LABJ FORUM – Taxing Matters

A report released last week by the General Accounting Office showed that between 1996 and 2000, more than 60 percent of U.S. companies and 70 percent of foreign ones paid no federal income taxes. With the screaming federal budget deficit promising to be a top platform issue in the presidential election, Congress has focused scrutiny on what has become an accepted part of doing business avoiding taxes. So the Business Journal asks:

Do you think there are too many corporate tax loopholes?

Gary Edelstone

Partner

Surpin Mayersohn & Edelstone LLP

The tax loopholes reflect a government policy favoring reductions in corporate taxes. Individual taxpayers are treated much more harshly than corporate taxpayers and the Republican administrations have intentionally made it that way. If the intention was to create tax incentives for certain types of economic activity such as job creation, the tax code could be designed to stimulate job creation or capital investment, but it’s not the case. The tax code favors the formation of foreign plants.

Pascal Dropsy

President

Corn Maiden Foods Inc.

There’s enough (loopholes) for small businesses like mine too, but most don’t take advantage of it. I’ve been with the same accountant for eight or nine years. He’s OK, but either he’s not knowledgeable enough or just not doing enough to find out about loopholes that will help me. If you have a good accountant, you can save thousands and thousands of dollars, and in a small business like mine, we look at every penny. There’s a lot of incentive programs, tax credits, employee training, fee reductions for setting up in certain zones. I had no idea about any of it until a few months ago.

Corinne Larue

Tax Advisor

H & R; Block

I guess so. I had no clue there were so many. I don’t do corporate taxes, I do individual taxes. But it doesn’t surprise me at all. I see all the expenses individuals get when they fill out their Schedule Cs, so I’m sure corporations are doing it as well. There are too many ways of getting around taxes.

Jeffrey Mann

Vice President, Public Entity Practice Leader

ABD Insurance and Financial Services Inc.

I’d be concerned if (corporate tax loopholes) had a significant fiscal impact on the federal government. They have smart accountants and people in finance departments who try to manage their earnings and minimize them through all kinds of things like depreciation, allowances, all kinds of games. But they are legitimate deductions. If there’s someone to point the finger at here, maybe we need to rewrite the tax laws.

George B. Newhouse Jr.

Partner

Thelen Reid & Priest LLP

Yes, in light of the fact that relatively few corporations pay what appears to be their fair share of federal income taxes. The problem is the Internal Revenue Code of 1954, which is literally riddled with hundreds of sections and provisions that let corporations avoid their full tax liability. That obviously needs to be addressed so the tax burden is fairly and equally distributed to corporations and individuals alike.

Larry Butler

Chairman and Chief Executive

Alpha Technologies Group Inc.

In general, corporate and individual taxes are too complicated, and if they would be simplified, there would be less loopholes.