January 29, 2012

"Apparently @TPM doesn't expense its employees' salaries."

Pithy takedown.

27 comments:

Kev said...

(the other kev)

Heh.

(Hope that's not a copyright violation.)

dbp said...

Liberals: Corporate person hood no problem when that "person" pays 35% on profits. Unacceptable when that "person" defends their interests.

AJ Lynch said...

The librul War On Math is what 30 or 40 years old now?

Rick Caird said...

Why is it that the left is so uninformed about business, finance, and taxes? Dividends are paid out of profits after the profit are taxed. I'll bet these same people, who do not understand dividends and corporate taxes, also think a non profit business does not need to make a profit. But, it does or it goes out of the non profit business. Non profits do not operate at a loss for long.

Anyway, if you follow the links, it eventually comes down to the fact that TPM does not understand the employer side of the Social Security taxes are a business expense and a part of the cost of an employee.

Joan said...

TPM:Like everyone else I pay various taxes on my personal income. Then I go over to the store and buy my son a toy and I’m taxed on the same income AGAIN.

I refuse to listen to an argument about taxes from someone who can't differentiate income taxes and consumption taxes.

rhhardin said...

If you're self employed, not only do you pay both sides fo the Social Security tax but they give you a break on the employer half reflecting its being not included in taxable income for regular employees.

They figure it out very exactly based on wage earners' in fact paying both sides of the social security tax, in other words.

Just as capital gains are taxed the same as dividends based on their being two different forms of the same after-tax corporate profit.

Bond income is taxed as ordinary income because the bond payer deducts that expense before taxes.

It's funny how this has all been figured out and the left doesn't know any of it.

pauldar said...

"Anyway, if you follow the links, it eventually comes down to the fact that TPM does not understand the employer side of the Social Security taxes are a business expense and a part of the cost of an employee."

I was wondering what the IRS deduction straight out of the bank account was every month for my employees for the past 30 years. Oddly enough, they come out every month without fail.

I find it interesting that those who haven't a clue how to run a business, is always trying to tell me how to do it.

Maguro said...

Late Update: A number of readers have written in to say, Yes, ‘Romney’s claim is bogus. But these analogies you’re giving aren’t very apt.’ And my answer is, sure, I know that.

Um...OK. If you know that the analogy you're making isn't "apt", why not think about it a little more and come up with one that is? Or is that too much work for a Journolister like Marshall?

rehajm said...

It's wonderful news to hear liberals believe corporate taxes don't count. That means they certainly won't mind when the government stops collecting them

Martin Gale said...

Two questions for Josh:

1.) Who, but the shareholders, pays the corporate tax?

2.) Why do so many small business owners organize themselves as S corporations wherein all corporate profits are passed through to the business owner and taxed as ordinary income?

Actually the arguments that Romney makes here have already been put forth by Harvard economist Greg Mankiw, the anti-Krugman and a Romney advisor.

Paul Zrimsek said...

Leonhardt's statement that "the top 1 percent of earners pay about 10 percent of their income in corporate taxes" is a bit misleading when applied specifically to Romney. The reason the figure is so low for the top 1% as a whole is that it's expressed as a percentage of total income-- and most taxpayers in that group are not as dependent on capital gains for their income as Romney is.

A third question to add to Martin Gale's two good ones: "Does your answer to Martin's (1) cause you to re-think your support for the corporate income tax?"

Ralph L said...

Who, but the shareholders, pays the corporate tax?
Their customers?

WV - bidnes !

PaulV said...

LLCs lke partnerships pay no taxes, they pass through everything in K-1s.
MR share of corporate earnings at taxed at 35% marginal rate and later at 15% CG or dividend rate. What an ignorant liberal tool.

WV huffacar I do not to huff a car.

rhhardin said...

Who, but the shareholders, pays the corporate tax?
Their customers?


That's looking at consequences of corporate taxes, call it economic effects, rather than accounting.

When someone says that Romney pays 15% or pays 50%, they're talking about accounting.

If you look at tax consequences, the poor pay all corporate taxes.

The poor always give up more than the tax takes in.

Marshal said...

Marshall makes the point that adding the corporate tax to the personal is riduculous. I missed his similar condemnation of the Obama - Buffet tactic of adding the employer half of FICA to the secretary's personal income tax.

But at least we all understand from his blog title his only purpose is to put out propoganda for the Democrats. He's dishonest slime, but he is not hypocritical dishonest slime.

J.R. said...

So, what Josh Marshall is really saying is: "Romney might be right, but it's all just too complicated to think about it that way. Don't look deeper because that requires math and other hard stuff."

Seeing Red said...

Why is it that the left is so uninformed about business, finance, and taxes?

Add MMGW - Insty links to reports from Britain - no temperature increase in 15 years.

Robin said...

Its a good takedown.

But beyond that, the TPM piece is written by a moron. The tax code recognizes the double taxation that TPM pretends is nonexistant. It recognizes it by giving small business a way to avoid it, with the Subchapter S corporation form.

So TPM is either utterly ignorant of the issue it pretends to opine upon or lying.

Or both.

cubanbob said...

TPM is written by morons for morons which is the base of the democratic party.

Chip Ahoy said...

They will not look at it as you do.

The company is a big profit generating squeeze bag. Some profit goes to taxes and other profit goes to shareholders.

The only thing that is relevant is the money that Romney gets. His portion the money bag squeezed out is the only portion Romney feels directly so that is the only part that counts. The money bag squeeze is the starting point for comparisons.

I almost forgot, "DUH!"

Dust Bunny Queen said...

The librul War On Math is what 30 or 40 years old now?

Unfortunately, I think that they are winning.

jeff said...

".....rather than trying to fool people like Romney is with his preposterous claim. " I don't think that word means what Marshall thinks it does. As I understand it, a business engages in some sort of commerce and if lucky it generates a profit. Say $1,000,000. If someone (let's call him Romney) invests money in the company in exchange for 10% of the profits. So he has $100,000 coming. In sending the $100,000 to Romney, the company sends 35% to the government and $65,000 to Romney. He then pays 15% of the %65,000 to the government and pockets $55,250. How is this preposterous to claim almost 45% tax rate? For Marshall to be correct, you would have to assume the corporation owned the $1,000,000 profit. But the corporation is owned by the investors. How is this logic incorrect?

Ignorance is Bliss said...

Can someone who knows about corporate taxes and capital gains taxes clarify something for me?

I understand that if a company makes a profit, and pays a dividend, that money is double taxed as corporate and capital gains.

If a company makes a profit, and does something to make the stock price go up ( such as a stock buy back, or keeping the profit in the bank ) instead of paying a dividend, then this is also double taxed ( at least it is once the shareholder sells his shares.)

But what if a company's stock price goes up due to something other that does not coincide with a taxable profit. For example, what if I buy $100 of Pharacorp stock. The next day, they get FDA approval for a cancer cure. The next day, I sell my stock for $200. I just made a $100 profit. Is that taxed at the 15% capital gains tax rate? Is that money double taxed in any way?


As I wrote this I did see a way that it could be effectively double-taxed. The stock price went up on the announcement of FDA approval, but that was due to the anticipation of future profits. But the people anticipating future profits are also counting in the future corporate taxes on those profits. So if the stock price went up $100, it was because investors anticipated future profits of $154, which would leave $100 after corporate taxes were taken out. Is that how it's figured?

Andy Freeman said...

> The next day, I sell my stock for $200. I just made a $100 profit. Is that taxed at the 15% capital gains tax rate?

No. It's taxed as short-term capital gains, which currently has the same tax rate as as "earned" income. (However, there are other differences between the tax treatment of earned income and capital gains.)

Whether a capital gain is taxed as short or long term mostly depends on whether it is held for a year, but there can be other considerations. (Employee Stock Purchase Programs have a couple.)

Andy Freeman said...

I forgot to mention that some of the complications regarding capital gains (special rates for collectibles, etc.) are covered in http://taxes.about.com/od/capitalgains/a/CapitalGainsTax_4.htm .

Ignorance is Bliss said...

Thanks Andy!

Still Blissful, not quite as Ignorant.

Mike said...

The part where you take your $100 and invest it requires a second look. If that $100 was out of your income then you have already paid taxers on that $100 before you spend it on stock. Thus the gain or loss (investing is a risk unless you are a well-connected democrat politician with inside information) you realize down the road is taxed at the long-term capital gains rate. Of course if the $100 went into Solyndra you may get zero. If it was in Apple, you get 85% of liquidation after paying Uncle Sam.