U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Economics
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 08-25-2008, 04:06 PM
 
Location: Tennessee/Michigan
28,229 posts, read 47,666,499 times
Reputation: 19735

Advertisements

WASHINGTON (Reuters) - Tax and accounting loopholes that largely benefit rich taxpayers and companies cost the government $20 billion a year even as the pay gap between chief executives and employees has widened, two groups said on Monday.

Tax loopholes seen costing billions annually | U.S. | Reuters
Reply With Quote Quick reply to this message

 
Old 08-25-2008, 04:26 PM
 
3,596 posts, read 7,714,403 times
Reputation: 2878
There is nothing about that article, or the one concerned with transfer pricing, or any of the other dozens of tax loophole arguments I see that successfully crafts an argument in favor of the possibility of an exploited tax loophole.

In the first place, the government limits how much one may deduct for executive compensation as far as tax deductions are concerned. Stock options aren't ever deducted unless you wish to consider the "cost" of issuing them, which the government requires to be amortized over the service term. Because, how do I put this... it really does cost the company to issue that stock. At least, this is what the IRS, FASB and the SEC have agreed upon. It is mandatory that they keep track of the cost of stock options, and I'm honestly at a loss as to where I would begin to explain this to someone who doesn't already have an inkling of how alternative compensation works.

Deferred compensation certainly isn't unlimited. Jesus cristo, it means exactly that: it's deferred because the government won't allow corporations to deduct all of it right now. This isn't a tax loophole, this is a mandatory method of financial accounting to achieve federal tax compliance.

Secondly, comments like this just boggle me:
Quote:
"It's outrageous that our tax dollars are inflating executive paychecks," said Sarah Anderson, an author of the report. "Surely in these troubled economic times we can find better ways to spend our nation's wealth."
In order for this to be true, it would have to be a case of using tax money already collected to literally pay out corporate executives. Well, um... that's never happened, ever, in the history of the United States. Deferred compensation is a cost allocation method that spreads the cost over multiple periods (read: several years) even before the options become exercisable. In other words, it's a deduction that reduces taxable income. Again, this is the government's method, not corporate America's.

Speaking as someone who has struggled, and outright failed, to understand the laws around compensation, I can only stare in wonder at people as ignorant as Sarah Anderson. There are senior tax partners who spend their entire lives studying how to handle compensation and tax-related matters, and they still don't have definitive answers because of how complex and vague the subject is.

Last but not least, I'd like to point out that this article is only concerned with federal tax law. State tax law can and usually does differ radically state-to-state on how compensation is to be handled. Some states have a strict limit on the deduction, irrespective of how it's handled, while others (New York, for an example) have complex and trying laws regarding said compensation deductions.
Reply With Quote Quick reply to this message
 
Old 08-25-2008, 05:58 PM
 
1,570 posts, read 1,675,409 times
Reputation: 461
if you believe those 40billion dollars would have been spent well by the gv. than what about the 246billion dollars spent by the government on interest payments for the debt. perhaps the people should be more upset over that than these loopholes.
Reply With Quote Quick reply to this message
 
Old 08-26-2008, 06:37 AM
 
Location: Forests of Maine
30,721 posts, read 49,529,915 times
Reputation: 19162
Less than 30% of Federal Revenue comes from income taxation.

The topic of taxes is a minor issue when looking at the Federal Budget.

Tax Theory 101: Income taxes are a method of influencing behavior not a primary means of revenue.
Reply With Quote Quick reply to this message
 
Old 08-26-2008, 08:52 PM
 
17,875 posts, read 19,852,298 times
Reputation: 7506
The biggest loophole is the U.S. government is having a 10 trillion debt and over 50 trillion liabilities... talk about robbing Americans... how about robbing Social Security as if it was your own personal piggy bank.. all the politicians hands are dirty.. what about THAT loophole
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Economics
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top