Fellow Fools Selena Maranjian and Salim Haji have already written about the General Accounting Office (GAO) report that says 61% of U.S. companies paid no federal taxes from 1996-2000. But newspapers across the country continue to howl about these figures, and politicians are getting in on the action, too. I just can't resist, either, so let me take just one more whack at this poor dead pony.
The story boils down to this: Through a combination of doing legitimate business outside of the U.S., establishing quasi-legitimate tax shelters, and issuing generous stock option grants to their employees, U.S. companies often earn heaps of profits, yet pay next to nothing in U.S. taxes. Note to those who enjoy reading between lines: Yes, the same kinds of companies -- such as Cisco
Everyone (and their grandmother) is outraged about all of this. But here's a secret: Corporations never pay taxes. Not in an ultimate, final sense, anyway.
Sure, if the Feds send a company a tax bill, the company is going to pay it. But the story does not end there. Because unlike you and me, after a company pays a tax bill, it can recoup whatever it pays out... from you and me. For example, if General Motors
As for politicians opining that tax loopholes are allowing foreign companies, in particular, to shift their tax burden to American working families, spare me. Those foreign companies are selling goods to Americans. Were they to "pay more" in taxes, they would certainly charge the cost of those taxes back to our "working families."
That, or they would follow the lead of Dell
How do you feel about this taxing issue? Discuss it with other Fools on the Current Events discussion board.
Fool contributor Rich Smith has no interest in any of the companies mentioned in this article.
