Democratic Underground

The Desperate Plight of Our Overtaxed Corporations or, How Can a Poor Man Stand Such Times and Live
November 14, 2001
by Anonymous

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Even though I may seem lifelike, Iím actually a corporation, which means Iím turning handsprings over the exuberant largesse shown by my employees in the House of Representatives and the White House as they ramrod this goofy multi-billion dollar corporate kickback scam called, with unrestrained irony, "The Economic Security and Recovery Act" through the legislative process.

Now if only the Democratically controlled Senate signs on. Not that thatís been in question of late, as the dashing Mr. Daschle positions his party to out-Republican its Republican colleagues in his zeal to demonstrate an appropriate level of patriotism Ė starting (and apparently ending) with massive corporate giveaways and further abrogation of civil liberties. But still, thereís some token resistance from the back benches. I mean, how much money do we have to slip these weasels every election cycle before they act right?

But first, patient reader, youíre entitled to some background. In the mid-Ď90s, I had been running my own consulting practice and getting absolutely reamed each April Ė not to mention the punitive quarterly estimates for both feds and state. I had been operating as a sole proprietorship, which is code for "letís give the feds all our money every year." I had respectable annual revenue, but by the time they were done with me, I was running a de facto nonprofit.

One day I was talking about my tax situation with a friend whoís in a similar field. It turned out that he and I had grossed roughly the same the previous year, we had most of the same write-offs, yet he had paid many thousands of dollars less and his quarterly payments were negligible. The only significant difference: He had incorporated.

Iíve always said if youíre going to live in the world champion of unbridled, freebooter, rapacious radical capitalism, youíre a damn fool if you act any other way. You can either roll your eyes and bemoan the corporatization of America, or you can take advantage of it while youíre here, then immigrate to a civilized country when youíve amassed sufficient funds. Meanwhile, what more effective way to demonstrate your disgust for administrations past and present than to deny them operating capital? (To see your tax dollars at work obliterating whatís left of Afghanistan, go here.(1)

So in 1995, I took my own advice and mutated into an S-Corp. Iím now its CEO, president, chairman, office manager, washroom attendant and purchasing agent. Iím also its sole employee.

I no longer remember what the "S" stands for, but it might as well be "small." Thereís an alphabet soup of different kinds of corporations: C-Corps, LLCs and so forth. According to my accountant, Saint Brad of the Perpetual Deduction, S-Corp status seemed right for me. And how.

It cost me about $400 to incorporate. The first year I filed as an S-Corp, I grossed about $10,000 more than I had the prior year and paid about $15,000 less in state and federal taxes for a net gain of $25,000. Which is one hell of a return on a $400 investment. And itís been rolling right along in similar fashion each successive year, partially because of the corporate structure itself and partially because the corporation can write off all kinds of wonderful stuff that individuals would do time for.

Plus, I no longer have to take any personal responsibility whatsoever for my business practices. If I screw up and a client sues me for nonperformance or malpractice, big deal. The corporation simply goes out of business and reforms the next week with a new name, new letterhead and the same old deadbeat employee. Kind of like Johns-Manville and the asbestos settlement, although on a considerably smaller scale.

But many of my employees in Congress point to the hardships faced by our steadfast corporations. Theyíre concerned that corporate taxes are too onerous in these trying times and, frankly, I just know Iíd feel considerably more patriotic blowing my tax savings by kicking back on Maui and nursing a tax-deductible drink with some silly ass little umbrella in it.

Of course, the corporate tax bite is already considerably smaller, percentage-wise, than the burden that falls on the kid who asks me if Iíd like fries with my meal. But listen, Iím regarded by at least one Congressman as a "job creation machine," hilarious blowhard apologist fool that he is, so Iím not going to worry overmuch about the taxation travails of the peasant class. Particularly when I could be spending my time playing golf on the publicís nickel.

So letís talk a bit about some of the stuff S-Corps can write off today Ė even before the munificent Economic Security and Recovery Act slithers its way toward the Oval Office. Mind you, this is a tiny, tiny fraction of what I could get away with if I were one of the big C-Corp guys, but still itís transcendently cool and somewhat illustrative of the amazing feats of legal tax avoidance enabled by corporate campaign contributions.

  • My corporation is compelled by law to hold at least one, and no more than four, board meetings each year. It can hold them anywhere on the planet Ė Paris, Rome, London, Tahiti, Kabul, you name it Ė and, since my wife is a corporate officer, she has to go, too. Our round trip air fair is fully deductible, as are most of the costs of our meals, lodging, ground transportation, tips, and any clothes we buy that happen to be necessary to conduct business (like a new Brioni suit to get into that chi chi restaurant in Florence where weíll have the actual board meeting).
     
  • My corporation can spend up to $17,500 per year to decorate the corporate offices. Now, since thereís only so much you can do to a 10 by 12 room, I suppose the corporation could buy a square inch of a small Monet or Matisse each year and hope to get the entire painting before the death of its CEO. Or it can just keep buying new desks, computers, shelves, rugs and other boring junk like that. The important thing is to spend the $17,500 by December 31, though, because it doesnít carry over year to year. Maybe we can have Congress fix that mild injustice, too.
     
  • The corporate car is a write-off, even though its employee and sole driver works almost exclusively from home and most of its miles are logged traveling to and from various golf destinations. Its computer equipment is a monthly write-off, even though itís been paid for hundreds of times over. And of course the home office is a full write-off, too. In the latter case, either the corporationís a really lousy bargainer or Iím an exceptionally good one, because the company is paying me a ridiculously high rent to lease some rather modest office space. But no matter; the sum just needs to be reasonable enough to stay below the IRS radar.
     
  • Thereís also a magic undocumented deduction that can be used to great advantage. In brief, an S-Corp doesnít need a receipt to verify cash expenditures of less than $75. And while my corporation is a paragon of virtue where this stuff is concerned, other less scrupulous companies might see one hell of an opportunity there. I mean, if a company spent an alleged $70 a day for an entire year, theyíd get a $25,550 write-off. Not bad for sitting on the couch making phony notes in a day timer.
     
  • The guy who first told me about the incorporation hustle is a proficient target shooter. He wanted a new high-end .22 pistol a few years back, so he wrote it off as the corporate security program, which is completely legitimate under the rules.
     
  • Another friend whoís also gone the S-Corp route is an avid mountain biker. So he bought one of those $2,500 ultra-lightweight jobbies and wrote it off as the corporate fitness program, which again is completely legitimate.
     
  • Yet another S-Corp pal bought one of those giant screen TV and multi-speaker stereo combinations and wrote it off as corporate audiovisual equipment. Tragically, it wouldnít fit in the office, so she had to install it in the living room, where her husband and kids Ė corporate officers all Ė could watch all the fine business presentations each evening on HBO and Showtime.
     
  • And then thereís golf. Iím an addict, although Iím terminally lousy. Still, because many of my clients also play, I can write off the full cost of every round with them as a legitimate business expense. I can write off an expensive set of clubs Ė either as my own corporate fitness program or as a business necessity. If I had the money and could pass the scrutiny of its stodgy membership, I could even write off the $50,000 or so it would cost to join the local club Ė plus monthly fees, of course. All perfectly legitimate business expenses.

Generally speaking, unless youíre somebody like Robert Vesco, cheating doesnít pay nearly this well. Personally, I wouldnít dream of cheating. Why bother when all this crazy stuff is perfectly legal. In fact, write-offs are what keep corporate America humming.

Sales meetings in Barbados? Full write-offs. Christmas parties and office picnics? Full write-offs. A new Lexus for the VP of marketing? Full write-off. Outcall service for the poor, harried VP of sales? Only a partial write-off, but you can always fiddle the books and call it something like, oh, a corporate stress reduction seminar, at which point sexual dalliance, too, becomes a full write-off.

Outcalls notwithstanding, the only people really getting screwed here are, shockingly, Americaís wage earners. Since the federal budget is a relatively fixed number, somebody has to pick up the slack. And that would be the guy back at the burger place, or maybe the cop or the firefighter, since itís sure as hell not going to be anyone who can afford a decent accountant.

The corporate tax code is so generously whimsical that the only way I can explain it is, every time I uncover yet another really juicy perk that canít possibly be accounted for by common sense or business necessity, I just envision one of my Congressional employees skulking out of a room at the Watergate complex, pockets stuffed with fifties and hundreds, followed a few moments later by a couple of Gucci Gulch bag men.

So when I see Congress demonstrating its patriotic fervor by conspiring to reward our very finest American corporate welfare queens with another $115 billion in tax breaks Ė some retroactive all the way back to 1986 Ė you can appreciate that Iím of somewhat divided loyalties. The venal bastard in me says "bring it on," while the more noble side says "oh, but what of the lofty goals and grand aspirations of America, guiding light of the free world, home of decency and goodness and equal opportunity for rich white guys, no matter how criminally incompetent they may be."

Then I call Saint Brad the accountant and ask how much Iím going to skate on this year, make travel plans for yet another burdensome board meeting somewhere near Barcelona, and somehow all my moral ambivalence about war profiteering and the class struggle simply evaporates like the morning dew on yet another gloriously sunny American tax-free day.

- - - - -

For obvious reasons, the author has absolutely no interest whatsoever in revealing his identity, so donít ask. But you might start pestering your representatives Ė both elected and selected Ė as to why, as an individual and American citizen, you donít get to do all this outrageous stuff. I mean, if workís as damn noble as these pontificating blowhards in government and industry tell us, how come workers are always the first ones getting screwed? Seems like a fair question, although I think we all know the answer.

(1) Courtesy of the Manchester Guardian Online via the exceptionally fine Blowback website ).

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