be willing to provide the government these services in exchange for the government's money? After all, in almost every country in the world, this money is "fiat money." It is not backed by anything of tangible value. There is no legal requirement to conduct business in the government's money. At least in the U.S., you and I can transact business using any medium of exchange we wish. There is also no legal requirement to conduct business with the government.
So we have this puzzle: people voluntarily use the government's money even though there seems to be no good reason for them to do so... Well, the thing is that most economic transactions, regardless of the medium of exchange, are taxed. Legally, the only way that these taxes can be paid is using the government's money. Thus, everyone needs the government money, and it becomes the universal medium of exchange.
Thus, you see, the only real reason that a nation with a sovereign fiat currency must tax is to create a demand for its money. Otherwise, it would be worthless, and the government could not buy anything with it! It is not always necessary to tax as much as it spends in order to maintain this demand. (The fact that the most successful economies in the world also have governments which are massively in debt seems to support this.) On the other hand, taxing more than it spends is, over the long run, disasterous--eventually there is not enough money present in the economy for everyone who owes taxes to pay them. Then what do you do?
With proper monetary policy and appropriate overall levels of government spending, long term deficits are perfectly sustainable. In certain circumstances they may well be desirable. Note that the level of debt is actually unrelated to interest rates. Short term interest rates and thus long term interest rates depend primarily on the supply of money. (how much money do banks have in their accounts at the Federal Reserve--this is all U.S.-specific, but other countries have similar systems) The Federal Reserve controls this at will through its "open market operations." When the Fed decides on a new short term interest rate today, short term interest rates in the U.S. immediately change. Why should that fact change anytime soon? (Here, Al Gore's claim that his conservative fiscal policy will lower interest rates is deeply fraudulent. I only hope that he knows that he's lying. I may well vote for him anyway...)
Anyway, this whole issue of how much the government taxes vs. how much it goes into debt is more or less orthogonal to the more important questions of how much the government spends and how the tax burden is distributed. This is all quite counterintuitive to those who assume (like many politicians claim to) that the federal budget is just like a household budget. Unlike a household or even a state government, the U.S. federal government creates its own currency! Furthermore, while a household buys all of its goods from outside the household, the U.S. Government buys almost everything from within the U.S. If I win the lottery and suddenly have 100 times as much money, I can buy 100 times as much. The same thing is simply not true of the U.S. Government.
Fiat money, as it exists in the U.S., is really quite an elegant system, once you realize what is really going on. In practice it works very well. The problem is that almost no one in American politics knows what is really going on. (or if they do, they don't bother to share their knowledge with the rest of us)
Well, I have really managed to go on... If you would like a far better explanation of all of this, try this paper.
Microsoft agrees to design the software and Cisco does the hardware that powers Al Gore in exchange for no taxes.
Robo-Al Gore must be stopped!
-atrowe: Card-carrying Mensa member. I have no toleranse for stupidity.
I see no issue with this. If someone can give me a good reason why we should eliminate an INCENTIVE for companies to give employees a benefit, please let me know.
Frankly, I would applaud any company that went to the trouble to give the money they would have paid to uncle sam to thier employees. Ultimately, Uncle Sam is going to get more out of it when the employees flip their options than from the company itself. The employees will get money they never would have seen, and the company will have better morale for it. Win-win-win.
So Uncle Sam doesn't lose, the employees don't lose, where is the problem other than the words 'Microsoft' appearing in an article.
the starange thing though is as the article says that the burden falls on the shareholders. So if the company reports no net income (profit) to the IRS, then why do they they show a huge profit to the shareholders in the prospectus.
Accountants have a knack for creating figures that look the best to whomever they are presenting them to.
gov't numbers: oh we didn't make any profit
shareholder numbers: boy did strike it rich this year.
This is good? Where the Employee is the CEO, CFO, CTO, VC's etc? They own 95% of the companies. the real employees own 5%. woohoo!
------ Curiosity killed the cat. {satisfaction brought it back | it didn't die ignorant | lack of it is killing mankind
Right, but it's not solely Microsoft and Cisco that are doing it. Yes, the article mentions them, but i'd bet that every dotcom of 1999 and every linux company of 2000 and every wireless company of 2001 has or has plans to take advantage of that.
Just because the article mentions Cisco and Microsoft, it'd be nice if the editors, who often add some slant to the stories posted, would be kind enough to add at the end of the little blurb something like "this probably means all of the dotcoms, too, guys!". Not that hard,
So, not only does MS raise it's own tax on computers ( the near mandatory windows license), they don't even pay taxes themselves. This is b*llsh*t people, I say it's time Microsoft and Cisco payed their share.
Sure. And the same politicians have fooled the same Americans that owning stocks is one of their many god-given rights. If little old Jane Doe buys stock in a company, she is a part of it. She is a part owner, and that is why she pays the same amount of tax as any other shareholder.
The important distinction here is that in buying stocks, shareholders do not make a tiny money-making entity into part of their personal property. They make a small part of themselves into a part of the larger company.
or something.
LAI
:eof
From the article:
He also said he believes it is "hypocritical" for Cisco to take this "massive tax break" and at the same time support Proposition 39, which would make it easier to raise property taxes on California homeowners. Prop 39 would allow local school bonds to be approved by a vote of 55 percent instead of the current two-thirds.
This completely confuses me. What interest does Cisco have in property tax legislation? More importantly, why is Cisco's "support" relevant? What does it mean for a corporation to support legislation that has nothing to do with they way they operate their business?
There's something very strange about this.
Check this out, American Tax Slaves:
http://www.taxfreedom.ws
http://No1040s.com/secret
http://www.solgroup.com/notax
http://www.federaltax.net
True freedom awaits you.
; -- the corruption of government starts with its secrets. a truly free people keep no secrets. --
It wasn't a credit, trust me. You misunderstood the article. It just looked weird in the article because their stock is valued so highly compared to their actual income.
Forgive me if I act a bit skeptical. Get to write off stock options? Maybe so, but does that account for all of Cisco and Microsoft's taxes? It would seem that if their employees are excersizing that many stock options, their stock would be worth more than the company. That doesn't sound right.
What bothers me is, if these companies paid no tax that should mean they effectively made no income last year. So what is keeping their value up? There has to be a missing piece somewhere.
According to Dave Barry, internet investors have the brains of grapefruit. Perhaps that's the missing piece?
The employees who exercise the stock options have to pay taxes on the income from them, meaning that while Cisco the corporation didn't pay income tax, the employees paid taxes on the $7b it gave out last year.
If the figures from the article translate back to the individual employees (which they probably do), the govt. actually got $1b more than what it would have gotten if Cisco had paid taxes on their income.
I'm no fan of trickle-down economics, but which would you rather have:
1) $1b paid by Cisco, employees get zip
2) $7b in stock options "paid" out by Cisco, $2b in taxes paid to the govt. Employees wind up with $5b in their pockets.
-- Ever notice that fast-burning fuse looks exactly the same as slow-burning fuse? I didn't... (Edgar Montrose)
they only get paid by the employees on stock options they get. Why should the company get to pay no taxes in return? They didn't give employees anything! Even the article says, THE SHAREHOLDERS are splitting their shares with the employees, the company LOOSES NOTHING!
And to anybody who thinks corporations shouldn't pay taxes, think again. The reason we pay taxes is so we can have a government that will create some sort of infrastructure in which its citizens can live and do business. So if corporations don't pay taxes, they shouldn't have access to useful governmental things, like courts, police, roads, and whatever else they're using. Let's see where hi-tech companies would be if they couldn't hire anybody who went to a public school or used healthcare...
m
Yes M$ paid $0.00 in taxes last year.
The world's most profitable corporations paid no taxes. Why aren't I surprised? Those donations to politicians are definitely paying off. Pennies on the dollars and you just walk away...
The world's richest man did pay some though, I'm sure... Whatever wasn't reduced by all those charitable donations.
MSBPodcast.com The opinions expressed here are my own. If you don't like 'em... Think up your own stuff.
Explain to me how the richest company in the world could jump out of all their taxes, and not have the government up on their ear. This is the same government that shot the company down for monoplistic practices. I'm not a big fan of US taxes, but I do know they nail the people with the most money first. If profit motive is key, MS's millions are far more tempting than Joe Schmoe's couple hundred.
The government doesn't care because it didn't lose any tax revenue. What happened was the tax burden shifted from Microsoft to the employees exercising the options. These employees were probably in a higher tax bracket than the corporate tax rate anyway, so the government made more money. Hence, they don't care.
Sounds to me like these multi-billion dollar massive companies are putting a few bucks in the right direction to people that can work this out. Maybe I should give them some credit afterall.
My little sad piece of the internet: www.mtndewd
I'm afraid you did -- I'm saying if microsoft didn't skip their taxes this year, thats 14$ less each person in the US would have had to pay to make the same ammount of tax money to the government.
Free Techno/Jazz/DNB/MI Music by guys obsessed with monkeys!
One thing that may make you happy is when you think about the stock options in a company the 90:1 rule usually applies. i.e. 90% of the stock options were owned by 1% of the company. In Microsofts case, that's probally, Bill, Steve, and a dozen board members. So when you think about those bending over and taking some Capital Gains action from the IRS at least feel happy that it's comming mostly from those who deserve it.
On the other hand I'm willing to bet that there is some pretty creative accounting going on for the Gates Tax Return.
The idea that ANY corperation pays taxes is absurd. Think about it. If the government were to raise the tax on any given business to a point $1million above where it currently is, that company will increase the cost of their products and services by $1million (unless they're in a non-competitive marketplace like gasoline, where the increase will be more like $1.5 million). Part of the unit price we, as consumers, play INCLUDES whatever taxes the producer and any middlemen had to pay to make that unit available for sale.
but in aus donations are tax deductable...
--
enterfornone - logging in for a change
Actually, I do let the facts get in my way, and am not a rabid zealot. I did indeed misphrase, when I said $75 off of their tax bill. It should have been $75 off of their taxable income.
Your post seems to imply that I'm more wrong than that, though. Would you care to tell me exactly how, or would you prefer to stick with personal attacks?
GPL made simple: What was my stuff is now our stuff. If you improve our stuff, please keep it our stuff.
if there was any doubt we have a federal government run by corporations this should end it.
Oooh! You get an F in logic and rationality. If no corporations paid taxes, while everyone else did, then you would merely have a piece of circumstantial evidence. But you don't even have this!
Why do you claim that corporations run the federal government because they took advantage of tax writeoffs, shelters and loopholes, yet ignore the thousands, maybe millions, of individuals that do the same?
My previous employer paid no taxes. But it was an unincorporated three man operation with revenues (not profits) of only $250,000 a year (a very small business). A few years ago my Mom did not pay taxes because of Amway (of all things).
I find it especially ironic that CmdrTaco is an employee of the OSDN corporation. I wonder what federal agency he gets to be in charge of for being their faithful lapdog? Or does he get a cabinet post?
A Government Is a Body of People, Usually Notably Ungoverned
Stockholders don't make any money nor do they pay any tax for their shares, _before_ they sell out. When they do, they are taxed about 30% (in my country atleast). However, if you sell at a loss this is _just as tax-deductible_ (30%). In effect, you don't lose anything by this tax. It's a tool to to cool the market down with. This way, you cool it down with 30% if it's going up or down. The more the market is going up/down as a whole, the more is taxed/tax-deductible, thus cooled down as a whole. Severe conjunctures are always bad and dangerous to the economy, so I see this as a positive thing.
Taxing only profits on the stockmarket would always be bad, because it is not realized profits before you sell them. And people don't have to _annually_ sell their shares. Most rich people buy shares to avoid being taxed.
HOWEVER, I do agree a much more simple tax/economic-system should be implemented (reading between the lines). The current one is too unfair, too easy to fool, too naive.
- Steeltoe
http://www.debunkingskeptics.com/
Stop and think a moment:
Every time a corporation pays taxes on income, a stockholder is taxed twice. Corporations don't make money. The people who own a corporation, i.e. stockholders, make money. Stockholders pay income taxes on corporate dividends and capital gains on appreciated equity. So, if a company has to pay taxes on income and then the shareholders pay taxes on the divendends realized from that income, it just means that the same income stream is taxed twice.
So, please stop. Corporations are not people, the shareholders are and we already pay lots of taxes.
Don't forget Kevin Mitnick! He "stole" what was it, $90 million, from Sun, Nokia, etc., yet they didn't list it on forms filed with the SEC.
--
When you sympathize with stupidity, you start thinking like an idiot.
1) the employees don't exercise their options
2) the company doesn't collect the paper "loss"
3) the company pays more taxes
4) profits go down
5) stock price goes down
repeat step 1.
This is why it's not a win-win-win. Another implication is that employees leave for greener pastures
Take John Doe, a wealthy manager who has stock in
AT&T. He pays the corporate income tax on the dividents and the income tax on his large salary.
Take Jane Doe, a little old lady who has stock in AT&T. She pays the corporate income tax on her dividents, and uses the rest to buy knitting supplies.
Why do they pay the same rate? Because demagoguish
politicians have fooled Americans to thinking that corporations pay taxes. That is a fiction.
Corporations don't pay taxes, shareholders do.
And not all shareholders are rich.
The corporate income tax should not exist.
A progressive individual income tax is far more suited.
Shareholders that sell with loss can deduct this on their tax. This deductions is excactly equal to the tax on profits, so how is this "double-taxation"?
Read my reply to the original poster for more info.
- Steeltoe
http://www.debunkingskeptics.com/
Why did you post this? Are you just another stupid troll, or did you think this was actually useful?
----
---- I made the Kessel Run in under 11 parsecs.
Lets try to think about others before speaking greedily of money. Thanks for listening to this drivel...
According to the article before using the write-off Cisco owed "$1.8 billion in federal taxes" but that "its employees earned more than $7 billion exercising stock options". I'm no tax expert, but if you divide 1.8 by 7, you get about 25.7%. I'm sure Uncle Sam sqeezed at least that out of Cisco's employees.
I would say paying $7 billion to employees instead of $1.8 billion to the government was a wise investment. I really don't have any doubt that Cisco's employees spent the money better than the government possibly could have.
2)b. It's not - that title belongs to Sweden, after the last reports the US was about 7th on the list. 2)c. It doesn't - most european countries and several asian ones do better.
.sig
Major corporations run this country. Why are we surprised at this?
Whether it's a raw deal is open to interpretation, but it's indisputably true that high-income people *do* pay the lion's share of federal income taxes:
From IRS figures for 1998 (watch out, it's a self-extracting XLS for Windows, sheesh):
- Adjusted gross income under $25,000:
- AGI $25-50K:
- AGI $50-$100K:
- AGI $100-$200K:
- AGI $200K+
In other words, if you made over $100K (in 1998), you were a privileged member of the top 6.65% of wage-earners in the United States, and had the fortune to provide somewhat more than half of the government's revenue from income taxes.Percent of total returns filed = 49.71%
Percent of total tax paid = 4.06%
% filers: 25.10%
% total tax: 13.04%
% filers: 18.53%
% total tax: 24.79%
% filers: 5.00%
% total tax: 18.27%
% filers: 1.65%
% total tax: 39.85%
"Biped! Good cranial development. Evidently considerable human ancestry."
... this coincides with Microsoft's announcement of its new CEO, Leona Helmsley!
Intercarve Networks, LLC
In Australia, we have a imputation system. So its fairer in that it stops double taxation. If money is paid to shareholders in form of dividends, they get a tax credit on the income tax paid by the corporation on that portion of income they received.
Im not sure what the tax rates are in the US, but if this happened in australia, the government would get more money since the capital gains tax is hooked to ur marginal tax rate. So since company tax is lower than personal tax rate, (above a certain income) - more is received by the government.
-- Cheer, Cheer, The Red and the White.
When companies pay their employees with cash, they deduct the expense and pay less taxes because the employees are paying taxes on that same amount.
When companies pay their employees with options, they deduct the expense and pay less taxes because the employees are paying taxes on that same amount.
So what?
I'd be worried if this wasn't the case, because it would mean that companies which compensated their employees with options would be paying much more in taxes than if they compensated their employees with the same value of cash.
Tarsnap: Online backups for the truly paranoid
First off, I have been an incorporator since before my 21st birthday. Some of the companies I owned did well others did not. At present my wife and I own two corporations in the State of Florida so I am telling you this because I learned it the hard way... Corporate shareholders in S corps and C corps for the most part are covered by the corporate veil from liabilities but piercing that veil and coming after you personally is pretty easy. Any decent lawyer will find a way to say your actions were negligent in some manner and then poof they can come after you personally. I have been in that situation and lost a few times so take that serious. It works out kind of funny: if a corporate officer generates debt that would bankrupt your corp and then leaves, the remaining corporate officers/corporation are liable for the debt (this is very general and not true in every case but lets just say you and the remaining corporate officers were negligent in letting someone run you into the ground) hence the rise of the LLC Corporation as of late. The different types of corporations do give you some benefits (IANAL so don't treat this as Gospel): S Corp's profit/loss is a line item deduction on your personal taxes (though you can't(maybe shouldn't) have outside shareholders). This is great if you are a small company and have only a few employees and are just getting started the election of going as an S corp works well in most small business situations (imho) but it is very easy for something to go wrong and then they can come after you personally. Additionally, an S corp is probably your best vehicle for a home business (important to note that I say business here not home office, there is a huge distinction here) as you can write off many of the expenses involved with running your business(fax/phone/part of the elctricity percentage of sf in rent) and home.C-Corp's are a better way to go if you are making a lots of money and have many employees but you risk double taxation in this scenario:the corporation pays taxes on profit and you pay taxes on your payroll and profit. The plus side - outside investors as shareholders is ok and if you intend to go public then you have no choice but to go this route.LLC's are the latest trend in incorporating as the liablilty of the individual shareholders is limited (you are protected from your partners running you into the ground. I have not been involved with an LLC so I can't say much more about it.As for the lack of financial responsibility you mentioned... most of the time you have no choice but to sign Personal Guarantees if your corporation is not a major league player or have not yet established a decent coporate credit history. Things you can't do business without like electric and phone all require a personal. You can't even think about getting into the yellow pages withhout a personal either and the yellow pages will come after you hard for thier money. If you could just bankrupt corporations without fear of the liability there would be tremendous fraud goin on (this has happenned and is exactly why the whole personal guarantee exists). Sadly, the taxation issue is not fair to small business and hearing that MS doesn't have to pay is infuriating. The IRS makes the corporate tax filing so extremely cryptic and complicated that on average I have to pay accountants twice what I am laible for in taxes. In the real world this translates to paying triple in real dollars.
Prospecting Stinks. Stop Wasting Time on Cold Calling.
From the article,
I'd like to see a situation where a Corporation was only allowed to donate as much money as they paid in State or Federal taxes. A sort of 'matching funds' if you will. Your company pays $100k state taxes, it's allowed to spend $100k into the coffers of any state political party.
Maybe put the same sort of cap on paid lobbying activities, too.
[
the motley fool had a good article on how MS cooks their books. you can find it here: http://www.fool.com/portfolios/rulemaker/2000/rule maker000217.htm
putting the 'B' in LGBTQ+
Actually, yes. Because our taxes are withheld monthly (or biweekly) and computed yearly, the gov't gets to hold our money for up to a year at no charge. If we could hold that money we could invest it.
Now, switching to a monthly tax computation wouldn't be _needed_; it would just be the easiest way to evade the obvious mistakes of not saving enough to pay your taxes. I would personally prefer withholding to be done, but the money placed under my control until the appropriate time.
The result would be that we would *know* how much we're being taxed. Right now we can only guess.
-Billy
To rearrange the words in a historic quotation, if a body (either individual or corporate) wants the government to represent their interests then they should not avoid paying taxes.
Your insults don't change the fact that the top 5% pay 50% of the taxes.
And I'm not whining about the wealthy -- I'm telling you what the wealthy are going to DO TO YOU. I don't want that, you don't want it. Don't let your partisanship get in the way of your ability to think.
The people who pay for the government WILL run the government.
-Billy
Corporations raise money selling stock options. When they sell options to employees at a fixed price, they get less money, hence the deduction. This used to work just fine, because the exercising of stock options wasn't very significant, and wasn't planned for in the company's revenue flow.
The difference now is that companies like the two mentioned can issue stock options as a way to pay employees for free, and then claim it as a tax writeoff.
Really, this isn't a good thing; it should stop. Instead, they should be taxed on... well, ok, I don't know what really should be the solution. But I think that charging American governments of being corporate pushovers on this accout is giving them credit for more intelligence than they actually have.
If you are modding me down because you disagree with me, use the "Flamebait" category, not the "Troll" one.
All told, these darlings of the stock market aren't actually making profits. The government recognizes this in their tax policy, so they aren't charged for their nonexistent profit.
People who go work for a company like MS get most of their pay in stock options; the employees know this and factor it into their pay. So the company gets employees of greater quality than their salary alone accounts for.
The reason that the feds consider them broke for tax purposes but they report a profit everywhere else is that the value of the stock options is factored in as an expense for tax purposes but ignored otherwise.
If you consider people exercising their stock options to be equivalent to the company paying them the value of the stock (which it obviously is), and count it as an expense, then these companies are actually losing money.
MS and Cisco are pure "Baseball Card" stock. They could not pay, and never could have paid, dividends equal to the on-paper profit of their stockholders.
Their value is based on their perceived value. At some point in the past, people saw their prices go up and (absurdly) considered a simple extrapolation of this trend to be a reasonable assumption about future behavior. As long as a sufficient number of people believe that the price will go up, and toss their money at it in that belief, it will.
Other people call it a "stock bubble", because it's empty and eventually bursts. I prefer "baseball card stock" because this exact thing happens with baseball cards (and pokemon cards and any other inherently worthless junk that starts to increase in value because of clever marketing to naive children and then carries on as people begin to believe in a reasonable probability of future resale and consider it an investment).
Another name for it is "pyramid scam". Because, like any pyramid scam, eventually it reaches a point where everyone who can be suckered in is, and then there's no new money to keep pushing the value up; at that point, the upward trend that everyone believed would go on forever stops, once that happens, everybody realizes they've been scammed and tries to sell it while it's still worth something. Crash.
Neither MS nor Cisco are sound businesses. They attract the best employees with stock options they can't afford in the long run. When the stock stops going up, they either lose all their good employees (and go under due to employee incompetence) or pay them what the stock options would have been worth as salary (and go under due to paying out more than they're taking in).
I dunno about MS (which seems to make money from promoting inferior software over superior alternatives, and is thus harmful to everyone in general), but 3 cheers for the Cisco scam! We get all that good Cisco stuff for less than it really costs to make, and dumb stock market investors are footing the bill. A fool and his money are always parted, at least the public at large is getting some good stuff out of it (and we, as heavy internet users, are making out like bandits).
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Its like the classic bumper sticker "keep working, millions on welfare depend on you".
Typical right-wing claptrap. Yeah, go on Welfare, but bear in mind that 5 years hence it will ALL BE GONE and you will either have to get a J-O-B or go on "workfare" and work menial jobs for your check. Actually in some states you have to work menial make-work jobs for your check regardless.
And the thing about the "NEW" welfare is that once your 5-year allotment is gone, it's gone. Forever. You can only take 5 years of welfare in your entire lifetime. After that, it's pretty much sink or swim.
TANSTAFFL, dude.
Knowledge is power. Knowledge shared is power multiplied.
The employees who get the stock options pay taxes on their profits. It's a cost to the company. If the companies didn't get to take a deduction, it would be double taxation.
Consider this: Say you work at Lego. Because you're an employee, you can buy a Mindstorms kit for cost (say, $50) rather than the $200 list price. Should Lego have to pay taxes on the $150 profit they didn't make from you?
Similarly, if Microsoft has a bunch of stock that's worth $100/share, but they've previously agreed you could buy 1,000 shares for $10 each, they're losing $90,000. You, on the other hand, have just made $90,000. So who should pay taxes on that $90k? And since MS just gave you a portion of the company for 10% of its value, shouldn't they be able to deduct that loss?
Mind you, IANACPA...
Stupid people will be persecuted to the fullest extent allowed by law.
When people to refer to richest company, they mean market capitalization: Stock price time Number of shares. A few months ago, it was a 3 way fight between MS, Cisco and GE for company with most capital. Now, I bet GE is back on top.
I'm really curious about how one computes this - I"m assuming it's a lot of grunt work, although whenever the gov't brings more info on-line, it should be easy to compute it automatically.
If anyone has any knowledge about this, I'd really like to know - even basic stuff like "What info is public & where do you get it?"
Please finish the course before commenting.
Cisco would presumably owe income tax on the money they paid out. Smart employees would buy their options and hold on to them for a year before selling, thus paying long term capital gains tax. The capital gains tax rate is lower than the income tax rate. I don't see how the government will get more money.
If to many employee exercise thier option at the same time it could spell trouble for the company it could lead to a devaling of the company I know in these cases it is not likely. As people said earlier the government got thier money from the employees not the company.
Corporations need to show an after-tax return on the investment to their stockholders.
...
--> If they pay taxes to the gov, they have to increase pre-tax profit. This results in higher prices for all of us. Also lower investment in new technology,
We pay the taxes, not the corproations We get the benefit of Cisco's tax-avoidance.
"The Constitution, the WHOLE Constitution, and nothing but the CONSTITUTION."
This is just another case of the laws not keeping up with reality. Just like the article said stock options have traditionally been incentives for executives until some genius figured out to pay people a lower salary and add stock options to make them work harder. Maybe that is what helped MS become so successful. They have been doing it for years.
Whoops! Tiny mistake here: corporations don't have a choice between [a] sell X million options to employees at below market value and [b] sell X million options to the market at market value. They sell options to their employees that *would not otherwise be released onto the market*. They do this quietly to reduce the likelihood of it impacting on the value of all the previously issued shares. And guess what? They get away with it. That means that the benefit for their employees has cost them nothing. By contrast, their employees have paid *them* some money and their employees hope to be paid more money by investors.
IANAE but this seems to me to be parallel to inflation devaluing a currency. Unexercised stock options represent a risk of share price devaluation to investors. The more options exercised at any one time, the greater the risk of devaluation, and the larger the devaluation is likely to be.
Microsoft not profitable shock.
OK but why doesn't it have to report the cost of its options as part of its earnings?
The argument for a tax break would be that giving the options out is a legitimate business expense. If so Microsoft is either being far to generous to its employees or it is not a profitable business!
What happens if the shares stop going up and options are not worth anything anymore? Will the employees just keep working for their basic salary? If so why give them options now?
Typical practice for many Euroopean companies would be to buy the options from an investment bank thus precisely crystalising the value of the options. Think how much better off microsoft shareholders would be if they had done the same! Of course some of the earnings figures would not look as pretty but
The real question is how much does it cost to run Microsoft?
Big greedy corporations use their hordes of lawyers to pass unconstitutional legistlation and attack consumer rights. That's news. Big greedy corporations use their hordes of lawyers to find tax loopholes and save money. That's not news.
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A picture is worth 500 DWORDS.
What a typical Slashdot headline. Reading the article, we learn that this is a 'decades' old tax hole that is used by 'many' companies. But, mention that Micro$oft does it and the story gets posted.
Here comes the -1 Flamebait for pointing out the truth again, oh well.
We must respect evil, and we must make evil respect us.
Umm, I'm a bit confused here. If a government pays a company money to build a factory, then the taxpayer is subsidising the business expenses of the company: hence the term corporate welfare. There is a net flow of money from individuals' pockets to the company. The company gets to cut the costs of running its business, sometimes very substantially. Why should taxpayers subsidise the costs of the business--which isn't optional? Why not the market--made of consumers, who have the option? Don't you believe in the power of the market?
It's so ironic how everyone complains about this, yet we keep either not voting, or electing the same corperate trash into office every election. Maybe it's time we try some of these little guys(non elephant/ass parties) I'm going to vote for Nader, I know he won't win, but maybe someday... And hopefully they won't turn out to be scum. Point is, we have the power to change things, unfortunately it seems we are too lazy. If you aren't registered to vote, go do it, we need all the help we can get.
The corporation pays no taxes, but each and every employee does, and the better the company does the more each employee will make and the greater the number employees they can employ and the more money Uncle Sam collects from individuals. Don't think MS and Cisco get something for nothing, their employees are still heavily taxed who are paid directly by the company which still effect the bottom line.
I personally prefer the sales tax method introduced to congress by Congressman Linder from Georgia. The more you consume, the more you pay, the more you invest and earn, the more you have to use to consume if you wish. More information on alternative tax plans: http://www.fairtax.org
What this article, and the comments I've read on here seem to miss is that this description is not true of all types of options.
There are ISOs, which are Incentive Stock Options, and then there are NSO or Non-Qualified Options.
The ISOs do not give the company a tax deduction, and the employee does not have to pay taxes on them until the shares are actually sold.
Non-Quals behave as the article states -- taxes are due when the options are exercised, and the company gets a deduction.
This is important for employees to know, because with Non-Quals, if their options are exercisable at 1 cent per share, but the shares are at $10.01, they owe tax on $10 per share as soon as they exercise the options and get the stock. But if the stock is not registered by the company, the employee will have to hold it for 1 year before they can sell it. In that time, the stock could go down to $1, but they would still owe tax on the $10 they never actually got!
Non-Quals are good for companies, because they get tax deductions, but bad for employess because they may actually lose money!
For an option to be ISO, it must:
- be part of an approved incentive stock option plan
- expire within 10 years
- be exercisable at no less than the current stock value in effect when the option is granted.
If you may be affected by these regulations, please look into them... they can mean the difference between rich companies and poor employees!
By the grantee of the options. The grantor gets to write off the options on its taxes. All of which presupposes a rising stock market.
However things look quite different in a falling or plateauing market. Then the grantor is stuck with a huge tax bill they haven't been prepared to pay. That affects earnings, which affect the stock price, which, well, you get the picture.
Options are a form of leverage and should be respected in use, the same way you would respect a chainsaw in use.
Whether or not the hatred now being expressed toward corporations is justified or not, I won't say. It does seem to be the new trend. All I will say is that the trend is your friend, unless you are at the end of the trend.
These employees then get to pay their own taxes on the gain, usually at a full 37%, the same thing that M$ or Cisco would have paid -- sometimes more -- meaning that the government doesn't lose a cent.
Thank you, bleeding-liberal-sensationalist SF Gate and SlashDot, for informing us of this atrocity. That certainly proves that corporations run this country.
In the real world, the tax structure generally sucks for corporations, minus a few tax shelter structures (which are being closed this year, as reported in yesterday's NYTimes and elsewhere). For a techies' view of US taxes and trying to make a corporation fly, try John Walker's The AutoDesk File, which (in varying parts -- I believe Info letter 14? and the stuff on stock options) explains just how the US governments fucks corporations just as well as individual citizens.
www.billparish.com
Talks more about cisco and MS.
Hasn't MSFT lost about half its valuation since the peak? Not only is it a pyramid scheme (see Bill Parish's analysis) but it is running out of steam. Choke this down: MSFT basically lost ten _billion_ dollars just in '99 and hid it with accounting trickery. How much are they losing now, struggling to not completely fail with W2K migration against Gartner Group advisories, to kluge together .NET and paper over the many quietly failed projects like Fahrenheit (sp?)? The real losses are _accelerating_ not reversing, and they can only pay people in options- they _cannot_ meet payroll if they had to pay people actual money.
If it was any other dotcom, they would be _toast_ but any fraud is based on a lot of social engineering, and this one's had a good long run. Think about it- the argument around Slashdot is typically 'is it right/sane that MSFT is so wildly successful and popular when their products/practices suck so bad?', but the idea that MSFT is wildly successful is rarely challenged. Yet when you look at the information (again, Parish is useful- people seem to challenge his interpretation but not his numbers and facts) you see that their sales are a miserably small proportion of their income and most of it comes from an options pyramid scam and 'corporate welfare' (I'd be interested to see more data on that. Define 'corporate welfare'?). This is nothing like a sustainable business model, much less 'thriving on innovation', yet because of the sheer scale of the exercise it goes largely unquestioned.
The upshot is, we're about due for another Great Depression based on the fact that too much of the economy is focussed on these pyramid-type companies- ones that have valuation wildly in excess of their revenue and assets, ones that are fostering mad speculation on the basis of _stock_ performance which reinforces the pyramid scheme until it collapses. As Parish shrewdly points out, doing this allows these companies the ability to stomp all over companies that are actually practicing _sustainable_ business models, potentially endangering them and putting them at risk of being 'out-competed' by the ones that buy into the pyramid scheme heavily. There's this one small problem: pyramids end. Always. You can tell it's starting to happen when the 'growth' _stops_ being geometric and levels off- the model doesn't allow for that, and the pyramid crashes at that point, hosing everybody who got left holding the bag.
The danger in a Microsoft setting the tone for the modern economy is this- as they are willing to go right over the edge into illegal practices to protect their pyramid but it will still end at some point, the risk is that all the pyramiding companies will successfully stomp all over 'old business models' and the old-style companies will go out of business, unable to employ people. The result would be a larger and larger percentage of the workforce paid in options as the companies adopt the MSFT pyramid model in order to keep up- options for pumping gas, options for shelf stocking at Wal-Mart- then when the pyramid tops out and collapses, it takes the ENTIRE economy out with it. That could be worse than the Great Depression- hell, through the 90s my (GenX) age bracket suffered exactly the unemployment and income burdens recorded in the Great Depression and nobody batted an eyelash because the yuppies still made their money. This time it won't be a yuppie-exempt crash- far from it.
I'd say the best thing to do is to realise that there's no disaster that someone doesn't profit by- and if you're determined to buy into the whole stock thing get ready to short like a madman, but better still, lay plans for a post-pyramid world. That means, accept being stomped on for the moment and build businesses that focus on _real_ revenue and do real work for real money- even though that is totally a losing strategy at the moment. Nothing else will survive the market correction we're due to receive- things will be incredibly nasty but with a head start in _serious_ business practices (rather than pyramid-focussed wish-fulfillment valuation) it's going to be a terrific opportunity for anyone willing to really work.
Constructive criticism you want? Fine- MSFT and CSCO's problem aren't that they're not paying taxes. Their problem is that the ONLY ARGUMENT that they're making a PROFIT is this evasion of paying taxes _or_ normal wages. It's not about them not paying taxes, it's that they have no business being stock market heavyweights when they lose shitloads of money! That's just asking for trouble! End of story.
Any intelligent business owner would want to reduce his/her taxes in every possible way. In a way, corporations are "double-taxed" in the US. If a corporation shows a profit, it has to pay taxes on the profits. If the corporation pays out dividends to the shareholders, the shareholders have to pay taxes on their share of the dividends received.
If you want to know exactly how corporations can do this, go read the books Rich Dad, Poor Dad, CASHFLOW Quadrant, and Rich Dad's Guide to Investing . These books were authored by Robert Kiyosaki and Sharon L. Lechter.
At least somebody is managing to avoid the theft-en-masse of those who want to practise charity with coerced wealth.
All that profit they pocketed means more wealth for them and for any sane trader - and less for corporate welfare, skiving bums, congressional "pork", and wasteful socialist projects to buy a second TV for all teenage black lesbian single mothers in the inner cities.
Although I don't agree with everything Parish says about Cisco and MS, he does make some good points. Using stock options as a deduction without charging them against earnings is a disaster waiting to happen. It inflates the upside on the stock but it also inflates the downside if the stock starts to go south.
h tml
http://slashdot.org/articles/99/10/30/0936212.s
http://www.billparish.com/
Micro-Soft sure knows how to innovate!
--
Soma: because a gramme is better than a damn.
If Microsoft entirely gave up on all the programming activities that cost them billions a year, and did nothing _but_ issue options and buy up other companies, taking their technologies and ceasing work on them and giving the newly taken over employees more options, would you still think this made any kind of sense? Why do you think it makes sense when they make a pretense at being a technology company?
This is not a picture of a technology company, and still less is it 'creation of wealth', and other companies should be encouraged to hang tough and _not_ do the same: this behavior is a pyramid scheme centering on stock valuation, and pyramids END. It is useless, productless, pointless money-juggling, impressive-looking while the 'pyramid' builds, but destined (like all pyramids) to crash. When it does it's gonna take the US economy, and probably the world, with it. (possibly excepting Japan- Japan has been there done that in recent years, that's why their 'miraculous economic recovery' crashed and burned. They see right through this sort of thing- fresh hindsight is helpful to do that.)
There's nothing about this situation that is good unless you are convinced of one of these things:
- pyramids expand forever
- money is so hypothetical that it needn't _ever_ be associated with tangible assets
- the future can't be other than the present, no matter what.
The first is just dumb- if you believe that why aren't you becoming wealthy off a thousand idiotic spams? They are pyramids too. The reality is that you'll lose your money. So, too, with MSFT and Cisco.The second is cute- very cute. Isn't having a 27 million dollars going to be enough, by definition? Well, wouldn't having 27 million Deutschemarks (better yet, Reichsmarks) be enough? There are plenty of Germans who can tell of times in their history when that would have just about bought a loaf of bread. A currency can be devalued to amazing, absurd levels- if everybody had 27 million dollars of *insert stock here* but no actual assets other than this, boom, suddenly it takes 27 million _US_ dollars to buy a loaf of bread. It _can_ happen here.
Finally, the idea that the future must be the same in kind as the present- just an extrapolation of it- is seductive but doesn't stand up to real-world experience. Some days it's sunny and others it rains. If it's sunny a _whole_ _lot_ does that prove that rain can't happen? If termites are eating the foundations of your house there will be a long period where nothing visible happens. Does this mean nothing will ever happen? Some processes happen out of sight of those who don't want to look at them. Termites would be one. In the context of MSFT and Cisco, the process would be a devaluation of money (inflation) caused by these stock pyramid schemes- the amount of 'money' being 'paid' goes up and up and up, but the amount of work being compensated doesn't. As the process accelerates and expands it becomes more exciting the farther it departs from reality. Look at AAPL for a picture of reality- temporarily swept up with the stock market, an earnings warning (and a profit is still anticipated!) 'corrected' the stock down to where it is barely in excess (or under?) the company's tangible assets! That was a brutal over 50% crunch- and stopped only because the price/earnings ratio hit the bottom stop and the stock ended up right down at the valuation of Apple's substantial physical resources and positive revenue. What happens when MSFT corrects and seeks _its_ level of physical resources and actual revenue? In 1999 they _lost_ ten _billion_ dollars and made it up solely by issuing more options! This is major, major trouble waiting to happen. I would have to really _protest_ the notion that it is 'good'. Are you a 'faith stockbroker', like a faith healer? Or is it a new religious movement professing faith in the ever-extending pyramid? Maybe you could make a stock out of this belief alone, and sell it based on no revenue or business at all, just that it will increase forever. I suggest 'JMST', to stand for Jamestown :P
Corporations have been granted, through legal fictions instituted within the last century and a half, the rights of individuals. With those rights they were also supposed to have all the responsibilities of individuals. However, they no longer live up to their responsibilities, and in so doing shift them back on the rest of us. For example, corporations are supposed to pay federal taxes, just as an individual would; but few do, because most corporations can afford to hire lobbyists to make loopholes and attorneys to exploit them--yet few individuals can. So, the tax burden gets shifted to the individuals, when corporations aren't paying their fair percentage.
Another example is the Bahamas loophole which is being used by the US-based insurance companies. By being technically bought out by a shell corporation in the Bahamas, they can do all their business in the US, and pay no taxes.
But your main point is correct - originally, all corporations had a corporate charter, and were to be established for the public good. Corporations not contributing to the public good could be dechartered. Naturally, at some point the large corporations started to use this as a weapon against their smaller competitors, by forcing decharter hearings on them.
Note - I have a very large quantity of assets invested in corporations - I make money off of these, my mom is comfortably retired on one of the trusts I manage even though she never saved a penny for retirement. I'm not pretending I don't know how the game is played, and I'm not going to unilaterally disinvest just because it's unfair.
But - the rest of you all subsidize these operations. You may think you'll become millionaires, but my bet is very very few of you will. Mostly because you subsidize unfair competition by corporations I own stakes in.
--- Will in Seattle - What are you doing to fight the War?
if you look at MS in the same light, their 4 billion in taxes ... assuming a population of 280,000 in the US, is about 14$ per person. Money that had to be paid by other people to make up the slack ... sickening when you think about it
Free Techno/Jazz/DNB/MI Music by guys obsessed with monkeys!
If Microsoft, or any other company, were not motivated by the tax code to spend or donate their money, they would do neither, and we would still be using punch cards and not watching PBS.
On the other hand, if they were unable to escape these taxes, they would pass the cost on to the consumer. This would mean that Congress would control what you hear and see more that it already does.
If abortion should be tax payer funded to protect poor women's 4th amendment rights, why not buy them guns to protect their 2nd amendment rights.
How many people have to suffer a harsh punishment before "cruel and unusual" returns zero?
I'll have to hope that this gets moderated up, because there are simply sometimes when I have to forego the starting score. These two companies aren't the only ones who are doing this. There was one alarmist tracking it and blowing the whistle a couple of years ago. He was widely regarded as a nutcase with an axe to grind because he was using Microsoft as his example. Then The Economist picked up the trail. They emphasized the point that this is a bad accounting loophole, and that the only reason to criticize Microsoft is that they are the biggest beneficiary of it. Here is the Motley Fool's article about it.
Because due to previous limits and freezes on property taxes (especially the infamous proposition 13), the public school system in California is going bankrupt, and Cisco wants an educated workforce and market in California.
Less stuff is bought, then the government doesn't have the money to fix anything. This also applies to income tax, of course. Nation wide property tax is the way to go.
Since the top marginal rate for individual taxpayers is *higher* than the rate that the corporations would have paid on the same earnings, the government actually winds up collecting *more* of the money in taxes after the distribution than they would have otherwise. So... where's the down side here?
Of course, that's ignoring the fact that corporations never pay taxes anyway. Corporations simply hike their prices to accomodate the revenue drain from the government. Individuals pay *all* taxes, corporate and individual, and nobody should forget that. The whole concept of "corporate welfare" is inane - whoever came up with that phrase should get a boot to the head.
In fact, it was my minor.
And you're right. Government is not an evil, it is a method of conglomerating interests.
An economic system reacts to the inputs. If the inputs say that pollution is free, the economic forces will result in cheaper technologies which pollute, since there is no cost.
And if corporations can get subsidies to take out their weaker rivals, the system will reward the larger corporations, whereas on a true level economic playing field the smaller, quicker corporations might have the upper hand.
Most of our economic models (what you call laws) are based on key assumptions - that all participants have perfect information, in real time, at no cost, and there are no barriers to entry or exit. None of these are true. The Net has come closest, as economic signals are close to perfect, are in near real time (e.g. stock quotes with 15 minute delays), have minimal cost, and barriers are much smaller.
--- Will in Seattle - What are you doing to fight the War?
if the u.s. did collect taxes from major corporations (i highly doubt that only microsoft and cisco are taking advantage of this)...much of the poverty-stricken areas in the u.s. could be made better, our education system could be far bettered (possibly even to the extent that college could be free or at a much lower cost)...
in turn, due to higher education, this would lower unemployment, raise the economy, and we could probably even be able to lower taxes for everybody, since the taxes from the corporations would remove the offset from the reduced taxes.
hmmm....why fon't we see a politician say that we will reduce taxes for the general public by taxing corporations (that aren't being taxed)?
I'm sure that would go well with the public...(although they'd need to come up with their fundraising money some other way, since the corps sure as hell won't help any)
Capitalism: Where the rich get richer and the poor get poorer
The result: The "poor" population gets so large and set upon an all-out revolt...utter chaos!
[okay the last part was my lame attempt at humor but hey, there's my 2.5 cents)
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BigCo gives a Bob, an employee, stock options at $5, the current price. Bob is not taxed for this, and BigCo doesn't put the transaction on its balance sheet, because there was no real value traded. BigCo gave Bob the ability to buy shares at $5, which is what he could buy them in the market for, anyway. Hence, no income for Bob, no loss for BigCo.
Five years later, BigCo has had an enormous run-up in its stock price, and those options are now worth $50. Bob excercises his options, buying 100 shares of BigCo stock at $5 per share, or a total cost of $500. But those shares are worth $50 each, or $5000. A nice profit for Bob, to say the least; he can now sell the shares at their full market value.
According to both the IRS and standard accounting practices, this gets counted as a taxable gain for Bob (that $45 difference gets hit as income). Similarly, if BigCo had just hung onto those shares, they could've sold them themselves for $50, so BigCo gets with with a $45/share loss. A company's profit is the total revenue in minus total money lost, and that loss counts. If you end up with a total number that is negative, you don't pay taxes, since taxes are on net profits.
So, the article's contention that it becomes a "tax deduction" for the company is a bit simple - it becomes a loss for the company. This is why so many .coms like to trumpet their pro forma numbers - those usually exclude "non-cash charges" such as the non-cash loss they are forced by accounting rules to take on the hefty stock compensation they give their employees. That non-cash loss is why you can see statements like "fooco.com has lost $278 million since inception," but, if you look back through their announcements, you'll find out fooco.com has only raised $75 million. The rest is a "non-cash loss," and, frankly, given that fooco.com is losing money, anyway and not going to pay taxes for a long time, they'd probably rather just get rid of the current system. In today's media world of people looking for "dot bombs," fooco.com is likely to report a $.75/share loss (including non-cash charges) and a $.25/share pro forma loss, with analyst excpectations of a $.50/share (pro forma) loss, and have the press complain that they missed their numbers!
The fundamental logic is simple - Bob was compensated by BigCo. Bob has to pay taxes on his compensation. It doesn't make any more sense to have BigCo pay taxes on the lost money in that transaction that it would for BigCo to pay taxes on the salary it has to pay Bob.
I wouldn't mind paying taxes if I got benefits equal to my payments. Each year I like to calculate how many seconds I supported the entire U.S. government. That is, the entire military, every welfare recipient, congressman, social security recipient, etc. Last year the entire weight of the federal government was on my shoulders for a little over 19 seconds. Believe me, it was one heavy load.
Cisco and Microsoft didn't pay any corporate tax because they compensated their employees extremely well. Not just their executives: both companies have stock-option programs that reach most of their employees. This is a very good thing. Other companies should be encouraged to do the same.
It's good for employees because they actually participate in the wealth they create; it doesn't all go to stockholders. It's good for stockholders and customers because the employees are strongly committed to the company and its success. It's even good for the IRS: the employees pay lots of taxes on those stock options.
Sorry about the insults, but I am really shocked that you have these ideas...
How much of the income do the top 5% make?
What percentage of that income is being taxed?
You seem to be arguing for something like Thatcher's poll tax (in the UK)-- let each citizen pay an equal share. You would then be asking people who make next to nothing for massive percentages of their income while asking for tiny percentages from the rich. That would produce a much uglier kind of social change, like violent revolution.
As for the rich taking over the Government - this country is already a plutocracy, but there are limits and there is no reason to believe that the forces that keep the rich in check today are suddenly going to vanish.
See paragraph thirteen "the difference between the strike price (what the employee pays)and the market price (which is almost always higher) becomes taxable income for the employee." So someone paid the tax. In fact, "someone" always pays. When taxes are raised on corporations, the tax is ultimately passed on to the consumer via higher prices. What is "scary" is that so many people do not understand this simple fact.
I may be wrong but aren't stock options considered benefits? It does not make any sense that a company can get a tax break on something that it is "paying" it's employees. What next a tax break for salaries?
Uhh... it didn't exactly work in Waco either, did it? :)
There should be a federal tax on money paid to accountants, like a sales tax. Then companies would have to pay at least some tax when they hire a kajillion high-priced accountants to fiddle the books to negate their income tax obligations.
All kings is mostly rapscallions. -Mark Twain, The Adventures of Huckleberry Finn
Does the percentage matter? The important problem is not how hard the rich are being hurt. The important question is how much our government can be hurt by them. If they're paying 50% of the bills, they hold 50% of the financial sway over the government. Now, if they were 20% of the people there would be no worry; I don't even believe that 5% is that much of a worry. But watch as the numbers go down!
This country is not exactly a plutocracy; it's ruled by the press and the legislature, and both of those are at least superficially controlled by the people.
I do agree with you on the limits, though. I find that very reassuring.
You talk about a "much uglier kind of social change." It's typical of liberals (which you clearly are) to consider the crimes of the poor as much uglier than the crimes of the wealthy, as though wealth washed away sins. A system which twisted the balance *that* way would be just as badly out of whack as our current system.
Fortunately, there's a good amount of territory in between the two extremes. A system doesn't have to be hyperregressive in order to avoid being hyperprogressive. I'm not going to even suggest what the correct amount would be -- but I will suggest that the current amounts need to be backed away from a bit.
But they won't be, of course. The rich have every reason to want more power; the middle class have every reason to want others to pay; and the poor don't care.
-Billy
If you want the benefits of government, then you should pay taxes.
When an employee exercises a so-called non-qualified compensation option (which is what most of Microsoft's are), the difference between the stock price and the price they pay for the stock (called the option's strike price) is a deduction for the company and ordinary income for the employee. This is the same thing that happens with cash compensation: a deduction for the company and taxable income for the employee. If the stock appreciates further, those *subsequent* gains are taxed as capital gains.
So the bottom line is that Microsoft is getting a deduction for that portion of profits transferred to the pockets of employees. As other posters have noted, taxes _are_ paid (by employees) and other shareholders in effect foot the bill by selling shares at a below-market price.
Bill Gates is not getting a break from this, unless paying big bucks to employees makes them more dedicated and productive.
Keep in mind, though, that taxation rates are very different for corporations and individuals, so the amount of money that goes into the public coffers is probably much lower than it would be if the corporations paid the taxes. In other words, the People end up being screwed twice: they get to shoulder the tax burden and get less out of it in the way of public services from their government.
Megacorps most definitely pay taxes, although they only crop up every election year nowadays. Here we have corporations that pay no tax, save the money they spend on politicians. You don't have to wonder why the average American is a little disillusioned (sp) with the system these days. Corporate gain is the name of the game. He is the loser in the game too. However, this lack of faith in the system just keeps the cycle going. Given the choice between apathy and activism, the average Joe will pick apathy. After all, these days activists are Seattle-riot anarchists. Activism has been made a social crime. And so, the system perpetuates itself on that apathy. Look at the upcoming election. Your choices are Pro-Business #1 or Pro-Business #2. No offense to Mr. Nader, but your average American would have to be a total slave before he'd resort to voting for him. I suppose it's the mentality against moving away from the Two-Party system. That's just as frowned on these days. So what can you do? People have talked about how communism failed utterly, why do I see democracy doing the exact same?
.88 magnum -- it goes through schools.
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It's a
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It's a
-- Danny Vermin
Is anyone surprised by this?
Ross Perot and other hundred-millionaires don't pay taxes either.
So why is everyone so against a flat-tax (with a minimum income requirement)?
www.niceFire.com
www.niceFire.com
Funnier than a speeding bullet
Its because I have to pay for social programs that do nothing to fix the problem, people that are just too damn lazy to work, and plain old government waste. Do you know the FDA regulates how big the holes in swiss cheese are? I'm paying for that! Why should I get a job when theres welfare, SSI, social security, etc etc? Just sit back and leech from the people who do pay taxes or trip over your shoelaces and sue nike for millions.
Its like the classic bumper sticker "keep working, millions on welfare depend on you".
Only the State obtains its revenue by coercion. - Murray Rothbard
Class .sig
*round of applause from me and the guy reading over my shoulder*
Regards,
Denny
# Using Linux in the UK? Check out Linux UK
Police State UK - news and
The professional investors know how to get information about option expenses and deduct accordingly before making a value judgement about a particular stock, but for the everyday investor this amounts to a gross misrepresentation about a firm's profitability. Every once in a while you hear about the SEC threatening to change this provision, but it always seems to end up in the dumpster. Anybody have info on where the issue stands now???
Stop by my site where I write about ERP systems & more
Well, the way AT&T has done lately, they'll both have a nice deductible capital loss!
sulli
RTFJ.
they have to pay the same as you do, but their accountants are better than yours. if you had good accountants to find all of your deductions, you wouldn't be paying a dime either.
Mooniacs for iOS and Android
Good for those companies!! I doubt anyone running a major company such as these would not take advantage of tax breaks like these.. Even wealthy individuals have accountants to look for tax breaks, and this isn't even technically a break (the employees pay taxes as stated in previous responses). This is one of the many reasons large companies ARE large companies and make money.
No sig for you.
Of course the governent lets this "abuse" happen. It's profitable. Currently, that "untaxed" income is flowing to California employees, most of whom are in the top tax bracket of about 44%. (39% fed + 9% CA state inocome tax. Yep, the numbers don't add...don't ask).
The highest corportate tax rates are typically in the 30% range.
Now, clearly, the thing to do is to tax this "abuse" and continue to tax the employeess.....
"one treats others with courtesy not because they are gentlemen or gentlewomen, but because you are" --G. Henrichs
I'm shocked.
Truly, deeply shocked.
Wake me when the revolution is over.
If these companies had made a bazillion dollars last year and put it in the bank, they would have been criticized for: ripping off the masses, ripping off their employees, ripping off society and on and on and on. But they would have paid taxes to our favorite uncle. And we all know how wisely he would have spent it.
Instead, they paid all the profits out to employees (who paid taxes on that money) and these same employees get to spend it any way they want. Now MSFT and CSCO get raked over the coals for not paying any taxes.
Does anyone out there have any *constructive* criticism?
They give back to the economy through jobs more than they could ever pay to the gub'ment
So to the government it looks like Microsoft isn't making money, but on the income statement it looks like they are. The controversy is whether or not the cost to companies of these options should be on the balance sheet as an expense.
It is also interesting to note that Microsoft increases their revenue by writing puts and calls (listed options) on their stock. If you took away this extra revenue and counted the employee options as an expense I think that investors would really be shocked at how poorly Microsoft is doing.
dmp
Stop talking about who's to blame when all that counts is how to change --"Born of Frustration" - James
I'm not trying to say that this is either "right" or "wrong", but to put it in another light, since I think the article missed this point. Essentially, the companies are taking money that they would have paid to the government, and giving it instead directly to their employees. The money, in this case, is really stock options, but you get the idea. Instead of money going to the government to be spent by the government on your behalf, it is given (minus tax, of course) directly to you.
The other thing that the article points out, but not well enough, is that in the end, all this really means is that these companies really aren't as profitable as they claim, since their expense is much higher than they are announcing.
Anyway, I think if you can write off expenses, you might as well be able to write off stock option programs too, since it really seems to be an expense. And (being on the conservative side) I do like the idea of less of my money flowing through Washington before it gets to me (usually in the form of poorly managed entitlement programs with more than a few hands skimming off of the top).
Just my 2 options... (priced at $0.01/option)
David Fay
If you build a man a fire he's warm for a day
If you set a man on fire he's warm for a lifetime.
Microsoft never represented me in anyway, so I guess it's only fair that they shouldn't pay any taxes!
Some might say I', misrepresenting the fine sentiments of the floundering fathers, but I say fair is fair. I just wish there was some other way they could screw us harder.
As for wanting unquestioning followers: I trust the 275 million individuals in this country to make decisions on their own behalf. It is you who want to subrogate their collective wisdom for your superior intellect. When you want a real education you will have to stop watching "Talk Back Live" and crack the spine of a book. Let me know when you are ready - I can provide you with a reading list.
What's Talk Back Live? Is that that CNN show?
Forgive me for boiling down economics theory and calling an externality an input. I meant it in a programming sense - this is News For Geeks, not News For Economists.
And again, an economic law is based upon a flawed system - always has been, always will be. That doesn't mean it's not a good model, it's just got inherent instabilities due to the flaws in design.
And, last time I checked, we broke 300 million in the US.
--- Will in Seattle - What are you doing to fight the War?
Three things we don't need.
Down with GNU. Long live the ENL.
Gosh, given the outcry you'd think that Cisco, Microsoft, Boeing, Cisco, Ford, and all of the other large corporations that have made these deductions had broken the law. But they haven't, they've followed exactly what the rules are for calculating and remitting taxes.
Taxes are a necessary evil, but no one is obligated to pay more than the share that the tax code specifies for them. I'm not going to fault anyone, individual or corporation, for not paying EXTRA taxes.
daniel
All I needed to know in life I learned from
Bill Parish has been tracking the creative accounting practices of Microsoft and Cisco for months now.
I went out to Excite's web site for MFST's financial statement and found that they paid $4,854 Million in Income Taxes in 2000 (fiscal year ending in June).
Check it out for yourself:
http://excite.elogic.com/sec_financials.asp?tic
Does someone have a screw loose?
Wovon man nicht sprechen kann, darueber muss man schweigen. Ludwig Wittgenstein
According to a report on Feb 17, 2000, Microsoft made over 5 Billion in stock last year. You can compare this to the 7.8 Billion it had in after-tax NET income.
e maker000217.htm
5 Billion made in stock compared to 2.8 million it made by scre, err, writing software. You do the math.
For more information about this check out http://www.fool.com/portfolios/rulemaker/2000/rul
Cisco has kept MS IIS servers from bringing the Internet to its knees.
Otherwise, not much.
-- All sigs are redundant --
In a sense, this article is a troll; it's very shoddily researched journalism, and extremely sensationalist. Of course tax deductions exist; I depend on those, and I would HOPE that corporations take advantage of them just like I do (and this one is even a GOOD deduction).
I've also seen and agreed with the arguments that corporate taxes are a demagogic sham in the first place; the money should be honestly taxed from individuals, so that we can keep track of how high our taxes really are, and be able to vote our outrage when appropriate.
However, there is some point in the outrage over how little corporations pay. The fundamental problem is that majorities vote, but a minority pays taxes. Fewer and fewer americans pay taxes, and they're the richest part of America. We're reaching the point again where we have taxation without representation -- but this time we're trying to do that to people who have real financial power, and IT WON'T WORK.
People with financial power have the means to work against those taxes; they start by lobbying for tons of loopholes, but pretty soon they're going to insist on being given political power proportionate to their tax burden, and pretty soon they will wield all of the political power in addition to all of their financial power.
This is assuming a complete lack of bad motives, of course. If you're the conspiracy theorist type, mix in those; you'll find that the result isn't much worse.
So we've encouraged poor people to trade their franchise tomorrow for a few dollars less in taxes today. Think about it. Does a progressive tax really sound so good now?
-Billy
- tripe
. The article doesn't even confirm Microsoft's tax evasion. It says that Microsoft "seems" to be avoiding taxes.Explain to me how the richest company in the world could jump out of all their taxes, and not have the government up on their ear. This is the same government that shot the company down for monoplistic practices. I'm not a big fan of US taxes, but I do know they nail the people with the most money first. If profit motive is key, MS's millions are far more tempting than Joe Schmoe's couple hundred.
- I don't care if they globalize against free speech. All my best free thoughts are done in my head.
Which slashdot have you been readong? The one I've been going to for a few years has never made any pretense of being unbiased or pro-corporate. You'll have to find a better criticism than "this is a staple of communism" if you expect people to take you seriously...
I'm an investigator. I followed a trail there.
Q.Tell me what the trail was.
Recursive: Adj. See Recursive.
The huge "loss" that the companies got to carry on their books for this is because of the insane buy-up the NASDAQ has seen (although not so recently). If Cisco "gives" stock options at $5 a share, and the market (stupidly? you decide) decrees they're now worth $100 a share, then there's a $95/share difference. THATS what creates the multi-billion dollar "loss". And, like 10000 other posters noted, this way it all gets whacked at the capital gains rate for the individual stockholder (in this case employee). For an idea of what the market did to Cisco's supposed value, click here.
I want to delete my account but Slashdot doesn't allow it.
But legally, they are a separate entity.
now consider the flip side of the coin if you were to start your own business, and decide to incorporate, depending on what state you are in.... but probably around $400, and you have yourself a corporation. The next step is to raise funds... assuming the you have chartered for X number of shares of your stock, that becomes the corporation's liability. If this corporation of yours go bankrupt, what happens? Are you liable to repay any outstanding debts? No. Because the Corporation was in debt. So if the corporation is what goes bankrupt, and not the stockholders (equity holders, which is similar to a sole proprietor or partnerships who are liable for any outstanding debt that their company has), then shouldn't they get taxed also? A lot of people just talk about the double-taxation problem of corporations, but never seem to mention the benefits a corporation has. just my $0.02
A democracy, even a representative democracy, is a system where the populace directly (direct democracy) or indirectly (representative democracy) by a majority vote controls the decisions made in the government (this isn't a proper defenition, /. love to nitpick).
Almost correct. The part you left out was that the majority rules, the minority loses.
A "constitutional republic" is a system whereby this vote of the public is put to work. It refers to how the country and control of the country is _organized_, as opposed to how it is ultimately controlled. You can have a democratic "constitutional republic" or a non-democratic one.
This is totally wrong. A constitutional republic is a government by which the public elects officials to enact laws. The laws govern the people, the legislators make the laws, and the public elects the legislators. Our republic is definately not "democratic." Read the constitution and see how many types of changes require a two-thirds vote. Simple majority does not always win.
Your personal opinion about what is right and wrong doesn't completly control what you can do.
Yes it does, provided that I do not infringe on someone elses right to life, liberty, or property.
I believe it's a good idea for me to go on a three week murder spree. The majority in this country doesn't. I believe I should be able to spend all my dough promoting and handing out a heavy duty drug to children. For some reason the society tries to FORCE me to spend it elsewhere. It's my money, no?
This is really stupid. For some reason you believe that it's the majority which regulates your actions. This is wrong; we have laws which make the three-week murder spree illegal. Let me say this again: we are governed by laws, not by the majority. Majority rule is mob rule. And in response to "...society tries to FORCE me to spend it elsewhere" -- "society" isn't forcing me to do crap. It's the GOVERNMENT who is using force! Tell me, if I choose to deduct money from my taxes that I pay to the Federal Government becuase I don't like the space program, then what happens? Will "society" come and arrest me? Hell no! The GOVERNMENT will! And if I resist they will KILL ME. Your "society" argument is completely stupid.
This is what it all boils down to. The society as a whole, through the vote of democracy, does.
Wrong again! We are not a democracy, and it's not society making the choices. Most Americans don't even vote, so how could they? It's government legislators who make those choices, and the reason they take money from high income earners is to buy votes by giving said plundered money to the low income earners.
If you don't like what the majority decides, move. Doing that is YOUR democratic right.
Thank goodness I don't like in a democracy and don't have to worry about the tyranny of mob rule which you describe here. Tell me, what happens to the black minority when the white majority decides that the blacks are inferior and should be enslaved? Doesn't paint a very rosy picture of democracy, does it?
It's prefectly possible to move somewhere where you don't need to pay for no space shuttle and where most laws that impede your personal
freedoms are easily ignored.
All laws that impede my freedoms should be repealed. That is, unless they infringe on someone else's life, liberty, or property.
Ofcourse, you will probably have to live with some poverfy around you, a non existant or corrupt police force, bad roads, and some other inconviniences
We already live with those. In fact, big government is responsible for many of those things.
But why not start a business that fixes those problems? I mean, you don't trust some government to fix them do you?
I sure don't. The government corrupts everything it touches. Tell me this: can you name a government program which has succeeded on its goals? (I'll give you some examples of government programs: Social Security, Medicare, Medicaid, the Drug War, the Department of Education's programs).
I don't make the rules. I just make fun of them.
Concering the bit about microsoft and Cisco not paying any taxes.
When an employee exercises an option to buy stock, the difference between the strike price (what the employee pays) and the market price (which is almost always higher) becomes taxable income for the employee and a tax deduction for the employer
Do the figures given for each company, (i.e.) the 1.8 billion in taxes cisco didn't pay, represent the deduction Cisco claimed? Or does that figure include the amount cisco claimed minus what the employee wound up paying? I'm sure both Cisco and Microsoft are royally shafting the government, heck every big business does, but i wonder how represenative the figures really are.
My head hurts now.
--
There are some people that if they don't know, you can't tell 'em.
Q: Whats Big, Evil, Run by a Zombie and is slowly sucking the life blood out of ordinary American Citizens? A: Microsoft. Now wheres Buffy the corporation slayer?