15-06-2005 12:41									#31
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By the way, who REALLY takes the time to actively vote on all the companies they are invested in? Lots of people are into mutual funds, which are invested into many companies at once.

Usually it's an oligarchy of major and minor stakeholders that may actually know about the companies they have invested a major sum of money in.

Nobody else really has any idea what's going or has any influence into the company to make that much difference to sway how much money the executives are making.

	15-06-2005 12:52									#32
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quote: Originally posted by Oerdin Further more the government taxes transactions so it is a lie to claim that it is double taxation when profits are given to share holders. Legally a corporation is a seporate legal entity very m uch like a person. A share just gives someone rights to one share's worth of profits a company makes and one say in decisions but the share holder is legally a different person then the company. Thus legaly the transfer of money from the company to a share holder is a transaction between two legally different entities. Thus it generates a tax. The company is covering a contractual obligation buy taking some of its profits and giving them to someone else just like you are when you pay for your household utility bill.

Thanks for a review of corporations 101 . I've only had 11 years of practicing corporate law.

Taxation theory indicates that you have to consider both transactions. A "profit" inside a corporation is pretty much useless to shareholder (except to the extent it increase share price). The idea is that an individual can earn a dollar in a given business personally OR they can incorporate, run the same business and then pay themselves a dividend. The goal is to have equivalent taxation for either structure. In theory you could reduce corporate tax to ZERO and tax the cash at a higher rate going to the shareholders

quote: Originally posted by Oerdin Except these are companies which report billions of dollars of profits to share holders then claim they just couldn't possibly survive if they had to pay taxes to the government. These are not companies which are generating loses.

I have no idea what these companies claim. I just say that the stats used are garbage. I don't say that his assertion is false as I have no evidence to refute it but his evidence in support is a pile of crap. It would be like me citing a company as a success as their profitability went up 1000% in a year-- The number is laughable.

	15-06-2005 12:53									#33
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quote: Originally posted by Flubber It would be like me citing a company as a success as their profitability went up 1000% in a year-- The number is laughable.

You could have been the CFO of any .com with those 1999 numbers.

Actually those numbers are way too conservative for the .com era.

	15-06-2005 13:00									#34
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quote: Originally posted by Ted Striker What's YOUR point? You just told me they couldn't live without a CEO?

You have to admit that a leaderless corp is worse off than a corp without employees that were redundant in the first place.

quote: My point is it's alot easier than a line worker to live off their savings than CEO's that are raking in cash, and you know, getting $48 million severance packages.

Tru dat.

quote: Not really. Cause that's not the final answer, silly.

How is it not the final answer? The science that studies the issues we're discussing is... ECONOMICS, ne c'est pas?

quote: Even the government has stepped in, and set limitations on CEO compensation.

Hey, your government has also said there were WMD's . Good standard for right and wring, this Gummint' thingy.

quote: Unfortunatley many companies have loopholed their way around the law by giving out creative total compensation packages.

Legal loopholes

quote: Saras, I didn't know you were a CEO.

Not only that, but also a director of three outside boards

	15-06-2005 13:11									#35
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quote: Originally posted by Saras You have to admit that a leaderless corp is worse off than a corp without employees that were redundant in the first place.

I think it depends really, on how good or bad that leader was. And how long the corporation goes on without a leader in place. Sometimes the underlings can keep the ship running smoothly without breaking anything.

But more people who can't take the economic slight are hurt when they are lower level workers.

quote: How is it not the final answer? The science that studies the issues we're discussing is... ECONOMICS, ne c'est pas?

Because we have seen runaway economics in the past that has gotten to extremes, where the government has had to step in and put a stop to the excess. Teddy the Trust Buster used to PWN silly abusive trusts, for example.

quote: Hey, your government has also said there were WMD's . Good standard for right and wring, this Gummint' thingy.

Well, the particular government that passed the legislation was a past administration. Though you have my full agreement that current administration is 100% full of irresponsible crap.

quote: Not only that, but also a director of three outside boards

Do me a favor and think about the little guy the next time one of your boys asks the board to approve a round of layoffs. Refuse these jerks performance bonuses if their leadership resulted in cost-savings, but most of that cost was due to layoffs.

	15-06-2005 13:16									#36
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Speaking of Pfizer, here's an example of how silly some of these companies are with regards to CEO compensation:

1. They give him a BIG AZZ raise:

quote: NEW YORK (AP) - Pfizer Inc. CEO Henry McKinnell last year received a 72 percent pay increase to $16.6 million thanks to a large restricted stock award. McKinnell earned a base salary of $2.2 million and a bonus of $3.9 million. He also received a restricted stock award of $4.3 million that he hadn't been granted in the two previous years. His salary also included $5.81 million in common stock as part of an incentive program, and $307,454 in retirement savings. McKinnell also received 525,000 stock options last year, down from 1 million in 2003. In 2003, he earned $9.7 million, including a salary of $2 million and a bonus of $4.6 million.

2. But now senior managers are not getting raises?

quote: The filing also said Pfizer's senior managers would not receive salary increases this year because of the need to control costs.

3. And now they are trying to figure out how to reduce costs by $2 billion?

quote: Next month, New York-based Pfizer will hold an analysts meeting where it is expected to announce how it will reduce costs by $2 billion.

http://www.ahrp.org/infomail/05/03/10a.php

	15-06-2005 13:26									#37
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4. And finally, a quick Google search for "Pfizer layoffs" brings back alot of hits:

quote: Pfizer was unspecific about where the cuts will occur, except to say that nothing is sacred. Layoffs in Pfizer's 115,000-person workforce are likely, especially in manufacturing. "You don't have $4 billion in cost cuts without cutting a substantial number of heads," says Lehman Bros. analyst Tony Butler. Pfizer has already closed a handful of plants, and Butler says 20 of the almost 90 remaining could go.

http://www.usatoday.com/money/indus...r-warning_x.htm

Of course, companies need to trim bloat when they can, but I'm curious to see what kind of paycut the CEO is getting this year.

	15-06-2005 13:27									#38
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quote: Originally posted by Ted Striker I think it depends really, on how good or bad that leader was. And how long the corporation goes on without a leader in place. Sometimes the underlings can keep the ship running smoothly without breaking anything.

Sometimes, yes. Sometimes pigs fly as well, if the catapult is of the right size

quote: But more people who can't take the economic slight are hurt when they are lower level workers.

True.

quote: Because we have seen runaway economics in the past that has gotten to extremes, where the government has had to step in and put a stop to the excess.

You'll have to explain how this is the fault of the science of economics

quote: Do me a favor and think about the little guy the next time one of your boys asks the board to approve a round of layoffs. Refuse these jerks performance bonuses if their leadership resulted in cost-savings, but most of that cost was due to layoffs.

Layoffs are so passe. We now look at how to boost margins by "adding more value to the customer", i.e., raising prices without them noticing or with them not minding

	15-06-2005 14:16									#39
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I've always seen lay offs as a sign that a company has been very poorly managed. Good companies like Toyota are able to properly forcast demand and keep its workforce in line with demand so as to avoid big hiring binges followed by massive lay offs. This is good managment. Bad management is when the executives stop paying attention, let bloat settle in, and then try to cut. They took their eye off of the ball and became complacent so that management has already shown they've failed in the past and should be shown the door.

Pfizer, IBM, Boeing, Time-Warner, Saks, and the rest aren't companies which are hurting so bad they should be getting subsidies and free rides without taxes.

	15-06-2005 14:19									#40
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I think the worst people in this regard are US investment banks. They usually overhire and later ovefire. At least that's the rep they have in London's City.

	15-06-2005 19:00									#41
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Rarely are there "redundent" employees at a company. Layoffs generally mean longer hours for those who don't get fired. In other words, the work still has to get done, it just gets done by the drones for free on what should be their time.

	15-06-2005 19:02									#42
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quote: Originally posted by Flubber I haven't researched the companies involved but a couple of points 1. You folks do realize that there are such things as carrryovers and carrybacks of losses.

That's crap. I don't get this priveledge, why should they?

quote: 2. In most countries, corporate profits are taxed again when paid out to shareholders. Is this not the case in the US?

Not anymore.

	15-06-2005 19:26									#43
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quote: Originally posted by chegitz guevara quote: Originally posted by Flubber I haven't researched the companies involved but a couple of points 1. You folks do realize that there are such things as carrryovers and carrybacks of losses. That's crap. I don't get this priveledge, why should they?

Actually I believe if you checked you would find that you CAN carry forward losses on your personal tax if you make a loss as part of running a business. I would be suprised if that is not the case (Again the harmonization concept in taxation is that a business whether or not it is incorporated should get similar tax treatment-- I don't know how well it currently works.)

Do you disagree with loss carryforwards?? If a business loses 100 million 1 year and makes 1 million the next, you expect them to pay tax even though net they are down 99 million?


I do stick by my guns that taking profit and tax from a given year is GARBAGE as a measure of anything. Its just something that "looks wrong" that the uninformed can get riled up about.

	15-06-2005 19:29									#44
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Che

and seriously . . . people in the US don't pay tax on dividends ?? I knew that you folks had all sorts of tax exemptions for capital gains but I always assumed that dividends would be taxed in a similar fashion to Canada (ie included in income in a fashion where it is taxed less than other income to reflect the tax already paid on the money in the corporate structure)

	15-06-2005 19:30									#45
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It was part of the tax cuts in '93. Dividends are no longer "double taxed."

Oh, I guess you're right about carrying losses forward on business taxes. I forget about those. Still, it would be nice to be able to do that on personal income taxes.

	15-06-2005 19:31									#46
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quote: people in the US don't pay tax on dividends ??

We do, although the percentage paid has been lowered.

On the other hand, corporate income tax rates in the US are among the very highest in the first world.

	15-06-2005 19:48									#47
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quote: Originally posted by chegitz guevara It was part of the tax cuts in '93. Dividends are no longer "double taxed." Oh, I guess you're right about carrying losses forward on business taxes. I forget about those. Still, it would be nice to be able to do that on personal income taxes.

Question-- how exactly would you carry forward personal losses?? If I make 30Gs salary what expenses should I be allowed to deduct so that I can make a loss-- (food?? rent, how about interest on a mortgage??) I agree that in a tough year where you don't make a lot and get in a hole, it would be nice if you don't get slammed with highly "progressive " tax rates since you happen to make more in certain calendar year. Since I don't see how you can have personal losses ( without a business) unless you get into an accounting nightmare ow which personal expenses are deductible, the best that could probably be done is to allow some income averaging so that a person that makes 30, 30, 120 doesn't pay way higher taxes than the one that made 60, 60 60.

I can see problems with this idea as well since people would be screaming about the CEOs getting big tax breaks when they get a huge package and then take a few years off and make no income.

	15-06-2005 21:11									#48
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i don't know if I'm opposed to this lose forwarding or not though I would want to control what sort of loses can be forwarded to prevent an obvious avenue for abuse.

	15-06-2005 22:17									#49
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quote: Originally posted by Oerdin i don't know if I'm opposed to this lose forwarding or not though I would want to control what sort of loses can be forwarded to prevent an obvious avenue for abuse.

Obviously abuses and frauds should be prevented. Loss carryforwards and carrybacks would be an element of corporate taxationin most countries.


Hmm have I PWNed the article enough yet?? I've actually had Che and Oerdin agreeing with me in the last few posts

	15-06-2005 22:28									#50
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Why do you hate your own country, Oerdin?

	15-06-2005 22:36									#51
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quote: Originally posted by Flubber Question-- how exactly would you carry forward personal losses??

You can carry forward capital losses on your personal income tax because the loss you can claim in any one year is limited. Say you lost $20K when the stock market tanked in 2000. You can use that loss to offset future earnings, plus deduct up to $3000 per year from your income in each of the next five years (IIRC). If you still have some loss left after five years, tough luck, you can't claim it. (This is one reason why income tax payments ahve been picking up recently.)

quote: the best that could probably be done is to allow some income averaging so that a person that makes 30, 30, 120 doesn't pay way higher taxes than the one that made 60, 60 60.

The US tax code does have income averaging, which came in pretty handy the first couple years I was out of grad school.

	15-06-2005 22:39									#52
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quote: Originally posted by Adam Smith You can carry forward capital losses on your personal income tax because the loss you can claim in any one year is limited. Say you lost $20K when the stock market tanked in 2000. You can use that loss to offset future earnings, plus deduct up to $3000 per year from your income in each of the next five years (IIRC). If you still have some loss left after five years, tough luck, you can't claim it. (This is one reason why income tax payments ahve been picking up recently.)

hmmm-- my recollection was that capital losses in Canada could only be applied against capital gains. So essentially you could shield your later gains and not have to pay tax in situations where your overall portfolio could be sold for exactly what you paid for it

	15-06-2005 22:44									#53
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quote: Originally posted by Adam Smith If you still have some loss left after five years, tough luck, you can't claim it.

Its pretty easy though to time your loss though unless events occur which result in a deemed disposition. Once you stock tanked in 2000 you could have sold over the next 5 years such that some of the loss would be "useful" until 2010

I actually support longer carryforwards so that you don't place people in odd positions of being forced to hold a stock into another year. I think ( and could be wrong) that capital losses can be carried back for 3 years or carried forward indefinitely in the Canadian system.

	15-06-2005 22:49									#54
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quote: Still, it would be nice to be able to do that on personal income taxes.

And then what happens when a CEO buys a super expensive house, making his income -$100million, and carries that loss forward on his income taxes?

Like Flubber said, how do you measure things?

	15-06-2005 22:57									#55
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quote: Originally posted by Imran Siddiqui quote: Still, it would be nice to be able to do that on personal income taxes. And then what happens when a CEO buys a super expensive house, making his income -$100million, and carries that loss forward on his income taxes? Like Flubber said, how do you measure things?

You got it -- and even if you could measure things, aren't you just using the tax system to subsidize consumption-- Who exactly would pay tax?? Almost all individuals spend close to what they make and do you really want to tax people on the bit they don't spend and dicourage savings??

	15-06-2005 22:58									#56
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quote: Originally posted by Flubber Hmm have I PWNed the article enough yet?? I've actually had Che and Oerdin agreeing with me in the last few posts

You did? Other then Lose forwarding which didn't occur since none of these companies posted a lose what did you pwn? I belive everything else was duly refuted. So you have one interesting piece of tax law which doesn't even apply in these cases. How is that pwnage?

	15-06-2005 23:04									#57
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In backup to Flubber (who is doing a superb job of owning the article), corporate income tax receipts are running 50% above the 2003 figures. It is disingenuous to pick out the 2003 figures in isolation and base any kind of general argument on those figures.

	15-06-2005 23:04									#58
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quote: Other then Lose forwarding which didn't occur since none of these companies posted a lose

I believe Dan addressed the fact that these companies did have losses in 2003 and earlier that they were forwarding.

	15-06-2005 23:08									#59
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Points 2,3 and 4 of my original post.

I stick with my point. Corporations may or may not be be paying way too little tax but this article proves nothing. Take any industry where two companies paid widely divergent rates of tax. There must be REASONS for this since the same tax code should be available to both. For certain the higher paying corp have a number of tax experts looking at ways to minimize their tax hit so it isn't benevolence.

I think I have demonstrated how the stat cited repeatedly is a GARBAGE number. If someone wants to talk intelligently about this, they need to figure out why two companies in the same industry had such apparent divergent tax bills.

	15-06-2005 23:11									#60
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quote: Originally posted by Imran Siddiqui quote: Other then Lose forwarding which didn't occur since none of these companies posted a lose I believe Dan addressed the fact that these companies did have losses in 2003 and earlier that they were forwarding.

Site? I haven't looked up any of these profit statements but the report says each of them reported at least a 1 billion profit to share holders. We'd have to see if 2002 or 2001 were lose years. I tend to believe Aggie and the Mac bridgade would have been gloating if IBM was losing money while Asher would have been running around trying to explain it.