Effective tax rates UPS and FDX
 

Interesting article on Effective tax rates paid by large corporations. Seems like FedEx has a much better rate of return on it's lobbying efforts than UPS. While I do NOT support the authors boycott approach, I do find the concept of a "loophole free", lowering of the corporate tax rate worthy of consideration, but bottom line: Changes in the corporate tax rate without a concomitant effort at reigning in spending, (IMHO) will not get us out of the woods. The article does offer some interesting insights on how the game is played, so I offer it up for your consideration/comment.

To emphasize my point about the need to have a more comprehensive approach, the author suggests that taxpayers are loosing out on 71 billion in tax revenues....but consider this:
If my math is correct, 71 billion of missed tax revenue, when compared against a debt in excess of 15 trillion,...is a "one half of one percent" solution to the problem........,now 71 billion is nothing to sneeze at and everything helps, but as the numbers suggests, there is a much greater problem, aka the 15 trillion pound gorilla.



71000000000/15000000000000=.00473333x100=.47% or less than one half of one percent.

Here is the link for the article.

What You Can Do About U.S. Corporate Tax Loopholes - Seeking Alpha

Also...check out the Debt clock at:
U.S. National Debt Clock : Real Time

It is not the governments money. We are not missing out on 71 billion, any more than we are missing out on the 100 billion associated with the home interest deduction. Taxes are just another expense to a business, like energy, equipment or wages. If the cost to the business goes up, the cost will eventually be transferred to the customer. What does that do to the rest of the economy.

I am all in favor of lower rates and eliminating loopholes. But lets not forget subsidies either. Having the government pick winners and losers only results in the taxpayer getting stuck when the government bets on the wrong loser.

Spending has never decreased after any pledged tax increase. If the government only grows by 6% next year, the lying polititians in Washington will claim a 2% net spending cut.

Always remember, other's tax deductions are "loopholes"; yours are a god given right.

Not sure where they get their numbers. This is straight out of FedEx's most recent 10K filing:

Our effective tax rate was 35.9% in 2011, 37.5% in 2010 and 85.6% in 2009. Our 2011 rate was lower than our 2010 rate primarily due to increased permanently reinvested foreign earnings and a lower state tax rate driven principally by favorable audit and legislative developments. In 2011, our permanent reinvestment strategy with respect to unremitted earnings of our foreign subsidiaries provided a 1.3% benefit to our effective tax rate. Our total permanently reinvested foreign earnings were $640 million at the end of 2011 and $325 million at the end of 2010. Our 2009 rate was significantly impacted by goodwill impairment charges that were not deductible for income tax purposes.

Here is the paragraph from UPS' most recent 10K filing:

Our effective tax rate declined to 34.1% in 2011 compared with 36.9% in 2010 as a result of several factors, including the change in the tax status of a subsidiary, changes in deferred tax asset valuation allowances, and the relative proportion of taxable income in certain non-U.S. jurisdictions, among other factors.

Yeah, but facts aren't very sensational.

I used to think Seeking Alpha was pretty insightful.

Contacted the author
 

Contacted the author. He claims the rate is reflective of a three year average based on the following report dealing with the issue.

http://www.ctj.org/corporatetaxdodge...gersReport.pdf

My main intent was to illustrate that corporate tax reform, regardless of how you feel about it, or how you feel about corporate taxes in general, would not have the "bang for the buck" or impact that some would suggest....at least when compared (as a percentage), to the total debt.

The very title of the report shows how unbiased it is, "Tax Payers vs. Tax Dodgers" indeed. The report is only about corporations, but if it was for individuals they would have to include people taking a home mortgage deduction or deducting their union dues with the "Tax Dodgers".

Our tax policies at the various government levels seem more about empowering the agencies with the power to tax than funding the government. Of course, they are aided and abetted by an industry that benefits from its complexity and impenetrability.

Those responsible are Republican and Democratic politicians who have sold their souls to the devil. They create drama publicly arguing over side issues as they make back room deals with big corporate donors. There is a reason Obama is called the Wall street puppet. Both sides of the aisle are the same.

They insist on being called "The Honorable" Mr. or Ms. Scumbag because they need to hear someone say it. Apparently some believe it if it's repeated often enough.