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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (74680)	1/27/2000 5:25:00 PM
From: Knighty Tin	Respond to of 132070

Wayne, Part of it has to do with the fact that they have shifted their mix of reporting info to reflect the lower corporate rates that went into effect a decade ago. Also, we have seen a major move toward selling assets or investments due to the much lower capital gains rates and a move away from cash and bond holdings. Few play dividend capture any more as there are too few cos. paying decent dividends. However, the major tax reduction game is the M&A scam. There are so many loopholes in these deals that nearly every sleazeball co. in America is taking advantage. Earlie and I have listed a few here before. For example, when they take over a co., they write off some or most or all of its inventory as obsolete and worthless. Then, for tax purposes, they have a large one time writeoff. But, of course, they make certain that investors don't pay any attention to these numbers behind the curtain. So a takeover every quarter leads to a much lower tax rate. The cos. get a lower tax rate by reporting expenses to the IRS while suckering investors into ignoring the expenses but paying attention to the extra income and revenues from the merger. It also leads to some income scamming, as the firms then sell some of that inventory carried at cost for any positive price and it goes straight to eps. Another fact of life is that US corporations are going deeper into debt and lower rates have meant that this leverage has paid off in higher eps but lower tax rates. You get to write off interest cost, but if you can earn more than your interest rate, you cop a nice earnings pop at a slightly lower overall tax rate. Of course, if the market ever turns down, that game bites you in the patootie.