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The
Desperate Plight of Our Overtaxed Corporations or, How Can
a Poor Man Stand Such Times and Live
November
14, 2001
by Anonymous
Even though I may seem lifelike, I’m actually a corporation,
which means I’m 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 that’s 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 – starting (and apparently ending) with massive
corporate giveaways and further abrogation of civil liberties.
But still, there’s 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, you’re entitled to some background.
In the mid-‘90s, I had been running my own consulting practice
and getting absolutely reamed each April – not to mention
the punitive quarterly estimates for both feds and state.
I had been operating as a sole proprietorship, which is code
for "let’s 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
who’s 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.
I’ve always said if you’re going to live in the world champion
of unbridled, freebooter, rapacious radical capitalism, you’re
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 you’re here, then immigrate
to a civilized country when you’ve 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 what’s
left of Afghanistan, go here.(1)
So in 1995, I took my own advice and mutated into an S-Corp.
I’m now its CEO, president, chairman, office manager, washroom
attendant and purchasing agent. I’m also its sole employee.
I no longer remember what the "S" stands for, but it might
as well be "small." There’s 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 it’s 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. They’re concerned that
corporate taxes are too onerous in these trying times and,
frankly, I just know I’d 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 I’d like fries with my meal. But listen,
I’m regarded by at least one Congressman as a "job creation
machine," hilarious blowhard apologist fool that he is, so
I’m 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 public’s nickel.
So let’s talk a bit about some of the stuff S-Corps can write
off today – 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 it’s
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 – Paris, Rome, London,
Tahiti, Kabul, you name it – 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 we’ll have the actual board meeting).
- My corporation can spend up to $17,500 per year to decorate
the corporate offices. Now, since there’s 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 doesn’t 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 it’s 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 corporation’s a really lousy bargainer
or I’m 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.
- There’s also a magic undocumented deduction that can
be used to great advantage. In brief, an S-Corp doesn’t
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, they’d
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 who’s 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 wouldn’t
fit in the office, so she had to install it in the living
room, where her husband and kids – corporate officers all
– could watch all the fine business presentations each evening
on HBO and Showtime.
- And then there’s golf. I’m an addict, although I’m 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
– 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 – plus monthly
fees, of course. All perfectly legitimate business expenses.
Generally speaking, unless you’re somebody like Robert Vesco,
cheating doesn’t pay nearly this well. Personally, I wouldn’t
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, America’s 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
it’s 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 can’t 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 – some
retroactive all the way back to 1986 – you can appreciate
that I’m 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 I’m
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 don’t ask. But you
might start pestering your representatives – both elected
and selected – as to why, as an individual and American citizen,
you don’t get to do all this outrageous stuff. I mean, if
work’s 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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