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Warren writes: "Huge corporations hire armies of lawyers and lobbyists to create, expand, and protect every last corporate loophole."

Senator Elizabeth Warren says the tax code favors the wealthy. (photo: Reuters)
Senator Elizabeth Warren says the tax code favors the wealthy. (photo: Reuters)


The Tax Code Is Rigged

By Elizabeth Warren, Elizabeth Warren for Senate

22 August 14

 

uge corporations hire armies of lawyers and lobbyists to create, expand, and protect every last corporate loophole.

That's how we end up with a tax code that makes teachers and bus drivers and small business owners pay, but that allows some huge American corporations to make billions of dollars and not pay a single dime in taxes.

Simply put, the tax code is rigged.

Apparently, even this rigged game doesn't go far enough for some corporations. Those companies are taking advantage of a new move: a loophole that allows them to maintain all their operations in America, but claim foreign citizenship so they can cut their US taxes even further.

That means American companies can hire a bunch of lawyers and Wall Street bankers, fill out some paperwork, and dodge their US taxes.

Tax lawyers call this process a "corporate inversion." But don't let that bland name fool you – these companies are renouncing their American citizenship, turning their backs on this country, simply to boost their profits.

If a person did that, we'd call them a freeloader and insist that they pay their fair share. And that's exactly what our tax laws do for people who renounce their American citizenship. But when corporations do it, they don't suffer any consequences at all.

Forget whether corporations are people – in this corner of the tax code, we're treating corporations better than people.

That's not right. That's why I've teamed up with Senator Levin and more than a dozen of our Democratic colleagues to introduce the Stop Corporate Inversions Act. The bill is simple: it allows American corporations to renounce their citizenship only if they truly give up control of their company to a foreign corporation and truly move their operations overseas.

In Massachusetts and across the country, we invest in public education to produce millions of skilled workers. We invest in infrastructure, in our roads and bridges and ports, making it easier for our companies to move products to market. We invest in scientific and medical research, giving our companies access to the most innovative and cutting-edge technologies.

America is a great place to do business because of the investments we have made together. We invest together to make America a place where any kid will have a chance to come up with an idea and turn it into the next great American company.

The companies that are pursuing these corporate inversions know all of this. That's why they are not actually leaving America behind. They just don't want to pay for it.

Our achievements aren't magic. They didn't simply happen on their own or through dumb luck. America works – our government works – our democracy works – because we all pitch in and do our part to build the things that none of us can build alone. The things that give everyone a chance to succeed.

We've had enough of rich corporations taking whatever they want and expecting everyone else to pick up the pieces. The time for freeloading is over.

e-max.it: your social media marketing partner
 

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-102 # Roland 2014-08-22 12:22
When she says “so they can cut their US taxes even further…. That means American companies can hire a bunch of lawyers and Wall Street bankers, fill out some paperwork, and dodge their US taxes.” Does this sound very misleading to anyone else?

To me, she seems to imply, that the companies want to cut the taxes on what they earn in the US. In actuality it will only cut their taxes on earnings created overseas. This is an advantage overseas companies have. It lowers their cost of doing business outside the US. Why does Warren want to put US companies at a disadvantage overseas? Is it just populist rhetoric to enhance her image with the left?
 
 
+29 # WestWinds 2014-08-22 16:02
America is the largest open market in the world with 316 million consumers. The way the tax codes have been rigged, any non-US corporation operating outside of the US pays 2% tariff to sell their goods into the US. Yet, American companies trying to sell outside the US into other countries pay a 22% tariff on their consumer goods.

To be registered as an outside the US company and be eligible for only 2% tariffs on their consumer good, while actually not spending anything to move their companies offshore or overseas, allows them to take advantage of the 2% tariff while having no outlay to move or pay any US taxes while actually being here is buttering both sides of the bread in an end run move.

Sen. Warren is correct in that American corporations should only be allowed to renounce their citizenship if they truly give up control of their company to a foreign corporation or to become a foreign corporation when actually moving their equipment and operations overseas. Otherwise, their renunciation is a legal fiction.

This keeps it crisply clear as to who is entitled to take advantage of the 2% tariffs and which company owes US taxes.
 
 
-21 # Roland 2014-08-22 16:35
Tariffs aren’t on all products and I believe (not sure) that they aren’t on goods coming from countries where we have trade agreements. I don’t think tariffs affect the inversion equation. That isn’t what Walgreens and others are doing. If the product is made in the US, regardless of whether it is a foreign company or a US company, there isn’t a tariff. If we make the product in another country and sell to that country there isn’t a tariff. Most companies do not seem to be considering moving their stores or manufacturing overseas. They would be entitled to the same benifits as foreign companies with operations in this country.
 
 
+27 # Nominae 2014-08-22 18:48
Quoting Roland:
When she says “so they can cut their US taxes even further…. That means American companies can hire a bunch of lawyers and Wall Street bankers, fill out some paperwork, and dodge their US taxes.” Does this sound very misleading to anyone else?


Sen. Warren is simply making statements of FACT that are part of Public Record.

You yourself can verify those statements of FACT by *accessing* those very same Public Records.

Whether or not you personally *like* those facts is not a matter of public discussion unless you are on fbook.

Just because you may *unaware* of a fact does not make the FACTS derelict - more likely the commenter.
 
 
+13 # kalpal 2014-08-23 12:34
There are no corporate tax loopholes that were not bought and paid for by some rich twits who have access to a lobbying firm that knows who exactly is willing to be bought and to renege on his oath of office and his promises to his constituents.
 
 
-74 # moafu@yahoo.com 2014-08-22 13:01
Elizabeth,
A a Right Wing Christian, I would vote for you -- if you carried your logic to its proper end....
In 1913 the corporations violated the U.S. Constitution by
A. implementing a national bank and removing the authority of minting money from Congress.....
B. Implementing a 'graduated income tax' scheme which is specifically prohibited in the U.S. Constitution.

You should be calling for elimination of those to wretched and destructive agents. THEN we will see change we can believe in.....

Do you have the courage?
 
 
+50 # Ray Kondrasuk 2014-08-22 13:52
@ moafu...

"...which is specifically prohibited in the U.S. Constitution...."

Cite, please.
 
 
+13 # kalpal 2014-08-23 12:38
Quite often I have been assured that the federal government can't levy or collect taxes and that the constitution says so in no uncertain terms. Where it says so they can't show me and why the the SCOTUS is also unable to locate these explicit restrictions is also baffling them.
 
 
+3 # FDRva 2014-08-24 01:20
I am a Christian, too, like Alexander Hamilton, Franklin Roosevelt and Liz Warren.

And the Federal Reserve is not a national bank--like Hamilton's--tha t the Founders' adopted. That would be a vast improvement. (And very Constitutional.)

The Fed is a privately owned central bank.

Big difference, constitutionally.

And the Wall Street-dominate d Fed's stockholder banks seem to control the thinking of both wings of both parties.

I have hope that either the Tea Party element or the Occupy Wall St. element will break free of this Wall Street-media-ru n debate.

And maybe do something useful.
 
 
+4 # FDRva 2014-08-24 01:23
Glass-Steagall comes to mind.
 
 
-32 # James Marcus 2014-08-22 14:19
A Joke. The ENTIRE GOVERNMENT is rigged!

and The IRS is furious. Pending 'extinction'!!
When you are a Genuine, Fearless, Complete Fraud, Now, DIGITALLY ENHANCED/EMPOWE RED,
....why bother with 'collections'?
Digital Dollars' make collection, Book-Balancing (Barf) utterly unnecessary!
The IRS, fairly expensive, and now Digitally Superseded, will go the way of all Unneccessities. The Trash.
But Their Henchmen will be seeking 'Further Work'
:-0
 
 
+6 # kalpal 2014-08-23 12:39
Come back when you learn the English language,
 
 
+52 # Peace Anonymous 2014-08-22 14:34
Take it a step further. Local police are becoming a military unit, paid for by the taxpayers, to protect the wealthy from those who used to live in a democracy. Rights and freedoms are being curtailed. Incarceration rates are going through the roof. The media has turned into a propaganda machine. All the pieces all fit.

Corporate America has used the CIA and the military again all paid for by we the people to gain control of much of the world's wealth. The only country left - your own.

You're right Elizabeth the game is rigged.
 
 
+1 # ritawalpoleague 2014-08-22 17:13
Yes, Peace Anonymous and Elizabeth Warren, the game is most certainly rigged. However, Elizabeth W. just disappointed me immensely, with her indication herein that the U.S. is still a democracy. NOT! However, I will not assume that Elizabeth W. actually said that. It is possible that she was misquoted, etc..

Vital that we investigate each and every candidate very carefully, boring as that may be, and cast a vote for only those who have walked the walk for some time, and not merely talked the talk. Sorry to say, any pol. who actually believes that this country is still a democracy will not get my support and/or vote (ha, ha, ha, silly to imply here that my vote or any vote is actually counted), because said politician(s) will obviously not do what it takes to lead us out of the egregious mess we are now in, and fight effectively to OCCUPY LIBERTY and JUSTICE FOR ALL, and...

UNDO THE EVIL COUP !
 
 
+28 # Robbee 2014-08-22 14:47
we have government by corporations, of corporations and for corporations. corporations average effective tax rates of 12%, yet their party refuses to lower tax rates to 12%, across the board, and eliminate loopholes that lobbyists paid so much to buy. we have the best government money can buy, yet, by renouncing their citizenship corporations can always find a desperate government that will tax them less. we cannot escape these welfare queens, fleeing profits they earned here, to to banana republics, unless we try
 
 
-28 # Roland 2014-08-22 15:28
Again, they are not fleeing taxes on profits they earned here. They are getting a better tax rate on the profits they make overseas. If they like, they can then bring these profits back here to invest without being penalized. The same way foreign companies can.
 
 
+21 # Philothustra 2014-08-22 16:38
This discussion is about US corporate inversion, where US corporations create a storefront in a low tax country like Ireland and cut their total tax bills.

Where a multinational, stateless octopus corporation keeps its money is irrelevant given the countless offshore schemes at its disposal....
Enron had over 800 Caymans accounts....
They count profits overseas in low-tax venues and costs domestically. Study up on it, please. Read Nicholas Shaxson's
TREASURE ISLANDS and look at the record for US corps. like GE, Boeing, Verizon...

http://www.reuters.com/article/2014/02/26/us-usa-tax-corporate-idUSBREA1P04Q20140226
 
 
+20 # Nominae 2014-08-22 18:52
Quoting Roland:
Again, they are not fleeing taxes on profits they earned here. They are getting a better tax rate on the profits they make overseas. If they like, they can then bring these profits back here to invest without being penalized. The same way foreign companies can.


Dude, please, you embarrass yourself.

Look up the legal definition of "Corporate Inversion", and then get back to us.
 
 
-12 # Roland 2014-08-22 22:01
See the definition of Corporate Inversion I supplied below.
 
 
+7 # bigkahuna671 2014-08-23 12:33
Sorry, Roland, not just on profits they make overseas but, in the end, on all profits. As a foreign entity, they can avoid many of the hassles "real American businesses" have with our tax codes. However, much of what Sen. Warren refers to is the abuse of our tax system that began, not with the implementation of a national bank, which happened with Alexander Hamilton, but with Ronald Reagan's mindless tinkering that eliminated nearly all tax breaks for the middle and lower classes while introducing a plethora of such breaks for the wealthy and for corporations. Since then, corporations and the wealthiest 1%ers have hired a multitude of lobbyists who, like the plagues that descended upon Egypt, have descended on our nation's capitol to create a tax code that no longer taxes fairly, but inhumanely, allowing the wealthiest families and corporations to nearly avoid any taxation whatsoever. And foreign companies do not avoid taxes as American companies do, their countries tax them to the hilt in a variety of ways, not just income taxes.
 
 
+2 # karenvista 2014-08-24 17:02
Quoting Robbee:
we have government by corporations, of corporations and for corporations. corporations average effective tax rates of 12%, yet their party refuses to lower tax rates to 12%, across the board, and eliminate loopholes that lobbyists paid so much to buy. we have the best government money can buy, yet, by renouncing their citizenship corporations can always find a desperate government that will tax them less. we cannot escape these welfare queens, fleeing profits they earned here, to to banana republics, unless we try



The U.S. market should be closed completely to any U.S. corporation that uses this corporate inversion loophole.

Walgreens tried it and got such backlash from customers (including me) that they abandoned the scheme. (Or at least have said they did. We'll have to confirm that.)

Do not buy anything from any company that pulls this trick. We can close the market to them without the help of our government lackeys who would never pass legislation against it anyway.

Let's just do it!
 
 
0 # bingers 2014-08-24 19:03
Quoting Robbee:
we have government by corporations, of corporations and for corporations. corporations average effective tax rates of 12%, yet their party refuses to lower tax rates to 12%, across the board, and eliminate loopholes that lobbyists paid so much to buy. we have the best government money can buy, yet, by renouncing their citizenship corporations can always find a desperate government that will tax them less. we cannot escape these welfare queens, fleeing profits they earned here, to to banana republics, unless we try


Guess why they are called lobbyists? The founders disallowed the practice because it was (and is) nothing less than outright bribery, so the crooks met in hotel lobbies to do their dirty business. Legalizing the practice was one of the worst mistakes the government ever made.
 
 
+20 # Floe 2014-08-22 14:58
I admire Elizabeth Warren for at least highlighting the crookedness not that it goes far enough but her heart is in the right place. It seems that from every vantage point, we are witnessing the self-immolation of Capitalism. Hoorah.
 
 
+29 # kevenwood 2014-08-22 15:06
"Those companies are taking advantage of a new move: a loophole. . ."

Completely agree with this article, but not exactly "new". At least several years ago, 60 minutes aired an episode on exactly this issue. They interviewed Congressman Lloyd Doggett, who spelled this whole thing out. A lot of companies in Houston, for example, are merely setting up a mailbox and moving their company to a foreign govt to avoid paying US taxes.

It's as unpatriotic as it gets.

I suggest an advocacy group with the resources develop an app and website that identifies, calls out, and offers their contact information to the public, of all of these cheats. Some don't sell direct to consumer, to be sure, but those that do could really be hurt by this, just like Walgreens was. Lo and behold, Walgreens reversed their decision to do this, so we can help change this.
 
 
-23 # Roland 2014-08-22 15:34
Still don't think the people here get this. From Investopedia -Definition of 'Corporate Inversion- Re-incorporatin g a company overseas in order to reduce the tax burden on income earned abroad. Corporate inversion as a strategy is used by companies that receive a significant portion of their income from foreign sources, since that income is taxed both abroad and in the country of incorporation. Companies undertaking this strategy are likely to select a country that has lower tax rates and less stringent corporate governance requirements.
 
 
-5 # Ray Kondrasuk 2014-08-22 15:55
I think Roland has a point here, when Warren writes

"...Those companies are taking advantage of a new move: a loophole that allows them to maintain all their operations in America, but claim foreign citizenship so they can cut their US taxes even further..."

Warren could be clearer; by "their operations in America" does she mean sales and profits? Is Roland right to protest that perhaps "operations" means management/admi nistration but not revenue?

More information, please.
 
 
+8 # Philothustra 2014-08-22 16:39
Where a multinational, stateless octopus corporation keeps its money is irrelevant given the countless offshore schemes at its disposal....
Enron had over 800 Caymans accounts....
They count profits overseas in low-tax venues and costs domestically. Study up on it, please. Read Nicholas Shaxson's
TREASURE ISLANDS and look at the record for US corps. like GE, Boeing, Verizon...

http://www.reuters.com/article/2014/02/26/us-usa-tax-corporate-idUSBREA1P04Q20140226
 
 
+1 # FDRva 2014-08-24 01:37
Sen. Warren is morally right, here.

But Pres. Obama's unseemly & long-standing relationship to Wall Street heavy-weights, like Goldman and Soros Fund Mgmt. undermines Sen. Warren's point.

If Pres. Obama had to run for reelection in 2016--I suspect Liz Warren would challenge him for the Dem nomination.
 
 
-2 # FDRva 2014-08-24 01:43
How ironic that financial friends of President Obama want Liz to challenge Hillary.

Per the Chinese curse--we live in interesting times.
 
 
+15 # Nominae 2014-08-22 18:54
Quoting Roland:
Still don't think the people here get this. From Investopedia -Definition of 'Corporate Inversion- Re-incorporating a company overseas in order to reduce the tax burden on income earned abroad. Corporate inversion as a strategy is used by companies that receive a significant portion of their income from foreign sources, since that income is taxed both abroad and in the country of incorporation. Companies undertaking this strategy are likely to select a country that has lower tax rates and less stringent corporate governance requirements.


Like the U.S. Tax Code, Sir, what Corporations are *supposed* to be doing, and what Corporations *ARE* doing are always two different things.
 
 
+17 # Carol R 2014-08-22 16:25
Corporations are the true "freeloaders". Their destruction goes much further, and costs the whole country much more than the poor schmuck who gets a little more in food stamps or a meager welfare check. Why does corporate greed continue merrily on its path with hearty approval from the GOP? The GOP constantly complains about the "greedy, lazy" poor people when nothing is said about the true 'freeloaders' who work to destroy our whole economy so that they can get more $$$$ by any loophole possible.

Where is the corporate conscious? Where is our Congress who should care more about average people than keeping power through huge campaign contributions and lobbyist money? Why should corporations make billions in profit and pay nothing in taxes?

Elizabeth Warren for President. She is not afraid to speak out.
 
 
-24 # Roland 2014-08-22 16:53
Corporations have given us the (higher than most other countries) standard of living that we enjoy in this country. If not for them we wouldn’t be online now. The equipment wouldn’t be around for us to use. And if it were it wouldn’t be as cheap or as technology advanced. Almost everything costs less due to corporations. Corporations, which provide jobs, are owned by almost 50 % of the population through company retirement plans, pension funds or directly.

For someone to invest and risk their money there should be some sort of return. If not jobs will disappear. Everyone here seems to think that the people who own the stocks are greedy. They don’t seem to understand the risk—return equation.

Does anyone here remember the stories of how much it cost to buy a pair of blue jeans in Russia before it collapsed?
 
 
+8 # kalpal 2014-08-23 12:43
So why is it that many European countries have a higher standard of living than the average American has yet those countries are able to supply universal healthcare and other aid to poor citizens?
 
 
+3 # bingers 2014-08-24 19:08
Quoting kalpal:
So why is it that many European countries have a higher standard of living than the average American has yet those countries are able to supply universal healthcare and other aid to poor citizens?


Because socialism works better for everyone than unregulated capitalism in every case. And socialism doesn't interfere with honest corporations or their profits.
 
 
+6 # Jim Young 2014-08-23 17:55
Quoting Roland:
...For someone to invest and risk their money there should be some sort of return. If not jobs will disappear. Everyone here seems to think that the people who own the stocks are greedy. They don’t seem to understand the risk—return equation...


We never had so much falsely rated risk before, with so much profit "skimmed" by the tax advantaged as never before financial sector. The financial sector used to make 8 to 10% for providing legitimate services under sensible rules like Glass-Steagall, to keep the speculators out of the more rationally risk appraised "deposit" banking. Where on earth do they justify taking 4 to 5 times as much profit from riskier, less productive investments (for the whole society) than ever before? They are killing the Golden Goose with their tax advantaged, immunized from criminalconsequ ences, speculation, based on phony risk analysis designed to maximize profit (while actually minimizing production of truly useful goods and services to the degree we did in our best days). A simple look at the Velocity of Money, now even worse than any time since they started recording it during the depths of the Great Depression, will show that the results of so lopsidedly favoring the less truly productive speculators and scam artists is destroying what we have accomplished in the past. We are very far from where we should be by this time in our history, and still going backwards.
 
 
+9 # Sweet Pea 2014-08-22 16:54
Very commendable that she is speaking of closing the barn door after the horses have already gotten out. The big investors have already exported a huge among of our jobs along with their billions of dollars. We already complained about this a few year ago in our "We are the 1%" rallies. We still have huge amounts of unemployed people along with huge amounts of imported goods No Jobs-no income. This is not rocket science!
 
 
-27 # Roland 2014-08-22 17:24
Why do you think you still have large numbers of unemployed? With Warren you will get fewer jobs. She not only supports all the things that are holding back the economy, she wants to put these bad policies on steroids.
 
 
+7 # kalpal 2014-08-23 12:44
It would be less a waste of time if you went to school and learned something other than RW lies, distortions and deceptions.
 
 
+2 # karenvista 2014-08-24 17:12
Quoting Sweet Pea:
Very commendable that she is speaking of closing the barn door after the horses have already gotten out. The big investors have already exported a huge among of our jobs along with their billions of dollars. We already complained about this a few year ago in our "We are the 1%" rallies. We still have huge amounts of unemployed people along with huge amounts of imported goods No Jobs-no income. This is not rocket science!


You mean "99%" unless I am misunderstandin g you.
 
 
+11 # Philothustra 2014-08-22 20:14
Again, the point about corporate inversion is not where profits and sales actually occur, but where they are declared and taxed. When companies can dump all their costs in the high tax zone and declare their profits in Ireland, and hide their transactions in shell or dummy corporations and secrecy banks, you wind up with a GE paying no taxes in 2010.

Instead of making ad hominem attacks, why not educate your self on tax policy and make some constructive criticisms? Nobody likes to pay taxes..........
 
 
-9 # Roland 2014-08-22 22:29
They are declared and taxed in the country where they are earned. At least that is the law. Some countries like the US tax them again when they come home. Ireland is good because it doesn't tax then again to bring them home, if that is where your headquarters is. Again losses carried into 2010 and green energy credits is why GE didn't owe taxes that year.
 
 
+12 # drush 2014-08-22 20:57
It appears no one is mentioning the reason inversions are taking place
Corporations can manufacture items here
sell them to their shill corporation in ireland
at say cost, then buy it back at a greatly inflated price. This greatly inflates there costs in US. cutting there tax burden to almost nothing. This shifts almost all their profits off shore. This is what the deal is. No products even have to be moved. All paper work
They also buy abroad for pennies with this same off shore shill corp then sell at a much higher cost to the local instate corp inflating costs cutting taxes.
that is the core problem
 
 
+5 # futhark 2014-08-22 22:45
I'm not crazy about paying taxes, either, as long as they are going to be spent on weapons technology, spying on the general public, and persecuting groups and individuals that have been identified as opponents of the established power elite.

The other thing about the taxes being rigged is that not only do large businesses take advantage of loopholes to reduce the tax liability, the whole tax code is so complicated that the average person doesn't have much of a chance of being able to compute his tax liability correctly, which seems to be what the government orders. Only those capable of hiring professional agents can be fairly certain the job has been done right. The consequence of this is that the average citizen ends up feeling like a stupid dope, not exactly the best way of creating a society of mutual respect and support.
 
 
-8 # Walter J Smith 2014-08-23 08:36
RE: "That's not right. That's why I've teamed up with Senator Levin and more than a dozen of our Democratic colleagues to introduce the Stop Corporate Inversions Act."

Dozens of Democratic Senate Colleagues my sits bones. Dozens of Democratic Colleagues favor taxing big oil. The Democratic controlled Senate refuses to tax big oil. Dozens of Democratic Senate Colleagues favor effective environmental/e conomic legislation. The Democratic Controlled Senate refuses to pass effective environmental/e conomic legislation. Dozens of Democratic Senate Colleagues favor taking the power of protecting rape culture away from the Pentagon. The Democratic Controlled Senate refuses to take protection of the rape culture away from the Pentagon. Dozens of Democratic Senate Colleagues favor reducing the threat to the global economy the US daily strenghthens because the Democratic Controlled Senate refuses to reduce that threat. Dozens of Democratic Senate Colleagues favor taxing corporations, preventing corporations from being legal citizens, preventing the buying and selling of votes and entire elections, putting decent judges into the Supreme Court, stopping military adventurism abroad, plugging tax loopholes, repairing the corporate boondoggle called the ACA (aka "Obamacare") and on and on it goes.

Dozens of Democratic Senate Colleagues are wimps.

Get a life.
 
 
+7 # universlman 2014-08-23 10:01
The tiny State of Delaware is headquarters for the majority of Fortune 500 companies. The majority of ocean going tankers are registered in the two tiny countries of Panama and Liberia. This is the rigging that lets fat-cat owners avoid taxes and regulations.

As she says, this type of rigged structure is contrary to the previously exceptional American value of fairness.

I appreciate her efforts plus those of a small handful of legislators.

However, I question how this important value got so lost. Also, why do so few of our elected officials seem to care about this?
 
 
+6 # Rain17 2014-08-23 10:44
People have no clue about how taxes work. I was once a tax prepare for Jackson Hewitt. I don't claim to be CPA, but I know a little about how taxes work.

The more money you make the more deductions you get. That is the first main principle. Those who make more money can generally have tax breaks like:

--Home mortgage interest
--Property Taxes
--State income taxes/sales tax
--Charity

But where the rich really start to reduce their tax liability comes from stocks and other business investments. They can get foreign tax credits for international stocks that pay taxes in other countries. They can wipe out capital gains taxes by selling stocks that have lost money.

What most people don't get is that there is a big difference between W-2 income and dividend/capita l gain income. W-2 income is arguably the worst to have because it has higher tax rates the more you make. Capital gains get treated much better by the IRS.

Furthermore I'm an Uber driver. Because I am an independent contractor I get to write off my mileage on my car, my cell phone usage related to business, my SEP IRA contributions, part of my home used for business, and so forth. These deductions would not be available to me if I didn't do that.
 
 
-6 # Roland 2014-08-23 13:07
Are you implying that you shouldn't be able to deduct your expenses? If you couldn't would you still be an Uber driver?

The reason that capital gains and dividends are taxed at a lower rate is because they are already taxed on the corporate level. And why shouldn't someone be able to deduct their investment losses? It is kind of like an expense of investing.
 
 
+4 # Rain17 2014-08-23 23:37
Nope I didn't say that. I was just explaining how tax deductions work--and how, as an Uber driver, I have many more to me that ordinary people don't.
 
 
+3 # Rain17 2014-08-23 10:46
In my opinion the biggest losers in our tax system are those making between $200,000 and $500,000 or so. They are still making the majority of their income from wages, but not making enough from stocks and dividends to get a lower tax rate. So they still earn a lot of W-2 income.

But once you get past a certain threshold beyond there--maybe like $1,000,000--tho se taxpayers start to have significantly more business and dividend income. And their effective tax rate then diminishes.
 
 
+1 # Caliban 2014-08-23 15:54
"Losers"? With $200K-$500K a year? How can I become this kind of "loser"?
 
 
+2 # Rain17 2014-08-23 23:39
I meant in terms of the tax system. They pay the highest rates on W-2 income. And they are still not rich enough to be getting most of their income from dividends and investments.
 
 
+3 # karenvista 2014-08-24 17:30
Quoting Caliban:
"Losers"? With $200K-$500K a year? How can I become this kind of "loser"?


The biggest losers have been the lowest quintile (20%) of income earners who "owed more than they had and were worse off in 2011 than they were in 2000. In 2011, the median net worth of the poorest Americans was negative $6,029, compared with negative $905 a decade before."

And income has become even more disparate since 2011!

http://www.startribune.com/politics/national/272210211.html

That's who's really losing in this economy.
 
 
+3 # Jim Young 2014-08-23 18:14
Quoting Rain17:
In my opinion the biggest losers in our tax system are those making between $200,000 and $500,000 or so...


I have to agree, because I see so many small business people that seem to be in the very worst part of the tax system, paying the highest effective rates, with them doing so much more of the production of useful goods and services (instead of speculating). The higher income ones seem much more able to operate or invest internationally , and speculate in tax advantaged investment more than anyone else.

I'm so sorry so many of them seem to defend the distorted tax system that really does more against their interests. They usually complain most about senseless regulations, which seems plausible at the lower levels, especially where they face all sorts of fees to "pay" for enforcement. I'd rather minimize or eliminate the fees, by having the rest of us that benefit from their services pay for the rational enforcement of the truly important regulations. I believe stronger community partnerships would result with business people much better in tune with customers they can compete for. Instead of fees, perhaps we should make it part of the sales tax so the high volume, community destroying, mega stores pay a fairer share to keep all businesses well regulated.
 
 
+1 # sofi12 2014-08-24 12:33
Would anyone believe what Joseph Stiglitz of Columbia says on our unfair taxation system? You can find him this week on billmoyers.com.
 
 
+3 # bingers 2014-08-24 19:13
In a rational world the highest tax rate would be on capital gains with an exception for venture capital for a start up business.
 
 
+1 # relegn 2014-08-25 06:16
Increasing corporate taxes is fine but keep in mind that raising the top marginal tax rate per individual is also needed. A return to a top marginal tax rate of 70% is called for as well as increased rates on capital gains...Individ ual wealth is a threat to the common good.
 

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