Retire in your 30s and Get Subsidized Healthcare? I don't get it.

[MRG]

Many people made a choice. Keep income low and get an ACA subsidy or do Roth conversions. Perhaps both should be looked at? [emoji12]

 

[pb4uski]

Meet the 18 profitable companies that paid no taxes for over 8 years
https://www.cbsnews.com/news/meet-the-18-companies-that-paid-no-taxes-over-8-years/

I'm skeptical of the source:

Studying an eight-year period addresses how taxes impact corporations during an entire business cycle, rather than shorter periods previously analyzed by ITEP, a liberal-leaning think tank focused on tax policy.

 

[daylatedollarshort]

I'm skeptical of the source:

"At least two-thirds of all active U.S. corporations paid nothing in federal income taxes during the 2006-12 period, despite an income-dependent statutory tax rate of 15% to 35%, the Government Accountability Office said in a recent report...Among large, profitable entities, 19.5% paid nothing in federal income taxes in 2012"

Source: A Huge Chunk of America's Biggest Companies Pay No Income Tax | Fortune

You can do a Google search for more. There's lots of articles on the topic from a wide variety of sources.

 

[pb4uski]

A part of the reason for that is that there were significant losses in 2008/2009 that created loss carrybacks and loss carryforwards, so because that specific period straddles the worst economic crisis in our lifetime it is not indicative of normal.

 

[daylatedollarshort]

A part of the reason for that is that there were significant losses in 2008/2009 that created loss carrybacks and loss carryforwards, so because that specific period straddles the worst economic crisis in our lifetime it is not indicative of normal.

You can set your Google search to 2012 - 2018 and still get the same kinds of articles. Amazon made $5.6B in 2017 and paid zero federal income taxes. I don't want to take this thread off topic, so won't post any more on that issue. I could have just as easily posted about billionaires getting farm subsidies. My point was only, no I don't feel bad at all about getting ACA tax credits I legally qualify for when billionaires and big companies take full advantage of the tax code, and they have a much bigger impact on the federal budget than my household.

 

[pb4uski]

According to the statement of cash flows in their audited financial statements, Amazon paid $957 million in income taxes in 2017.

Go to http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-reportsannual click on 2017 Annual Report and then go to page 37, third line from the bottom.

Also, from page 64...

Cash taxes paid, net of refunds, were $273 million, $412 million, and $957 million for 2015, 2016, and 2017

Also, their 2017 net income was $3.0B, not $5.2B. same source, page 38

It is hard to isolate federal taxes paid from the audited financial statement disclosures... so no federal tax paid might be true for 2017, but their current U.S. federal taxes (essentially the tax on their federal tax return) was $215 million, $1.136 billion and -$137 million for 2015, 2016 and 2017, repectively. (page 65, top of page)... what is paid may be different due to timing, just like it is for an individual... but over the 3 years they "paid" $1.2B in federal income taxes.

 

[daylatedollarshort]

According to the statement of cash flows in their audited financial statements, Amazon paid $957 million in income taxes in 2017.

Go to http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-reportsannual click on 2017 Annual Report and then go to page 37, third line from the bottom.

Also, from page 64...

Also, their 2017 net income was $3.0B, not $5.2B. same source, page 38

It is hard to isolate federal taxes paid from the audited financial statement disclosures... so no federal tax paid might be true for 2017, but their current U.S. federal taxes (essentially the tax on their federal tax return) was $215 million, $1.136 billion and -$137 million for 2015, 2016 and 2017, repectively. (page 65, top of page)... what is paid may be different due to timing, just like it is for an individual... but over the 3 years they "paid" $1.2B in federal income taxes.

I am not an accountant, but the $5.6 figure and zero federal income taxes are the numbers that have been widely reported:

"Jeff Bezos’ sprawling e-commerce giant Amazon reportedly raked in more than $5.6 billion in U.S. profits in 2017, but despite that, the company essentially paid $0 in federal income taxes."
Source: https://www.foxbusiness.com/markets/amazon-earned-5-6b-in-2017-but-paid-no-federal-taxes

"In 2017, Amazon paid no federal tax on $5.6 billion in U.S. profits, according to an analysis by Matthew Gardner at the Institute on Taxation and Economic Policy."
Source: https://www.marketwatch.com/story/t...-bezos-is-better-at-avoiding-taxes-2018-04-04


Still feeling good about my ACA tax credits, especially since I paid more in federal income taxes than Amazon in 2017.

 

[pb4uski]

If you drill down into it.... it looks like the reporters were relying on that analysis by ITEP, that liberal think tank.... who knows where those numbers come from... Amazon does disclose $2.8B of operating income for North America in its segment disclosures... but given the source is likely biased I am still skeptical.

 

[daylatedollarshort]

If you drill down into it.... it looks like the reporters were relying on that analysis by ITEP, that liberal think tank.... who knows where those numbers come from... Amazon does disclose $2.8B of operating income for North America in its segment disclosures... but given the source is likely biased I am still skeptical.

You can set you date range to 2012 - 2018 in Google and search for terms like:

corporations that paid zero income taxes

and get page after page of articles from most major publications on many major corporations paying zero U.S. federal income taxes (besides Amazon) from both conservative and liberal leaning publications and everything in between.

 

[Offgrid Organic Farmer]

I was reading the Root of Good blog recently. If I remember correctly, the blogger retired at 33 and now earns around $40k per year. He's getting heavily subsidized healthcare through Obamacare, ACA or whatever you'd like to call it.

We're paying taxes to pay the subsidy for a guy to retire at 33 and get cheap healthcare? I don't get it.

It wouldn't bother me as much if he'd paid 'into the system' for a number of years and then retired in his 50s or even late 40s and then got subsidized. To retire at 33, able bodied, and then avoid paying much of his healthcare costs? Yikes.

I know it's legal, but it really bothers me. Am I overreacting?

I do not know if you're over-reacting or not.

I retired from Active Duty when I was 42. I have a pension and pretty good healthcare coverage.

 

[Cayman]

Why not get angry about something that impacts each of us in a BIG way. What about the extremely inflated health insurance premiums and lack of policies and providers? Nationwide. BOTH parties are to blame.

In 2013 a Blue Cross Blue Shield PPO for the 3 of us was $8,000/year.
Accepted nationwide (not regionally). $6,000 deductible.

That same policy is now more than $21,000/yr and carries a $13,000 deductible. $8k/year was nuts. Now, I pay $21k+ thanks to inept governance on both sides of the table. (and it's a large part of my budget)

Oh, and there are no safety nets anymore. So, you're scr*wed if you don't have alot of dough for health insurance, or don't qualify for ACA. Health care is very complex. Dismantling it piece by piece or letting it languish un-tweaked & without a plan in place is unconscionable.

 

[audreyh1]

As far as ACA goes cash is not considered income

My point was simply that if you have an amassed a pile of cash, and then are drawing it down to cover your living expenses, you have already paid a ton on that cash - it’s amassed after tax. Of course it not income, it’s after tax savings.

 

[aja8888]

...........corporations that paid zero income taxes

Why are you making such a big deal out of this?

The corporations that didn't pay corporate income taxes were following tax code. And, BTW, income is taxed, or exempt from tax, whether it's earned by a corporation, employee or self employed individual.

It's the only tax system we have..

 

[Offgrid Organic Farmer]

A lot of us [both individuals and corporations] have figured out methods to avoid paying income taxes. Recent politicians have claimed the number to be near 50% of us.

If 50% of us avoid paying into income taxation, it seems the other 50% is really mad about it.

 

[FUEGO]

Hey underwrite, Root of Good here. Hi!

If it consoles you any, just think of me as someone who "downshifted" his full time job as an engineer making $70k per year. I switched gears and dropped down to a (very very) part time job as a travel/early retirement blogger making $30k/yr plus $10k in dividend income. We legitimately live on $40k/yr and are living it up by my own subjective evaluation. Should I work a little harder just so I can pay some more taxes you think I should pay on my accumulated wealth?

To the extent that I work, I produce a decent quality product that literally dozens of people enjoy enough to come back week after week.

I'm earning money, spending money, and propping up the American economy. I am Making America Great Again single-handedly (well, technically I type with two hands).

I'm educating my kids so they can earn money and pay taxes to the best of their ability when they are on their own. Who do you think will be paying for your (and my) Social Security and Medicare eventually?

I pay thousands in FICA taxes (15.3% as a sole proprietor!!). I pay local property tax, sales tax, state income tax, and all kind of other taxes, duties, and license fees. And all that on $40k/yr income.

Is our system of taxation and spending equitable? I don't think so either. I've got a long list of grievances too. It's what keeps me showing up to the polls every other November and a time or two in between.

 

[Texas Proud]

I am not an accountant, but the $5.6 figure and zero federal income taxes are the numbers that have been widely reported:

"Jeff Bezos’ sprawling e-commerce giant Amazon reportedly raked in more than $5.6 billion in U.S. profits in 2017, but despite that, the company essentially paid $0 in federal income taxes."
Source: https://www.foxbusiness.com/markets/amazon-earned-5-6b-in-2017-but-paid-no-federal-taxes

"In 2017, Amazon paid no federal tax on $5.6 billion in U.S. profits, according to an analysis by Matthew Gardner at the Institute on Taxation and Economic Policy."
Source: https://www.marketwatch.com/story/t...-bezos-is-better-at-avoiding-taxes-2018-04-04


Still feeling good about my ACA tax credits, especially since I paid more in federal income taxes than Amazon in 2017.

Read one of the articles... saw this...

In 2017, Amazon reported $5.6 billion of U.S. profits and didn’t pay a dime of federal income taxes on it. The company’s financial statement suggests that various tax credits and tax breaks for executive stock options are responsible for zeroing out the company’s tax this year.
​

My red..... so it seems to me that they are taking into account some credits that we do not know where they are from or where they are used and probably some fancy math that counts stock options as negative taxes to be able to say 'zeroing out' the taxes...


BUT, it does not mean they did not file a federal tax return and send in a check... the article is pretty light on real info on what they are talking about...

 

[Texas Proud]

A lot of us [both individuals and corporations] have figured out methods to avoid paying income taxes. Recent politicians have claimed the number to be near 50% of us.

If 50% of us avoid paying into income taxation, it seems the other 50% is really mad about it.

There are a lot of tax breaks and credits for middle income families that reduce their taxes down to almost nothing...


As an example, in 07 I was single and paid almost $26K in federal income taxes... in 09 being married with 2 kids I was less than $4K....


Now, my income did drop as I was laid off in 08 and got a lower salary, but it was not that much...

 

[Offgrid Organic Farmer]

There are a lot of tax breaks and credits for middle income families that reduce their taxes down to almost nothing...


As an example, in 07 I was single and paid almost $26K in federal income taxes... in 09 being married with 2 kids I was less than $4K....


Now, my income did drop as I was laid off in 08 and got a lower salary, but it was not that much...

When I was mid-career, the EIC 'credits' I got from having children was enough to get us 'refunds' even years when we had zero being 'with-held' for taxes.

So me being tax-free got us healthy refund checks.

 

[daylatedollarshort]

Why are you making such a big deal out of this?

The corporations that didn't pay corporate income taxes were following tax code. And, BTW, income is taxed, or exempt from tax, whether it's earned by a corporation, employee or self employed individual.

It's the only tax system we have..

The OP asked about ACA tax credits,"I know it's legal, but it really bothers me. Am I overreacting?" and my point was "Many corporations pay zero taxes, but root of good getting subsidized health care for his family bothers you?" and "[I'm] Still feeling good about my ACA tax credits, especially since I paid more in federal income taxes than Amazon in 2017." If Amazon can pay zero taxes, why should individuals not take advantage of all the tax breaks they legally can? Why get mad at root of good getting $10K - $20K in legal tax breaks for health insurance and not big companies like Amazon finding legal ways to get out of paying millions or maybe billions in income taxes?


My other posts about the zero taxes were replies to pb4uskis posts.

 

[gwraigty]

I was reading the Root of Good blog recently. If I remember correctly, the blogger retired at 33 and now earns around $40k per year. He's getting heavily subsidized healthcare through Obamacare, ACA or whatever you'd like to call it.

We're paying taxes to pay the subsidy for a guy to retire at 33 and get cheap healthcare? I don't get it.

It wouldn't bother me as much if he'd paid 'into the system' for a number of years and then retired in his 50s or even late 40s and then got subsidized. To retire at 33, able bodied, and then avoid paying much of his healthcare costs? Yikes.

I know it's legal, but it really bothers me. Am I overreacting?

I'm not familiar with his blog. It sounds as if he used to work as an employee, then amassed enough wealth that he became FI earlier than most. Per his response, he gets about 3/4 of his income from his blog and 1/4 from dividends. As long as he's declaring his income properly on his taxes, he's still paying into the system.

I don't know much about ACA matters. If he was still a full-time employee, made $40,000 per year, and didn't get healthcare from his employer, wouldn't he still get a subsidy?

 

[Montecfo]

In my view, any outrage over ACA subsidies is misplaced. We have an income tax system, not a net worth tax system. People with high incomes pay more, those with low incomes pay less. Net worth does not come into play. Nor should it, in my view.

And ACA is like any other government service. People with lower incomes get virtually ALL government services at a discount, relative to higher income folks. Why focus just on health insurance?

The idea that someone who can "afford" to pay more should be forced do so is dangerous, in my opinion.

 

[marko]

In my view, any outrage over ACA subsidies is misplaced. We have an income tax system, not a net worth tax system. People with high incomes pay more, those with low incomes pay less. Net worth does not come into play. Nor should it, in my view.

And ACA is like any other government service. People with lower incomes get virtually ALL government services at a discount, relative to higher income folks. Why focus just on health insurance?

The idea that someone who can "afford" to pay more should be forced do so is dangerous, in my opinion.

Agreed. [-]Un[/-]fortunately we are deemed 'able to pay more' due to our income and ACA is far beyond our reach. DW coughs up $1200 a month for HC; twice that before I got on Medicare.

The people I feel bad for are the legit cliff dwellers who are just one overtime pay away from not qualifying at all.

But we also pay more (via taxes) on dividends, cap gains, SS as well. Not complaining; a nice problem to have.

I think one reason we use income v net worth is that NW would be considerably easier to ummm 'manage', especially for UHNW families. I already know a few UHNW folks who, legally have no NW at all.

 

[Moemg]

The thing that bothers a lot of people is the unfairness of ACA . Young working people who do not get healthcare through their job are forced to buy healthcare at a very inflated rate so they end up not being able to accumulate wealth whereas people who have accumulated wealth can get health care at a bargain. I know life isn't fair but when the unequality hits close to home it bothers me .

 

[ExFlyBoy5]

Hey underwrite, Root of Good here. Hi!

If it consoles you any, just think of me as someone who "downshifted" his full time job as an engineer making $70k per year. I switched gears and dropped down to a (very very) part time job as a travel/early retirement blogger making $30k/yr plus $10k in dividend income. We legitimately live on $40k/yr and are living it up by my own subjective evaluation. Should I work a little harder just so I can pay some more taxes you think I should pay on my accumulated wealth?

To the extent that I work, I produce a decent quality product that literally dozens of people enjoy enough to come back week after week.

I'm earning money, spending money, and propping up the American economy. I am Making America Great Again single-handedly (well, technically I type with two hands).

I'm educating my kids so they can earn money and pay taxes to the best of their ability when they are on their own. Who do you think will be paying for your (and my) Social Security and Medicare eventually?

I pay thousands in FICA taxes (15.3% as a sole proprietor!!). I pay local property tax, sales tax, state income tax, and all kind of other taxes, duties, and license fees. And all that on $40k/yr income.

Is our system of taxation and spending equitable? I don't think so either. I've got a long list of grievances too. It's what keeps me showing up to the polls every other November and a time or two in between.

Has anyone called the internet retirement police on you lately? You sure don't sound retired to me...as a matter of fact, I need to take a nap *even thinking* about putting together a blog!

And OP...do you know what RoG's plan is for his law school debt? That might get you spun up too (says the guy who didn't pay a dime for law school thanks to the GI Bill).

 

[Huston55]

The thing that bothers a lot of people is the unfairness of ACA . Young working people who do not get healthcare through their job are forced to buy healthcare at a very inflated rate so they end up not being able to accumulate wealth whereas people who have accumulated wealth can get health care at a bargain. I know life isn't fair but when the unequality hits close to home it bothers me .

There are always generational ‘inequalities.’ You described one of those inequalities occurring today, and millennials are taking the hit. Several decades ago, in the early days of SS, a different generation was taking the hit. I don’t think such inequalities are always avoidable, and I’m not sure “unfairness” is the term I’d use to describe them.