The $104 Billion Refund

from the fun-with-tax-law dept

theodp writes “Getting a nice tax refund this year? You’re not alone. Slate reports that some of America’s largest corporations have been reporting their own hefty tax windfalls, thanks to an absurd provision of the American Jobs Creation Act. A case in point is IBM, which reaped $2.8B in savings by paying a low 5.25% tax rate on $9.5B in repatriated profits while shedding 5M sq ft of space in the U.S. and increasing head count in India to 40,000. Another example? National Semiconductor, who on the same day it announced it was cutting 6% of its workforce, boasted it was repatriating $500M under the Act.” Of course, you can’t blame the companies for taking advantage of these laws. It’s yet another example of politicians passing laws that sound good on the face of it, without anyone bothering to care about the second level effects that are so obvious, it would be unfair to refer to them as “unintended” consequences.

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Comments on “The $104 Billion Refund”

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BennyTB9 says:

Re: Re: Re:

“I do, when they don’t have to pay taxes and off shore jobs, that means I am going to have to pay more in taxes to make up for what they didn’t. “

Re: by Scott on Apr 17th, 2006 @ 6:02am

No Company ever pays taxes!!!!!!!!!!!

The raise the cost of the goods/services they provide to YOU!!! and YOU pay their taxes for them. It all just a big number shuffle to say that a company pays taxes.


cyberry says:

Re: Re: Re: Re:

uh, not exactly, Benny.

let’s look at, for instance, General Motors. sure, if GM pays less in taxes, the company might decide to make up the difference by charging more for cars. (of course, the company might also decide to reduce benefits for employees, buy cheaper toilet paper for company bathrooms, etc., but let’s leave those possibilities out of the equation.)

but let’s say i don’t buy a GM car. (in fact, i don’t even drive.) so if the taxes GM doesn’t pay cause the cost of GM cars to go up, consumers who buy GM cars will be affected, but others in the US will not (at least not directly).

contrast that with scott’s statement. if GM pays less in taxes at a time when the country is running a deficit, either others are paying more in taxes to cover the $ GM didn’t pay, or the US is borrowing to cover the “missing” GM taxes (which means that future USA taxpayers are paying, plus interest). either way, taxpayers end up having to pay more to cover the taxes not paid by GM, even though most taxpayers do not (directly) benefit from GM’s products.

John W (user link) says:

Re: Re: Re: Re:

What’s there to see on It’s just a turbotax enrollment page.

But you’re right, no company ever pays taxes. If you charge them higher taxes, they raise their prices…and who pays higher prices? You and I, the consumers. So, what’s the best option to fix this? The FairTax.

Dosquatch says:

Re: Re: is like an even shittier version [of] slashdot nerds bitching

Yeah, we know. And….?

about how badly they are underpaid and how their geek lives won’t ever achieve success because their personalities are spent online commenting on shitty articles instead of doing business.

Hello, Pot. My name is Kettle. Pleased to meet you. Thanks for dropping in 🙂

Oh, dear, I think I hear your Mama calling you. Run along, now, or you’ll be late for dinner.

Doug Robinson says:

> is like an even shittier version slashdot nerds >bitching about how badly they are underpaid and how >their geek lives won’t ever achieve success because their >personalities are spent online commenting on shitty > articles instead of doing business.

And you find fulfillment in trashing the ones you mentioned? Boy, that sure does put you soo much higher on the food chain, doesn’t it. (And just in case you missed it, that was sarcasm.)

If you don’t like it, quit reading it and find a place for news and stories you like.

randdickson says:


Yep, you can’t blame the companies for taking advantage of this. They are in the business of making money and reaping profit. Guess I should be angry at the government … ok, generally I am … but I voted and as is the nature of democracy, sometimes the right men/women don’t when.

Course I’m no longer sure there is a ‘right man/women’.

Wizard Prang (user link) says:

uh, not exactly, cyberry...

If GM pays less in taxes, then chances are so does Ford, Chrysler, Toyota, etc. If GM decides to “charge more for cars” the others will eat their lunch. That’s called competition. If they cut benefits, facilities, etc, they will lose employees to other businesses that provide them. That’s also competition.

Since GM does not print money, they have to make money by selling goods. People buy goods, and people – albeit indirectly – pay the taxes. That was the point that Benny was trying to make.

The only source of wealth building – and the eventual source of ALL taxes – is earned income – if not from customers then from shareholders or employees.

Odm says:

Economics disagrees

Companies will obviously pass the cost of a tax on to the consumer. However, they won’t pass all of it on because their sales will suffer as a result. It all has to do with how much demand and supply changes when price changes, but the end result of it is that some of the tax will increase the price while the rest of the tax will be absorbed by the firm.

That only applies to indirect taxes, though. Direct taxes, like on profit etc., aren’t so easily shunted on to the consumer. Ideally, firms will always maximize profit, so whatever taxes they have to pay will cut into that because changing the price will cost them even more.

In practice it works the same way. Whenever a firm has to pay taxes, it has to figure out how it can still be profitable, and being profitable does not involve jacking up prices. So saying that firms don’t play taxes is quite simply wrong.

John W. says:

Re: Economics disagrees

“…saying that firms don’t pay taxes is quite simply wrong.”

That’s not true. No corporation would have any money to pay for the taxes unless someone paid them for their products or services. The money for all corporate taxes comes from the price consumers pay. Now of course if a company has a 10% profit margin and the gov’t increases taxes to the company they may decide that they could get by on 8% so they might not raise their price, but still the money to pay their taxes is coming from the price paid by the consumer.

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