I wonder how much the following companies spent on lawyer fees (pronounced liar), and accountant fees, and bribes?
“Accounting rules. A big reason that Verizon’s effective tax rate is so low, coming in at a negative 4.8%, is largely due to accounting. The company’s sped-up depreciation, severance and pension costs are large credits that contribute to pushing the company’s taxes down, says Jonathan Schildkraut of Evercore. But there’s also a distortion caused by the company’s 55% interest in Verizon Wireless. Vodafone, which owns 45% of Verizon Wireless, pays taxes on its share, but the entire profit is reported on income. Adjusting for this, Verizon’s effective tax rate is closer to 30%, the company says. Verizon is buying Vodafone’s stake, which will eliminate the issue in the future. Similarly, real estate investment trusts have low effective tax rates because they pass profit to shareholders, who then pay the taxes.
The question for investors is whether or not companies paying low effective tax rates might, eventually, attract the attention to regulators. “They are slow at getting at these issues,” Yee says.”Tax evasion and tax avoidance reduce government revenues. If there are loopholes that allows these companies to avoid paying taxes we need to close them. It is hurting America and its citizens who are paying their taxes. Even the stockholders of these companies are paying their taxes (for the most part). The company pays the dividend to the share holder and he then has to pay taxes on his income. I have no problem with this but I do have a problem with the companies “legal” avoidance of taxes.
Lets start a conversation about this problem. Do you agree that it is a problem? Do you think there is bribery involved?