When a company sees that its profit will cause it to pay higher taxes and it decides to re-invest or give to charity so it falls in a lower tax bracket do you see this as a form of Tax Evasion? What do you see as some of things people do to avoid paying taxes (legally)?
Absolutely, it is a form of tax evasion. It bothers me that these practices are also legal, because they should not be. If a company is making a profit, then it should be taxed on that profit.
International Level: Envoy / Political Participation: 241 24.1%
This is actually a tricky question. It depends on what they do with the money or rather where the money comes from. Re-investing into the company is great as it usually ends up creating more jobs or allowing jobs that are there to remain for a longer time. This actually brings money to the government through individual taxes.
Another way that companies decrease there profit margin is to do research and development. This is a dollar for dollar tax relief with research and development. It also helps our technology progress and creates jobs. If there were no research and development tax relief, then many companies would purely be worried about the bottom line on a yearly basis (This is particularly bad with US companies) and would do no research and development. For large technology based companies, this relief is a must in order to keep up with the rest of the world or to stay a leader.
However, if a company starts to play games with devaluing assests or changing depreciation rates in order to gain higher profits, then that is not right! The IRS looks out for this very closely with large and small companies.
Just my Thoughts,
Vincenzo.
International Level: International Guru / Political Participation: 863 86.3%
It is no more a form of tax evasion than it is for me to take a deduction on my taxes for my tithing donation to my Church or for me to take a tax write off for the interest I pay on my taxes. As long as it is allowed by law, it is not tax evasion. It is more, tax avoidance, which I think we all do our best to achieve.
I think reinvesting in the company and charitable donations are an excellent pursuit. Also, lets be clear about something, businesses do not pay taxes, people do. Period. The more business is taxed, the less it's employees make in salaries and benefits, the more the services cost, etc. If your goal is to tax the rich, you must do so at the individual level, not the business level. It simply doesn't work.
International Level: Diplomat / Political Participation: 320 32%
Obama calls for end to tax inversion 'loopholes,' cites Panama Papers
President Obama praised new Treasury Department rules that will make it harder for companies to do tax inversions that allow them to buy a smaller corporation and then move their corporate address overseas. "It sticks the rest of us with the tab," he said at the White House. Ref. USAToday.