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Thread: An Op-ed with value

  1. #1
    Join Date
    10-22-01
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    An Op-ed with value

    What is being discussed here is an ongoing phonied up claim by the media---on both sides, likely because they themselves don't understand it. Here it is for all to understand as well as take the wind out of Lizzy's sails---who undoubtedly already understands and hopes we don't. This is political pandering to the unwashed

    The most effective way we have of making our politicians accountable is to educate ourselves and that my friends takes work and will not happen in front of a TV.

    Elizabeth Warren’s War on Accounting
    Her ‘Amazon tax’ plan would undermine the FASB and ultimately harm small investors and workers.
    By Scott Dyreng
    Nov. 14, 2021 5:30 pm ET

    Sen. Elizabeth Warren speaks during the Senate Armed Services Committee hearing in Washington, Oct. 26.

    The engine of the corporate tax system is sputtering, and Democrats are trying to fix it with a Band-Aid instead of a wrench. They’re proposing a corporate minimum tax, which they call the “ Amazon tax,” targeting U.S. companies that pay little or no taxes despite reporting billions in profits each year to shareholders.

    The Democrats’ proposed 15% levy on the world-wide financial-accounting earnings of large, highly profitable companies may sound familiar. It was originally proposed by Sen. Elizabeth Warren during her bid for president. Democrats are pushing this tax again now, hoping it will encourage passage of a $1.85 trillion reconciliation bill to fund President Biden’s Build Back Better plan.

    Any plan to tax financial-accounting earnings is ill-conceived, as I argued on these pages in May 2019. Blurring the lines between taxable income and financial-accounting profit would inevitably lead to political meddling in financial-accounting rules and damage the usefulness of financial accounting for investors.

    The political meddling has already begun. In September 2019, shortly after Sen. Warren introduced her version, she and 11 other senators wrote to the Financial Accounting Standards Board, a private institution that defines best procedures for accounting, urging it to increase disclosure of foreign subsidiary activities for the purpose of improved tax enforcement. If tax enforcement or any other political objective were to enter the decisions of the FASB, accounting standards would immediately deteriorate.

    Politicians and the FASB have vastly different objectives. Financial-accounting rules are created by the apolitical FASB to provide information useful to investors. In contrast, tax-accounting rules are largely determined by Congress to achieve such objectives as raising revenue, encouraging or discouraging certain behavior, and redistributing wealth. Two accounting systems are necessary, one for pursuing social objectives through the tax system, the other for giving investors comparable, reliable and timely information. The U.S. is not unique in this regard. Every developed country has a tax-accounting system that is separate from its financial-accounting system.

    Because the objectives of the two systems are different, the income they compute is different. In some years, the discrepancies can be large. A company will appear to have paid a very low amount of tax if its taxable income is low compared with its financial-accounting earnings. The opposite also happens, but these occurrences go largely unnoticed. In fact, discrepancies between financial accounting and tax accounting are evidence of a system that works. It does not justify a new tax on financial-accounting income.

    If Congress wants to raise more revenue and prevent companies from reporting low tax rates, it should change the tax code. For 2018, Amazon reported more than $11 billion in income to shareholders and paid no federal income tax, largely because of tax deductions the company received after compensating employees with restricted stock. The solution? Reduce deductions on restricted stock.

    In 2018, FedEx reported more than $3.5 billion in income to shareholders and paid no federal income tax, largely as a result of accelerated depreciation deductions. The solution? Roll back bonus depreciation and other investment tax benefits. The list goes on. Companies often report low tax payments because they have posted losses in the past, they have significant investments in sustainable energy, they operate in countries with low tax rates and so on. Each of these tax breaks was enacted to achieve political, social or economic objectives, but could be altered by changing tax laws if Congress believes raising revenue or reporting higher tax rates is more important.

    Taxing financial-accounting earnings would harm the people the Democrats intend to protect: small investors and workers. Trying to fix the corporate tax system using financial accounting standards is like trying to fix a car at a doctor’s office. Take the car to a mechanic instead.
    ...and my own commentary:

    It is sad, that so few "journalist" and managing editors of today's so called news outlets, spend time reporting with gusto about what seems to be "popular" with their audience rather than trying to understand the true facts of the subject at hand and explain that to their audience. People have a far greater ability to absorb and process facts than the spoon feeders seem appreciate---or is it that they are simply too lazy to work at a true understanding?
    "A pessimist sees the difficulty in every opportunity, an optimist sees the opportunity in every difficulty” ---Sir Winston Churchill
    "Political extremism involves two prime ingredients: an excessively simple diagnosis of the world's ills, and a conviction that there are identifiable villains back of it all." ---John W. Gardner
    “You can’t go back and change the beginning, but you can start where you are and change the ending.” ---C. S. Lewis

  2. #2
    Join Date
    10-30-01
    Location
    Salt Lake City
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    30,650
    I can see why the media and our citizens would have a hard time appreciating Warren's moves. Heck, I had to read the posted material twice to get it down. I'd be surprised if our Congressional and Senate members would take the time to do the same.

    Hunter
    I don't care if it hurts. I want to have control. I want a perfect body. I want a perfect soul. - Creep by Radiohead

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