Most US Companies Pay No Federal Income Tax

We like to read the non-US newspapers to get a better idea of what is happening in North America.

It does appear that change might be in the wind. But we're not optimistic.

Most people are still thinking in slogans, headlines, and cartoons of reality, shaped by what is given by the media, the professional story-tellers, and character assassins. One has to only look at the chain emails they receive, uncritically passed around from person to person, to see how pathetically misinformed the majority seem to be.

So many Americans say "Good!" when they hear that many corporations and the abundantly wealthy few are paying less taxes, without realizing that they and their children are paying for this instead, since government spending is increasing dramatically. They are paying for the billions being created by the Treasury and Fed to subsidize the reckless banks and the huge war profits of the corporations.

We are no better nor different than any other people that have been deluded and misled by propaganda, no matter how ridiculous it might have sounded to others. We asked, "How could they have believed that nonsense, right up to the point of their own destruction?" Now we know.

Its not that we are any less intelligent than others. We are more complacent, self-absorbed, conceited and naive, with our senses dulled by excess. And before you smile too smugly about the Americans, it is a high probability that your own country and central bank have deeply involved you in this financial scheme. Its just that their propaganda has a different tone and flavor.

"It also gives us a special, secret pleasure to see how unaware the people are around us of what is really happening to them." Adolf Hitler


Most Companies in US avoid Federal income taxes
12 Aug, 2008, 0955 hrs IST
The Economic Times (India)

WASHINGTON: Unlike the typical American citizen, most U.S. corporations and foreign companies doing business in the United States pay no federal income tax, according to a new report from Congress.

The study by the Government Accountability Office, expected to be released Tuesday, said two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, and about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period.

Collectively, the companies reported trillions of dollars in sales, according to GAO's estimate.

``It's shameful that so many corporations make big profits and pay nothing to support our country,'' said Sen. Byron Dorgan, who asked for the GAO study with fellow Democratic Sen. Carl Levin.

An outside tax expert, Chris Edwards of the libertarian Cato Institute in Washington, said increasing numbers of limited liability corporations and so-called ``S'' corporations pay taxes under individual tax codes.

``Half of all business income in the United States now ends up going through the individual tax code,'' Edwards said.

The GAO study did not investigate why corporations were not paying federal income taxes or corporate taxes and it did not identify any corporations by name. It said companies may escape paying such taxes due to operating losses or because of tax credits.

More than 38,000 foreign corporations had no tax liability in 2005 and 1.2 million U.S. companies paid no income tax, the GAO said. Combined, the companies had $2.5 trillion in sales. About 25 percent of the U.S. corporations not paying corporate taxes were considered large corporations, meaning they had at least $250 million in assets or $50 million in receipts.

The GAO said it analyzed data from the Internal Revenue Service, examining samples of corporate returns for the years 1998 through 2005. For 2005, for example, it reviewed 110,003 tax returns from among more than 1.2 million corporations doing business in the U.S.

Dorgan and Levin have complained about companies abusing transfer prices _ amounts charged on transactions between companies in a group, such as a parent and subsidiary. In some cases, multinational companies can manipulate transfer prices to shift income from higher to lower tax jurisdictions, cutting their tax liabilities. The GAO did not suggest which companies might be doing this.

``It's time for the big corporations to pay their fair share,'' Dorgan said.

Consumer Inflation Comes in Smoking Hot

Tomorrow is the August stock options expiry and the Wall Street wiseguys are gaming the system aggressively to skin the public, so don't let the short term market reactions to any news we get influence your own thoughts. Think for yourself.

August 15, 2008
Inflation Hits Annual Pace Not Seen Since 1991
By MICHAEL M. GRYNBAUM
NY Times

Inflation reached a 17-year high last month, fueled by high gasoline and food prices, all but assuring that the Federal Reserve will keep interest rates on hold for the time being.

Consumer prices were 5.6 percent higher last month than they were in July 2007, a brisker pace than economists had expected, the Labor Department said on Thursday.

That was the sharpest annual increase since January 1991, as Americans paid more for clothing, food, transportation and recreational products.

The news was distressing for investors and the stock markets initially fell on the report. The major exchanges recovered, however, and the Dow Jones industrials up more than 100 points in early afternoon trading.

Investors returned to buying financial stocks, taking advantage of a sector that has fared poorly in recent sessions. The broader S.&P. 500-stock index was up 0.61 percent. Wal-Mart also reported a better-than-expected rise in quarterly profits, but the discount retail giant also issued a gloomy sales forecast for the rest of the year. In addition, crude oil prices continued to fall, dropping below $113 a barrel.

The overall Consumer Price Index, considered the benchmark gauge of domestic inflation, rose 0.8 percent in July. Economists had forecast a rise of half that rate. In June, prices rose 1.1 percent, the second highest monthly pace in 26 years.

The C.P.I. surveys prices of a basket of common consumer goods, measuring everything from toothpaste and prescription drugs to airline fares and restaurant menus.

Because food and energy prices can be highly volatile from month to month, the Labor Department also calculates a so-called “core” price index, which strips out those costs. In July, core C.P.I. rose 0.3 percent, reaching a 2.5 percent annual rate.

That is higher than the Federal Reserve and other economic policy makers would prefer. Central bankers use core C.P.I. to see whether price increases are becoming entrenched in the broader economy; Fed officials are said to prefer a ceiling of 2 percent annual increases.

The Fed has signaled repeatedly that it has no plans to lower interest rates, given the threat inflation poses to the economy. Lowering rates could stimulate more economic activity, but such a move would risk inflating prices further. Thursday’s C.P.I. report cements that view, and suggests that a rate increase could come sooner rather than later. (They will only raise rates under extreme duress - Jesse)

Still, central bankers face a difficult set of possibilities. The American economy continues to deteriorate: consumer spending is bad and likely to get worse; home prices continue to fall; and Wall Street has been unable to shake a credit crisis that keeps hurting big institutions. Stock prices are down too, further eroding household wealth.

The C.P.I. provided further evidence about the price pressures facing Americans this summer. Energy prices were up 4 percent in July; transportation costs increased 1.7 percent on a sharp rise in airline fares; and the price of clothing soared 1.2 percent after falling or staying steady for most of the year.

Food and beverages also cost more, with prices rising 0.9 percent last month. Since July 2007, food prices have risen 5.8 percent.

Bank Seizures of US Homes Rise 184 Percent

Note the origin of the cartoon (China Daily, Beijing).

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." Thomas Jefferson

U.S. Foreclosures Increase 55%, Bank Seizures Rise to Record
By Dan Levy

Aug. 14 (Bloomberg) -- Bank repossessions almost tripled in July and U.S. foreclosure filings increased 55 percent from a year earlier as falling prices cut homeowner equity, accelerating the housing decline, RealtyTrac Inc. said.

Bank seizures rose 184 percent, the most since reporting began in January 2005, the Irvine, California-based seller of foreclosure data said today in a statement. More than 272,000 properties, or one in 464 U.S. households, got a default notice, was warned of a pending auction or were foreclosed on. Nevada, California and Florida had the highest rates.

``It's getting worse,'' Rick Sharga, RealtyTrac's executive vice president for marketing, said in an interview. ``The number of properties that have been foreclosed on by the banks and still haven't sold is the highest we've ever seen.''

Total filings rose 8 percent from the previous month to 272,171, just shy of the record 273,001 set in May, said RealtyTrac, which has a database of more than 1.5 million properties. Through July, 775,244 properties were owned by banks, compared with about 445,000 for all of 2007 and about 224,000 in 2006, Sharga said.

Foreclosures are depressing home prices, contributing to job losses and weakening consumption as fewer people borrow against the value of their home, New York-based analysts at Lehman Brothers Holdings Inc. said Aug. 7.

U.S. home prices fell 15.8 percent in May, the most since at least 2001, according to the S&P/Case-Shiller home-price index. One-third of home sellers in the second quarter lost money, Zillow.com, a Seattle-based provider of home valuations, reported this week....

Price Manipulation Always and Everywhere Creates Artificial Gluts and Shortages.

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