Microsoft and Cisco paid NO federal income taxes

Great Debates
21

As stated above, Cisco didn’t plan this. These were options given in past years for various reasons which employees used this year because of the increase in stock price (which they were, at least in part, responsible for).

If Cisco had planned this, they would have stretched it out over three years; the deduction is almost three times as high as their total tax liability. And, though I don’t have the calculations at hand, I do believe that the total taxes paid by Cisco’s employees on the $7bn could easily be higher than Cisco’s original liability.

I’m sorry, but I don’t think I’d ever prefer a company giving money to the government rather than to its employees.

22

The term “corporate welfare” just means the person using it hates corporations and does not know what he is talking about. Whenever I hear someone using it I ask them and they just go into an anti-corporate tirade. I know what the origin and meaning of the expression is but never see the need to use it and it is hardly ever used correctly. Those who use it do not know what it means. If claiming deductions on your taxes makes you a welfare recipient, then everybody who pays taxes is on welfare. Everybody who owns anything is on welfare because the state lets him keep something they could take from him. How kind of them.

Of course, with the people who use the expression “corporate welfare”, corporations are inherently evil and can do no good. Whatever they do is evil, by definition.

So, If they have some money and distribute it to their shareholders they are evil because they are exploiting their workers. But what if they would somehow give the money to their workers instead? Would that make them good? Of course not, you dummy! They are still evil because they can claim a tax deduction. So what can corporations do to please the guys who say things like “corporate welfare”? The only thing they can do is disappear from the face of the earth by committing mass suicide.

23

Umm, sailor, I have used that term in this thread, and I am hardly anti-corp. I like corps, they are a wonderful driving force for the US economy. But, they should pay their fair share of Taxes, instead of 'bribing" Congress to give them their very own special loopholes to reduce their taxes. We, the wage earner, then have to make up that gap, by getting less tax cuts, or higher taxes. True, if we tax the corps, they will pass it on, but not always to US. Sometimes the shareholders get less $, sometimes the CEO get only 4million, instead of 16, sometimes they pass it on to their overseas customers. The other part of 'corperate welfare" is porkbarrel spending on needless stuff, so that some congresscritter can show how much $$ he brought in Federal funds to HIS states economy, $$ that WE have to pay.
Yes, individual TP’s ask for deductions from Congress, too. But Congress very, very rarely passes a special Tax code deduction for a single individual Taxpayer, as they have several times for Corps. (Witness the Special one time exemption for certain family owned wineries from the estate tax- that only applied to Gallo, and saved them 10’s of millions). That sort of stuff is just plain wrong.

24
      • It does not suprise me that rich companies pay little or no income tax. Laws are made by politicians, who are often generally wealthy people, and they always leave some way to take advantage of circumstances. If you’re lucky, it’s relatively minor. Those in power tend to give themselves advantages, no matter what kind of government you’d care to use as an example. ~ What amazes me is that voters will believe it when (a wealthy, well-connected candidate) says he wants to get in office so he can “soak the rich”. - MC
25

Danielinthewolvesden. I did not think I would need to explain the sarcastic tone of my post and, of course, in no way did it refer to anything you have posted. I just wanted to clarify that.

26

Hey, you’re catching on! :wink: Okay, here’s the deal: People actually on welfare have been vilified in this country. Those of us who actually think that perhaps the villans are more the ones who actually have the power than the powerless have adapted the use of the term “welfare” to other realms to make note of the fact that other people also effectively receive subsidies from the government (or society at large). Sometimes these subsidies take the form of actual direct subsidies and sometimes they are in the form of tax breaks…but they are still subsidies! And, often, these subsidies are “purchased” with substantial donations to the campaign coffers of those politicians who are willing to support them. Get the picture?

By the way, another example is SUVs…Everyone who owns an SUV is, IMHO, on welfare because there are numerous studies that show that people are not paying the social cost of owning these vehicles (i.e., there are external costs not borne by the buyer or seller). [Actually, this is true of automobiles in general, but since most people own one, they are cross-subsidizing each other and the net subsidization largely cancels out…although the bad effects on the economy don’t. Of course, people like kimstu who don’t own a car are subsidizing us all!] Personally, I would rather be subsidizing someone who is poor and trying to feed their family than some middle/upper class person who has the money to afford one of these road hogs. But, hey, that’s just me!

Cool…then I wouldn’t even have to go into work tomorrow! :wink: More seriously though, the point is one of balance. When things are very out-of-balance, one tries to push in the direction to re-equilibrate the balance. My belief is not that corporations are all evil but that they have too much power in our society at present. Since this is barely acknowledged in society at large, we might end up being a bit extreme in our language in order to try to make a point. If I was in living in Sweden, I might have to seriously consider where I stand on the whole issue of the welfare state vs. private/corporate enterprise. However, here in the U.S., I don’t because the spectrum is so freakin’ skewed!

27

>> Sometimes these subsidies take the form of actual direct subsidies and sometimes they are in the form of tax breaks…but they are still subsidies!

Ok, you are making my point. To people like you everybody is on welfare because the government could tax you at 100%, so, since they only tax you at 40% it means you are receiving a “subsidy” equivalent to the 60% you are graciously allowed to keep.

I see it very differently. I see a tax break as letting me keep what I made in the first place and welfare as money given to people who did not earn it. If you cannot see the difference… what can I say? It’s pretty clear to me.

28

jshore: actually, we the car driving public are subsidising the mass-transit public. Mass transit toll payers pay as little as 10 cents on the dollar, whereas drivers paid some 60>70 %. But most of those ‘subsidies’ are in the form of roads built by taxes. Gasoline taxes, etc, pay for a large % of those roads. However, some % does come out of the general fund- but this is not an unfair “subsidy” by the non-car driving public, as the mail trucks, police cars, fire engines, delivery trucks, grocery vans, and ambulances all use the roads also, and non-drivers use these services. I have heard your idea bandied about a lot, but it has been extensively refuted.

As for “unfair corp subsidies”, I say they are only 'corporate welfare" and thus unfair when they are a special subsidy to just one company in return for its political $.

29

Define unfair…

Define anything ‘fair’ about the tax system.

smiles

30

There certainly are instances of ‘corporate welfare’. They involve direct payments to corporations for political reasons. The bailout of Chrysler comes to mind. Land grants to railroads. Extremely cheap land given to corporations with political pull. Farmers allowed to farm public land at a heavy discount.

Perhaps one of the most common forms of ‘corporate welfare’ today involves professional sports. These teams are often given free buildings or property, or are allowed to lease public facilities for $1/yr in order to keep the team in a certain city.

Of course I oppose this stuff. I also oppose governments that give directed tax breaks to corporations in order to manipulate the economy. And guess what? Democrats are easily as guilty as Republicans on this score, and perhaps more so.

The worst politicians for this stuff are the ‘technocrats’, those people who think they know what’s best for us, and use government to enforce it. Al Gore is at the top of this list. Technocrats believe in using regulatory reform and the tax code to drive the economy in the direction they want it to go. Al Gore would like to tax auto makers who make certain kinds of vehicles. He would like to give tax breaks to high-tech companies and alternative energy companies. He wants farmers to have tax breaks, but not oil companies. And the list goes on.

The tax code should not be used to manipulate the economy. We need government revenue, and we need taxes to provide it. But those taxes should be evenly distributed, causing as little distortion as possible.

31

The free building/property happens all the time with sports, with businesses. It is the States that compete for the revenues brought in by these businesses and sports teams. They aren’t giving it away, they are investing. Sometimes they end up ahead, sometimes they lose, but competition is fierce and if they don’t provide the incentives, another state will. That is just free enterprise.

Dispite the beliefs and claims to fame, I don’t personally buy into the theory that the policies of the federal government have all that much to do with the economy. The economy has a natural swing up and down and is much more affected by businesses and the world economy than by government policy. Politicians will take credit for it in good years, blame it on the world economy in bad years, but really, they have pretty little to do with the economy.

Now Alan Greenspan (government appointee) HE is like the God of the economy. j/k - a little. He speaks and markets tumble. He sighs and banks raise their rates. He has a little too much power. Thank goodness he isn’t egocentric!

32

It’s funny how things change. Welfare 30 years ago was a good thing, a word with positive connotations. Now it has become a dirty word, an adjective that will smear anything it is attached to. The same people who want welfare programs will use the word “welfare” to smear corporations. Just an observation on the dynamics of the language.

Well, at least I hope we agree a tax break and welfare are different things.

Whether the government should use taxes to promote certain things and discourage others is another subject altogether. I think the mere existance of taxes means there will be an incentive to do what is not taxed and to not do what is taxed. I do not think an aseptic government can exist. The question would be one of degree. Up to what point should a government intervene to promote certain behaviors or to discourage others. On the one hand I would like to see as little intervention as possible. At the same time I prefer that the government encourage and discourage rather than prohibit and mandate. I see where the government, as representing the people they govern, could and should promote or restrict certain conducts.

I do not have a specific opinion on things like stadium deals. Initially I would oppose such things but if a city thinks it will bring business and they want to do it… The only thing I would do is put restrictions and controls to prevent abuses.

Regarding the example of Chrysler, if I am not mistaken, the government did not give them any money, what they did was guarantee a loan for a number of years and, in fact, Chrysler repaid the load ahead of schedule.

The type of welfare I would oppose is all the government help to farmers or homeowners after bad weather. Bad weather should be expected periodically and you should have insurance. If you cannot afford insurance doesn’t that tell you something? It tells me you should not be in that position to begin with. The government should not be in the business of helping rebuild after a disaster. It only encourages the same stupid conduct that caused the disaster in the first place.

33

It is NOT ‘investing’, and it certainly isn’t ‘free enterprise’. When the government gets involved in trying to pick winners and losers in the economy (and then manipulating taxes and regulations to try and force that outcome) they may call it ‘investing’, but all they are doing is diverting resources from where the ‘free enterprise’ system would like it to go, to where the government wants it to go.

And I’ve got news for you - the government is TERRIBLE at this kind of ‘investing’. The whole premise that some politician is better qualified to decide which industry is a ‘better investment’ than is the free market. And of course, the free market is made up of people who may have spent their lives in industry and are willing to invest their own money.

I could go on for hours about some of the horrendous failures that have resulted from government ‘investing’ in what they thought were the big important industries of tomorrow. And even when the industry they sponsors grows it might have displaced an even better one that we’ll never know about because the government mucked about with the market.

As for sports teams - PLEASE. The only ‘investment’ here is that a politician sees a ‘feel good’ issue that he can make political hay with at our expense. “LOOK AT ME! I SAVED YOUR TEAM! VOTE FOR ME!” is the only level these guys are thinking at. Oh sure, they always manage to come up with studies showing how much economic growth the team will bring to an area, etc.

I’ve seen a number of those ‘studies’, and you’ll never find a worse set of fabricated figures. They do things like add up ticket sales to show money coming into the economy, without considering that the money would most likely have been spent elsewhere in the local economy if the team didn’t exist. They show all the money coming in, while ignoring the money going out (teams pay leagues for advertising, to prop up weak franchises, huge salaries go to superstars who don’t necessarily live in that city, etc.)

If a sports team is economically viable, let it support itself. If the people of the city care that much about their team, let them organize and hold fund-raisers. But keep your damned hand out of my wallet to support something I have no interest in.

Sports subsidies are absolutely vile, and I can’t understand how anyone could support them. Conservatives should be against them on general principles. Liberals who believe in big government should STILL be against them on social grounds - how can you possibly justify giving tax money to the wealthiest people in our country (pro athletes and team owners) while there is still poverty in the streets? Isn’t this counter to the principles of progressivity? Or do social concerns go out the window when we’re talking about OUR TEAM?

The average person can’t even afford to go to the games anymore because the ticket prices are too high, and local teams often black out their own games to force more people into the stadium. That’s gratitude for you.
Oops. I’ve been ranting. Sorry.

34

That’s not exactly the point I had in mind when I said a tax break could sometimes (often?) be considered a “subsidy”. I think “corporate welfare” is somewhat of an ill-defined term, but to me an example is when the government shows favoritism toward a certain industry or company or whatever, and for reasons that cannot be justified by some sort of analysis of an externality. It is most horrific in the case when this favoritism seems to be connected most strongly with campaign donations rather than any defensible public policy goal.

I think one can also classify as corporate welfare some “tax shelters” which may not be so preferential toward one particular industry or company but which allow companies to not pay their fair share of the tax burden…Of course, the problem is defining what that fair share is. For some of you, I guess you would say it is $0. I happen not to think so, although I must admit that I would have to research the issue more before I could propose some reasonable criterion. (I envy libertarians…The answer is always so easy! I do see the appeal of libertarianism in this regard…It is sort of like religion.)

By the way, a good resource I found on the web on corporate welfare is http://www.corporations.org/welfare/ and includes links to resources on both the Left and libertarian ends of the spectrum! I haven’t had the time to look at it myself (I can’t spend all my time doing research for the SDMB!) and I am sort of curious myself as to what they defined as corporate welfare to come up with their figures for the dollar amounts…That’s my way of saying “Use at your own risk.”

35

Not to hijack this thread too far afield, but I do have to respond to this. First, I concede that public transport is subsidized to some degree too but your “as little as 10 cents on the dollar” being paid for by riders is indeed the way low end of the scale. Here is a quote from britannica.com (the encyclopedia people):

Mass transportation fares typically are set below the level necessary to cover full costs, and the difference is made up by government subsidy intended to create the social benefits produced when people use transit. In the United States, revenues from passenger fares typically pay from 10 to 70 percent of operating costs, the lower number representing lightly used suburban services and the higher number reflecting intensely used downtown corridor services. The other 30 to 90 percent comes from state, regional, and local subsidies. Limited federal operating subsidies were made available beginning in 1974, allocated in proportion to the scale of each city’s transit operations. The federal role in providing operating subsidies has been declining, and state and regional governments, along with transit riders (through increased fares), have made up much of the difference.

By the way, one implication of where it costs more or less is that there are huge economies of scale involved, so that subsidization could be a lot less if we subsidized cars less and thus had higher usage of public transit. Here in Rochester, the buses I’ve taken don’t run at nearly capacity but they can’t run them less often without it becoming ridiculously inconvenient.

And, while I don’t have numbers on your claim about what drivers pay, I am willing to assume it is perhaps somewhere in the ballpark you quote for direct subsidies. However, there are huge, huge externalities associated with automobile use, in terms of environmental costs, deaths and injuries, traffic congestion, etc. While these are admittedly harder to quantify, attempts have been made and they are summarized by the Sierra Club at http://www.sierraclub.org/sprawl/transportation/subsidies.asp (in terms of subsidies per gallon of gasoline). Now, you may claim Sierra Club is a biased source, but note that the numbers come from a variety of places including Congress’s Office of Technology Assessment (OTA). One of the other sources is also easy to get to on the web and has a plethora of info: http://www.vtpi.org/0_autode.htm.

Still another piece of evidence comes from the price of gasoline in Western European countries, where they have made at least some attempt to price it to recover some of these external costs. When I was in Denmark this summer, gas was $4 per gallon (and that was with an extremely strong dollar that made Denmark surprisingly cheap in general, especially considering its reputation). Now, admittedly Denmark is a more compact country, which you might argue could allow them to aim for a price higher than would be justifiable here. On the other hand, Denmark, unlike the U.S., is not dependent on foreign oil…They are a net oil exporter, as I was surprised to learn from my guidebook!

36

Sam Stone, I agree with you that the government is not a good investor. if you read my postings in other threads about this topic you will see that I have always said this.

Jshore, as you say, “corporate welfare” is a vague term and it is used as a pejorative by people who do not have any clear idea of what they mean.

Again, to say tax breaks by the government equal welfare is silly. Welfare is someone who does not pay taxes getting money from the government. Someone who pays taxes getting a tax deduction does not equal welfare in my book. We can argue about whether the governmen should or should not use taxes to influence the economy and certain conducts. That is a matter of opinion. The problem I see is that those who are most vocally opposed to “corporate welfare” (without even having a clear idea of what they mean) are the ones who most support welfare and other social programs.

If you are a taxpayer and you get deductions are you on welfare? If you bought a house and deduct the interest you pay on your mortgage, does that make you a welfare recipient? I think that is nonsense. We can discuss whether that deduction should or should not exist. It is unfair to people who rent but the government has decided to promote home ownership by this deduction. We can discuss whether it is the business of the government to promote certain activities over others but this is not welfare.

Corporate deductions are not welfare. They are there because the goverment wants to influence corporate behavior. Again, we can discuss whether they should or not, but it is not welfare.

The expression “corporate welfare” could only be appropriately applied to a corporation that received in subsidies more than it paid in taxes and declared a dividend to its shareholders. I do not know any such case but this would be the equivalent of a person who is on welfare.

And if you want to talk about business subsidies, agriculture would be the place to start as this sector is completely distorted by government intervention. I would favor getting rid of all subsidies to agriculture. Let the free market work just like any other sector.

37

Well, since it is an ill-defined term, perhaps each of us can define it as we see fit. (Actually, I think original credit for the term goes to Robert Reich, Clinton’s Secretary of Labor in the first term…and perhaps the only prominent cabinet member who could realistically be called a “liberal” IMHO.)

However, I don’t see your definition as being as analogous to the traditional usage of the term “welfare” as you do. For one thing, does that mean that someone who is on welfare for a time in their life but is earlier or later working and paying taxes is not really on welfare? Conversely, does a company that ends up with a tax REBATE one year (as I think some do) but pays taxes some other years count as being on welfare that one year? What about if the company pays very little taxes compared to the public services it uses or the pollution it causes or whatever? It just ain’t as cut-and-dry as you make it. (I am willing to admit, on the other side of the coin, that these sorts of fairly precise numbers I see being bandied around by those against corporate welfare are a little hard to interpret given the ill-defined nature of the term.)

I haven’t thought about ag policy very much, but I would have some tendency to disagree with you, at least in your extreme view on this. There are some rational arguments to be made to try to stabilize a market that can be as volatile as agriculture, particularly if you don’t want farmers to go out of business just because of a run of a few years of weird weather or something.

38

>> There are some rational arguments to be made to try to stabilize a market that can be as volatile as agriculture, particularly if you don’t want farmers to go out of business just because of a run of a few years of weird weather or something

You could make that same argument for a hundred other sectors that are as unpredictable. And yet the market seems to work. What is so special about agriculture?

(Note: answering “well, you can’t live without food” is a dumb answer)

39

sailor…Well, to be honest, I am not particularly wedded to me view on this. (As I noted, ag policy is something I’ve just never really thought about that much.) But, what other sectors are there that can have prices fluctuate by factors of 2 or 3 in a season, which require a considerable investment of capital…and in which a considerable number of the producers are small family businesses that may not be able to afford this type of volatility? I am not saying there aren’t many others…I just couldn’t think of any off the top of my head.

40

yeah, agricultural policy would be an entirely new thread. My point is that there are other sectors where the samll family business has been displaced by the big corporation and nobody had a problem with that and other sectors of high rik where they handle the risk themselves by just assuming it, or buying insurance or selling futures or whatever.

if you have a small family owned company which sells widgets abroad and you cannot assume the risk of currency fluctuations, you can buy insurance or choose not to sell abroad or whatever but the government isn’t going to insure your risk as well it shouldn’t.

If the government insures your risk, the result is people do risky things without regard for the risk, knowing it will be covered.

There is risk in every investment and the reward is proportionate to the risk. That is capitalism. I would let agriculture follow the free market.

But, as I say, that would be an entire new thread.