Economics 101

[Toddsterpatriot]

The IRS doesn't watch for things like that? What do we pay them for then?

It is hard. If company A is paying for widgets at $15 instead of $10 which is the average price, can the IRS do something about it? ... and that is assuming the IRS is able to find out the average price of widgets during that period and that company was buying them at a larger price.
Then as far as I know buying overpriced widgets isn't a crime.
Phantom services ( services bought and not provided)... I can't think of any way to detect them as far as ther is an invoice supporting them.

It is hard. If company A is paying for widgets at $15 instead of $10 which is the average price, can the IRS do something about it? ..

Absolutely. You think they'll just take your word for it? LOL!

Then as far as I know buying overpriced widgets isn't a crime.

If it's a related party transaction, they'll charge you taxes based on the proper price, plus a penalty.

I am not very optimistic about it: I've seen it done in the pharma industry with no penalty whatsoever for the company. It is really easy :
Company A produces base component X. There is a generic component X1 which has half the price.
Company A adds substance Y to component X, so it is not exactly equal to X1 ( for example for delayed absortion, and this might not be true, but it makes it a different substance).
Company B buys component X at an overprice and it is hard for bureaucrats at IRS to make an argument against that since it is not exactly the same component as X1.
Clever isn't it ?

Company B buys component X at an overprice and it is hard for bureaucrats at IRS to make an argument against that since it is not exactly the same component as X1.
Clever isn't it ?

Yes, losing money.....very clever.

Company B looses money, but pay at a rate of 35% of income taxes
Company A earns money , but pays a rate of 10% or less.
Company A owns company B.

They pay special attention to related party transactions.

Understanding the Implications of Related Party Transactions and Transfer Pricing - Inbound Logistics

 

[CultureCitizen]

It is hard. If company A is paying for widgets at $15 instead of $10 which is the average price, can the IRS do something about it? ... and that is assuming the IRS is able to find out the average price of widgets during that period and that company was buying them at a larger price.
Then as far as I know buying overpriced widgets isn't a crime.
Phantom services ( services bought and not provided)... I can't think of any way to detect them as far as ther is an invoice supporting them.

It is hard. If company A is paying for widgets at $15 instead of $10 which is the average price, can the IRS do something about it? ..

Absolutely. You think they'll just take your word for it? LOL!

Then as far as I know buying overpriced widgets isn't a crime.

If it's a related party transaction, they'll charge you taxes based on the proper price, plus a penalty.

I am not very optimistic about it: I've seen it done in the pharma industry with no penalty whatsoever for the company. It is really easy :
Company A produces base component X. There is a generic component X1 which has half the price.
Company A adds substance Y to component X, so it is not exactly equal to X1 ( for example for delayed absortion, and this might not be true, but it makes it a different substance).
Company B buys component X at an overprice and it is hard for bureaucrats at IRS to make an argument against that since it is not exactly the same component as X1.
Clever isn't it ?

Company B buys component X at an overprice and it is hard for bureaucrats at IRS to make an argument against that since it is not exactly the same component as X1.
Clever isn't it ?

Yes, losing money.....very clever.

Company B looses money, but pay at a rate of 35% of income taxes
Company A earns money , but pays a rate of 10% or less.
Company A owns company B.

They pay special attention to related party transactions.

Understanding the Implications of Related Party Transactions and Transfer Pricing - Inbound Logistics

Nice to know the theory Toddster, in practice I have seen it done.
Not a friend of a friend, I saw it when I made the cost of sales report for the products.
The effect was subtle of course, the price changed from one year to the other by a small margin ( between 5% and 25%), but the tactic to offshore the profits was there.

Indeed the job was done jointly with experts, people who knew exactly how to disguise the fact.

And that is only one way of doing it.

 

[Toddsterpatriot]

It is hard. If company A is paying for widgets at $15 instead of $10 which is the average price, can the IRS do something about it? ..

Absolutely. You think they'll just take your word for it? LOL!

Then as far as I know buying overpriced widgets isn't a crime.

If it's a related party transaction, they'll charge you taxes based on the proper price, plus a penalty.

I am not very optimistic about it: I've seen it done in the pharma industry with no penalty whatsoever for the company. It is really easy :
Company A produces base component X. There is a generic component X1 which has half the price.
Company A adds substance Y to component X, so it is not exactly equal to X1 ( for example for delayed absortion, and this might not be true, but it makes it a different substance).
Company B buys component X at an overprice and it is hard for bureaucrats at IRS to make an argument against that since it is not exactly the same component as X1.
Clever isn't it ?

Company B buys component X at an overprice and it is hard for bureaucrats at IRS to make an argument against that since it is not exactly the same component as X1.
Clever isn't it ?

Yes, losing money.....very clever.

Company B looses money, but pay at a rate of 35% of income taxes
Company A earns money , but pays a rate of 10% or less.
Company A owns company B.

They pay special attention to related party transactions.

Understanding the Implications of Related Party Transactions and Transfer Pricing - Inbound Logistics

Nice to know the theory Toddster, in practice I have seen it done.
Not a friend of a friend, I saw it when I made the cost of sales report for the products.
The effect was subtle of course, the price changed from one year to the other by a small margin ( between 5% and 25%), but the tactic to offshore the profits was there.

Indeed the job was done jointly with experts, people who knew exactly how to disguise the fact.

And that is only one way of doing it.

And if our corporate tax rate wasn't idiotically the highest in the world, the incentive to cheat wouldn't be so high.

 

[CultureCitizen]

I am not very optimistic about it: I've seen it done in the pharma industry with no penalty whatsoever for the company. It is really easy :
Company A produces base component X. There is a generic component X1 which has half the price.
Company A adds substance Y to component X, so it is not exactly equal to X1 ( for example for delayed absortion, and this might not be true, but it makes it a different substance).
Company B buys component X at an overprice and it is hard for bureaucrats at IRS to make an argument against that since it is not exactly the same component as X1.
Clever isn't it ?

Company B buys component X at an overprice and it is hard for bureaucrats at IRS to make an argument against that since it is not exactly the same component as X1.
Clever isn't it ?

Yes, losing money.....very clever.

Company B looses money, but pay at a rate of 35% of income taxes
Company A earns money , but pays a rate of 10% or less.
Company A owns company B.

They pay special attention to related party transactions.

Understanding the Implications of Related Party Transactions and Transfer Pricing - Inbound Logistics

Nice to know the theory Toddster, in practice I have seen it done.
Not a friend of a friend, I saw it when I made the cost of sales report for the products.
The effect was subtle of course, the price changed from one year to the other by a small margin ( between 5% and 25%), but the tactic to offshore the profits was there.

Indeed the job was done jointly with experts, people who knew exactly how to disguise the fact.

And that is only one way of doing it.

And if our corporate tax rate wasn't idiotically the highest in the world, the incentive to cheat wouldn't be so high.

Ok , it is high and as someone paying taxes I admit 25% seems fair enoug IF everyone pays its fair share. But even in that case I doubt those practices disappear. Small businesses simply can't do all the trickery that large corporations have at their disposal. When 0% is the alternative to 25%it is a no brainner for large corporations.

 

[Picaro]

Ok , it is high and as someone paying taxes I admit 25% seems fair enoug IF everyone pays its fair share. But even in that case I doubt those practices disappear. Small businesses simply can't do all the trickery that large corporations have at their disposal. When 0% is the alternative to 25%it is a no brainner for large corporations.

Yes. If big corporations ever actually paid this imaginary '33% tax rate', the rates could be lowered substantially all across the board for small and large companies., and the deficit would be a fraction of what it is now to boot. Most of these big companies actually have negative tax rates, and shareholders get paid larger dividends courtesy of taxpayers, but ideologues on the right don't like to mention that for some reason when posting disinformation about our alleged 'highest tax rate in the world 'nonsense. Many corporations, like energy companies and pipelines for example, collect federal taxes from customers, but never have to pay the money collected to the government, they get to pocket it, for instance.

 

[Picaro]

It is hard. If company A is paying for widgets at $15 instead of $10 which is the average price, can the IRS do something about it? ... and that is assuming the IRS is able to find out the average price of widgets during that period and that company was buying them at a larger price.
Then as far as I know buying overpriced widgets isn't a crime.
Phantom services ( services bought and not provided)... I can't think of any way to detect them as far as ther is an invoice supporting them.

It is hard. If company A is paying for widgets at $15 instead of $10 which is the average price, can the IRS do something about it? ..

Absolutely. You think they'll just take your word for it? LOL!

Then as far as I know buying overpriced widgets isn't a crime.

If it's a related party transaction, they'll charge you taxes based on the proper price, plus a penalty.

I am not very optimistic about it: I've seen it done in the pharma industry with no penalty whatsoever for the company. It is really easy :
Company A produces base component X. There is a generic component X1 which has half the price.
Company A adds substance Y to component X, so it is not exactly equal to X1 ( for example for delayed absortion, and this might not be true, but it makes it a different substance).
Company B buys component X at an overprice and it is hard for bureaucrats at IRS to make an argument against that since it is not exactly the same component as X1.
Clever isn't it ?

Company B buys component X at an overprice and it is hard for bureaucrats at IRS to make an argument against that since it is not exactly the same component as X1.
Clever isn't it ?

Yes, losing money.....very clever.

Company B looses money, but pay at a rate of 35% of income taxes
Company A earns money , but pays a rate of 10% or less.
Company A owns company B.

They pay special attention to related party transactions.

Understanding the Implications of Related Party Transactions and Transfer Pricing - Inbound Logistics

Many companies keep two sets of books, one for shareholders, another for the government. They will claim paying taxes on one, but not on the other set, so you have no idea whether they actually paid a dime in taxes on any of those transactions, and you also leave out all the deductions, real and imaginary, that knock the real tax rate down substantially, even to below zero.

 

[Toddsterpatriot]

Ok , it is high and as someone paying taxes I admit 25% seems fair enoug IF everyone pays its fair share. But even in that case I doubt those practices disappear. Small businesses simply can't do all the trickery that large corporations have at their disposal. When 0% is the alternative to 25%it is a no brainner for large corporations.

Yes. If big corporations ever actually paid this imaginary '33% tax rate', the rates could be lowered substantially all across the board for small and large companies., and the deficit would be a fraction of what it is now to boot. Most of these big companies actually have negative tax rates, and shareholders get paid larger dividends courtesy of taxpayers, but ideologues on the right don't like to mention that for some reason when posting disinformation about our alleged 'highest tax rate in the world 'nonsense. Many corporations, like energy companies and pipelines for example, collect federal taxes from customers, but never have to pay the money collected to the government, they get to pocket it, for instance.

Most of these big companies actually have negative tax rates

Can you prove this claim?

 

[Toddsterpatriot]

It is hard. If company A is paying for widgets at $15 instead of $10 which is the average price, can the IRS do something about it? ..

Absolutely. You think they'll just take your word for it? LOL!

Then as far as I know buying overpriced widgets isn't a crime.

If it's a related party transaction, they'll charge you taxes based on the proper price, plus a penalty.

I am not very optimistic about it: I've seen it done in the pharma industry with no penalty whatsoever for the company. It is really easy :
Company A produces base component X. There is a generic component X1 which has half the price.
Company A adds substance Y to component X, so it is not exactly equal to X1 ( for example for delayed absortion, and this might not be true, but it makes it a different substance).
Company B buys component X at an overprice and it is hard for bureaucrats at IRS to make an argument against that since it is not exactly the same component as X1.
Clever isn't it ?

Company B buys component X at an overprice and it is hard for bureaucrats at IRS to make an argument against that since it is not exactly the same component as X1.
Clever isn't it ?

Yes, losing money.....very clever.

Company B looses money, but pay at a rate of 35% of income taxes
Company A earns money , but pays a rate of 10% or less.
Company A owns company B.

They pay special attention to related party transactions.

Understanding the Implications of Related Party Transactions and Transfer Pricing - Inbound Logistics

Many companies keep two sets of books, one for shareholders, another for the government. They will claim paying taxes on one, but not on the other set, so you have no idea whether they actually paid a dime in taxes on any of those transactions, and you also leave out all the deductions, real and imaginary, that knock the real tax rate down substantially, even to below zero.

They will claim paying taxes on one, but not on the other set,

Why do you think they can get away with these supposed lies?

so you have no idea whether they actually paid a dime in taxes on any of those transactions,

The IRS has no idea?

and you also leave out all the deductions, real and imaginary, that knock the real tax rate down substantially,

What's an "imaginary deduction"?
Why do you feel I'm ignoring deductions?

 

[EdwardBaiamonte]

It is not surprise that Friedman took a pure monetary approach to the '29 crisis. .

dear, I guess he figured that after 35% of the banks disappeared and the money supply shrunk by 38% that it had something to do with the collapse of the economy. 100% stupid and liberal as always. You fool no one by reading a erudite article and then talking from it when you have not had Econ 101 and cant understand what you read. Grow up please.

 

[P@triot]

For those few progressives left that haven't figured out why Barack Obama is the only president in U.S. history to not have at least one year of 3% GDP growth.

The flat-earth progressives who deny reality just can't bring themselves to accept what the rest of the world is accepting (including socialist nations). While consumers look for the best deals from businesses, businesses look for the best deals from governments. They aren't going to pay more for labor, taxes, and regulations than they have to anymore than you would pay more for a home, an automobile, and a tv than you have to. You shop around and you get the best deal. That's what businesses do as well. And that is why so many have taken their manufacturing operations, and the subsequent jobs, overseas. Idiotic progressive policies have driven them there. We need smart, sound, conservative economic policy to bring them back and keep them here.

Soaring Business Taxes Hurt America’s Ability to Compete

 

[EdwardBaiamonte]

For those few progressives left that haven't figured out why Barack Obama is the only president in U.S. history to not have at least one year of 3% GDP growth.

The flat-earth progressives who deny reality just can't bring themselves to accept what the rest of the world is accepting (including socialist nations). While consumers look for the best deals from businesses, businesses look for the best deals from governments. They aren't going to pay more for labor, taxes, and regulations than they have to anymore than you would pay more for a home, an automobile, and a tv than you have to. You shop around and you get the best deal. That's what businesses do as well. And that is why so many have taken their manufacturing operations, and the subsequent jobs, overseas. Idiotic progressive policies have driven them there. We need smart, sound, conservative economic policy to bring them back and keep them here.

Soaring Business Taxes Hurt America’s Ability to Compete

and, a business has no choice but to look for the best country in which to operate. If it doesn't a competitor will and they will be driven out of business.

moreover, the entire process is driven by customers who, oddly, always want the lowest price. Customers are greedy, business owners are not.

In fact, a business will often make less money since the competition is off shore too and thus prices then have to be lower to reflect the lower production costs.

Seems simple but does a liberal have the IQ to understand it? Not even close.

 

[EdwardBaiamonte]

For those few progressives left that haven't figured out why Barack Obama is the only president in U.S. history to not have at least one year of 3% GDP growth.

The flat-earth progressives who deny reality just can't bring themselves to accept what the rest of the world is accepting (including socialist nations). While consumers look for the best deals from businesses, businesses look for the best deals from governments. They aren't going to pay more for labor, taxes, and regulations than they have to anymore than you would pay more for a home, an automobile, and a tv than you have to. You shop around and you get the best deal. That's what businesses do as well. And that is why so many have taken their manufacturing operations, and the subsequent jobs, overseas. Idiotic progressive policies have driven them there. We need smart, sound, conservative economic policy to bring them back and keep them here.

Soaring Business Taxes Hurt America’s Ability to Compete

and, a business has no choice but to look for the best country in which to operate. If it doesn't a competitor will and they will be driven out of business.

moreover, the entire process is driven by customers who, oddly, always want the lowest price. Customers are greedy, business owners are not.

In fact, a business will often make less money since the competition is off shore too and thus prices and profits have to be lower to reflect the lower production costs.

Seems simple but does a liberal have the IQ to understand it? Not even close.

 

[P@triot]

Another perfect example. Not only did the progressive state income tax not balance the budget despite an astounding $126 billion in revenue - but it has made spending explode as the progressives now believe the have a blank check at their disposal...

• In 1991, Connecticut Gov. Lowell Weicker decried the state’s “orgies of spending,” and said his income tax proposal—which would include fiscal discipline—would balance the books.

• Connecticut recently marked the 25th anniversary of the income tax, which has resulted in little to no spending restraint.

• State spending grew 71% faster than inflation from 1991 to 2014 and

• Most of that went toward debt services payments and state employee benefits—which combined grew 174% over the rate of inflation, according to a report by the Yankee Institute for Public Policy, a Connecticut think tank.

• “But many states lean on the revenue from an income tax will can discourage labor, drive down wages, and drive business to relocate.”

What Happened After Blue State Introduced an Income Tax

 

[P@triot]

What conservatives have known and said for decades. This is so simple - and progressives know it to. But they refuse to admit it.

• According to Paul Trussell, an analyst at Deutsche Bank, the number of people utilizing the Supplemental Nutrition Assistance Program, or SNAP, in June 2016 was down 4.7% from the same month a year before, and the number of households using SNAP was down 5.2% year-over-year.

• "The month of June represents the biggest YOY decline in persons and households participating in SNAP in the program's history," Trussell wrote in a note to clients on Thursday.

• The primary driver, according to Trussell, is the reinstitution of work rules by states. During the financial crisis, the federal government allowed states to waive requirements regarding employment for SNAP recipients as the unemployment rate soared.

The number of people on food stamps is plummeting at the fastest rate ever after the government made a key change

 

[P@triot]

Progressive policies continue to drive jobs out of the country. Left-wing ideology can't bring itself to accept that businesses shop for the best deal just like consumers shop for the best deal. China, Indonesia, Mexico, etc. continue to offer a much better deal in terms of tax rates, labor laws, regulations, etc.

Ford shifting all U.S. small-car production to Mexico

 

[P@triot]

Left-wing progressive policy doing what it always does - collapsing economies and dragging everyone down into poverty and misery...

Venezuela’s Govt -Owned Oil Industry Collapsing. Socialist State Now Buying American Oil.

 

[P@triot]

Say this for progressives - their policies are extremely consistent. You always know exactly what you'll get. Higher unemployment. More poverty. More famine. More misery. More debt. Economic collapse.

Cooper, of Project 21, said that African-Americans did fare better during the Ronald Reagan years, and even during the 1990s with Bill Clinton, along with every other demographic, before Obamacare, the stimulus spending, and other regulation crowded out the private sector.

“There was an increase in black Americans owning homes, in high school graduations, and attending college,” Cooper said. “Today, it’s harder for entrepreneurs. If not for the digital economy, all opportunities might be eliminated. Barriers for entry into the economy are artificially higher because of the federal government.”

How Minorities Have Fared in Obama Economy

 

[P@triot]

Can only imagine what all of the illegal immigrants that Dumbocrats encourage and facilitate are costing us...

Every Immigrant Without High School Degree Costs US $640,000

 

[P@triot]

South America is figuring out what progressives in America already know but are too immature to accept: left-wing policies end in poverty and misery.

• With the Senate impeachment vote to remove from office former President Dilma Rousseff, Brazilians joined a lengthening line of Latin Americans who have soured on the populist, corrupting, and impoverishing policies of “21st Century Socialism.”

• Faced with its disastrous consequences, people in some neighboring countries had already turned the page and moved on. Argentina wised up late last year and installed center-right President Mauricio Macri after more than a decade of misrule by the Peronist Kirchner family.

• Earlier this year, Peruvians voted for a 78-year-old center-right economist to get them back on track.

• And in Caracas, Venezuela, tens of thousands took to the streets demanding the removal of the brutally fascistic regime put in power by one of 21st Century Socialism’s founding fathers, the late Hugo Chávez.

'Socialism of the 21st Century' Collapses in Brazil

 

[EdwardBaiamonte]

South America is figuring out what progressives in America already know but are too immature to accept: left-wing policies end in poverty and misery.

I like your optimism but if the world didn't figure it out after Stalin, Mao, East Germany Cuba, FDR, and 132 others I doubt it will ever be figured out.