Posts Tagged ‘Tax Rates’

How does GM’s tax rate compare to Buffett’s secretary’s?

March 2, 2012

Interesting editorial in the WSJ re: the GM bailout.

Everybody knows the GM’s stock holders were wiped out, that secured debt holders were subordinated to the unsecured UAW claims and  haircut to about 50 cents on the dollar, and that “New GM” stock is trading about 25% below its IPO price — leaving taxpayers with a $15 billion book loss on Treasury holdings.

What most folks don’t know is that GM got a special deal that rolls old GM’s $45 billion in accumulated tax losses into new GM.  That’s usually not allowed when restructuring companies — as a means of stopping companies from just acquiring losses from other companies as a tax dodge.

Bottom line:

In a 2011 working paper, J. Mark Ramseyer of Harvard and Eric Rasmusen of Indiana University argue that by manipulating corporate tax rules by fiat, “Treasury gave the firm (and its owners, including the UAW) $18 billion more in assets.”

The WSJ observed:

Mr. Obama crowed yesterday about GM’s “highest profits in its 100-year history.”

We’d be interested to hear how its effective tax rate compares with Warren Buffett’s secretary’s.

Hmmm ….

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Mickey D says he deserves a break today … a tax break, that is.

November 9, 2011

Reported in the UK Telegraph

McDonald’s CEO says: Curb spending and cut taxes

“America must cut taxes and reduce government spending in order to kick-start an economic recovery, Jim Skinner, the chief executive of McDonald’s, has warned.”

“In order to create jobs in America, you’re going to have to cut taxes… particularly in the business community.

“We pay some of the highest [corporate] taxes around the world. There needs to be some levelling.”

For the record, in 2010, McDonald’s paid the Feds $1 billion on $2.624 billion in profits … pardon the pun, but that’s a whopper: 38.9%

I think Mickey (and Ronald) may have a point …

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You may be closer to the top 1% club than you think … or, at least the top quartile.

October 31, 2011

The IRS recently released 2009 tax data.

Here are some highlights:

  • It takes $343,927 in household income to make it into the top 1%; $112,124 to make the top 10%; and $66,193 to make the top quartile … sounds to me like a reasonable reach.
  • Excluding Warren Buffett, the top 1% pays a 24% effective rate … higher than Buffett’s secretary … whew!
  • The top 10% pays 70% of Federal income taxes; the bottom half pays essentially nothing … hmmm.

Virtually all of the people in the bottom half think that people at the top should pay more … it’s called “fairness”

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