Large corporations have a number of strategies that they can use to reduce their income tax liabilities. Some of these strategies are legal and aboveboard, while others are more controversial.
One common strategy is to take advantage of tax breaks and deductions that are offered by the government. For example, many corporations can deduct the cost of equipment and other business expenses from their taxes. They can also claim tax credits for things like research and development activities.
- Intangible asset deductions: Corporations can deduct the cost of intangible assets, such as intellectual property, from their taxable income. This can result in significant tax savings, especially for companies with large amounts of intellectual property.
- Net operating losses (NOLs): Corporations can carry forward NOLs to future years and use them to offset taxable income. This can allow corporations to avoid paying taxes for several years, even if they are profitable.
- Tax credits: Governments offer a variety of tax credits to businesses, which can further reduce their tax liabilities. For example, the research and development tax credit is a valuable tax break for companies that invest in research and development.
Avoiding taxes illegally is one thing, avoiding them using the tax laws is quite another. Significantly lowering corporate profits has consequences for all
Americans.
It is not as simple as some would make it appear.
Another strategy is to shift profits to overseas subsidiaries located in low-tax jurisdictions. This can be done by charging these subsidiaries high prices for goods and services, or by transferring intellectual property to them.
In addition, some corporations engage in more aggressive tax avoidance strategies, such as using shell companies or complex financial structures to hide their profits. These strategies are often legal, but they can be controversial because they can allow corporations to avoid paying their fair share of taxes.
What corporations do on a grand scale is no different than what average Americans do on their own scale – legal and illegal.
The debate over corporate tax avoidance is a complex one. There are valid arguments on both sides of the issue. Ultimately, it is up to each individual to decide whether or not they believe that corporations are paying their fair share of taxes.
QUINNSCOMMENTARY 
It’s complicated…
Or, some people say “corporate welfare” is worse than personal welfare. There’s probably a little truth in both statements. But when so called conservatives are bent on reducing the size of government by reducing (or eliminating?) entitlements, may be they should consider those recipients as a resource instead of a burden. If they don’t earn enough to survive*, they will die. Then who will work your assembly lines and clean your bathrooms AND at the same time, produce and train a whole new generation of workers?
*comfortably
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And, according to PPIC…
“SAN FRANCISCO, California, April 7, 1999 — Sharp reductions in caseloads have led many to pronounce welfare reform a success. But can it last? A report released today by the Public Policy Institute of California (PPIC) estimates that 40 percent of California’s welfare recipients face an uphill battle finding work, and those who do find work may not earn enough to pull themselves out of poverty. This number is twice what the state can exempt from time limits under welfare legislation passed in 1996, raising concerns about the long-term success of reform efforts in California.”
Many welfare recipients not working cannot find jobs* or are disabled or elderly. “Rugged individualism” can only go so far. “We Live in a Society, Not an Economy”
*The phrase “pull yourself up by your bootstraps” originated shortly before the turn of the 20th century. It’s attributed to a late-1800s physics schoolbook that contained the example question “Why can not a man lift himself by pulling up on his bootstraps?”
So when it became a colloquial phrase referring to socioeconomic advancement shortly thereafter, it was meant to be sarcastic, or to suggest that it was an impossible accomplishment.
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You have valid points, but for those not disabled or old, we need a better system designed not at sustaining, but getting out of poverty.
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If they don’t earn enough to survive*, they will die.
*comfortably.
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Thanks for pointing out the strategic & smart ways companies can legally reduce their tax bill. I’ll remember this the next time someone makes the broad statement about rich corporations not paying their ‘fair share’.
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When people like Reich make no effort to distinguish between legal and illegal tax reduction strategies, it unmasks their real opinion on wealth. They are all about dividing up the wealth fairly (as they define it), but seem uninterested in how the wealth was created in the first place.
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How right you are.
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