Corporate taxation has become an important issue in the U.S., as budget deficits loom and an important election approaches. Many U.S. companies have said that high corporate income tax is onerous and reduces their ability to compete globally.
Photo courtesy of Raw Pixel (Unsplash.com)
According to USA Today analysis of S&P Capital IQ data, however, there were at least 20 companies in the Standard & Poor’s 500 that reported paying an effective tax rate of 0 percent or lower for the second quarter of 2014. To be included in the analysis, the companies had to report positive earnings, including unusual items, before taxes.
One such company was drug-producing giant Merck, which had a negative effective tax rate of 7.5 percent for the second quarter, according to USA Today. In other words, taxpayers gave the company the equivalent of 7.5 percent of its quarterly profits in tax credits. Merck’s pre-tax income rose 52 percent during the quarter, coming to $1.9 billion.
This anomalous tax rate was attributed to the “beneficial impact of foreign earnings” in the company’s filing, but Merck also got a significant one-time tax benefit from an option exercise that involved AstraZeneca’s purchase of its interest in a partnership, the news source explained. AstraZeneca has also been under public scrutiny with regards to corporate tax practices.
President Barack Obama and other liberals have been making corporate taxation a major issue ahead of the 2014 midterm elections. Both sides of Congress agree that tax code reform is necessary, but many analysts agree that the political deadlock will prevent anything from happening before the elections determine the shape of the next two years.
As tax attorneys for Scarinci Hollenbeck, a regional business law firm with offices in New York, New Jersey, and Washington D.C., James F. McDonough and I are acclimated with corporate culture and the goings-on of corporations regarding income taxes. Check out some of latest post on this hot-button topic:
Dissolving Your Business: Essential Legal Steps to Protect Your Interests
If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]
The Role of Corporate Restructuring in Mergers & Acquisitions
Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]
Crypto Enforcement: A Former Prosecutor’s Warning to Criminals and the Public
Cryptocurrency intimidates most people. The reason is straightforward. People fear what they do not understand. When confusion sets in, the common reaction is either to ignore the subject entirely or to mistrust it. For years, that is exactly how most of the public and even many in law enforcement treated cryptocurrency. However, such apprehension changed […]
Understanding Chattel Paper: A Key Component in Secured Transactions
Using chattel paper to obtain a security interest in personal property is a powerful tool. It can ensure lenders have a legal claim on collateral ranging from inventory to intellectual property. To reduce risk and protect your legal rights, businesses and lenders should understand the legal framework. This framework governs the creation, sale, and enforcement […]
For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]
Supreme Court and Title VII: Implications for Reverse Discrimination
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
