View Full Version : how to make billions part2

03-15-2006, 01:50 AM
March 15, 2006
Many Utilities Collect for Taxes They Never Pay
Many electric utility companies across the nation are collecting billions of dollars from their customers for corporate income taxes, then keeping the money rather than sending it to the government.

The practice is legal in most states. The companies say it is smart business.

But some representatives of utility customers say that the practice, which involves using losses from other subsidiaries to reduce taxes owed, is not fair. They say that money that utilities are required to collect for federal and state taxes typically a nickel on each dollar paid for electricity should go for just that, or not be included in electric bills.

Otherwise, they argue, these legal monopolies make more than they are authorized to, and other taxpayers have to make up the difference in higher taxes or reduced services.

An examination of regulatory filings by The New York Times shows that companies with electric utilities in at least 26 states have pocketed money intended for income taxes, and that utilities can legally do so in 21 more states.

Because they are legal monopolies, utilities must charge rates set by state regulators. These cover all costs from buying fuel, to building new power plants, to a virtually guaranteed profit and paying the taxes on that profit.

Normally, customer payments for those taxes eventually find their way to federal and state governments. That is usually the case for independent utilities like Consolidated Edison, which serves the New York area, and American Electric Power, which operates in 11 states from Kentucky to Oklahoma.

But in recent years many utilities have expanded into unregulated businesses, like energy trading and aircraft leasing, while others have been acquired by companies that own other businesses. When those other businesses lose money or create artificial losses through tax planning, those losses can be used to offset income earned by the utilities.

As a result, the parent companies owe less in taxes than their electric customers paid. Sometimes these companies owe nothing, or receive large tax refunds. By not remitting the taxes, the parent companies effectively have more money to invest in their operations or pay to shareholders in dividends.

The ability to intercept tax payments is not limited to electric utilities. Natural gas, water and telephone utilities can use the same techniques. The potential tax benefits are much smaller for gas and water utilities, however. And most telephone companies are no longer regulated as monopolies and their rates no longer include income taxes. (The taxes and fees that phone companies add to monthly bills are not corporate income taxes.)

Among the electric utilities whose customer tax payments are not reaching tax coffers is Pepco, serving four states and the District of Columbia. Pepco collected nearly $546 million from customers to cover its income tax bill for the years 2002 through 2004. Yet the parent Pepco Holdings did not pay income taxes during those years; indeed, it received $435 million in tax refunds.

Pepco says the beneficiaries of those refunds were not the company's shareholders, but utility customers. A vice president, Anthony J. Kamerick, said that without the ability to use taxes embedded in monthly electric bills to help finance its unregulated investments, including new power plants, electric customers would pay higher rates.

Customers paid Xcel Energy, a big utility in 10 Midwest and Western states, at least $723 million to cover taxes from 2002 to 2004. But the money did not go to the government; in fact, the company received cash refunds of $351.4 million.

A spokesman, Ed Legge, said the refunds resulted from a failed energy trading business. "Utility customers did not bear the risk of that business, and they should not benefit either," he said.

Also expressing the utilities' view, Paul L. Joskow, an economist at the Massachusetts Institute of Technology, said, "For the customer, the result is the same." If the utility were a stand-alone company and filed its own tax return, he added, the customer would pay the same for power.

But critics argue that when utilities collect taxes the government never receives, customers do lose.

The Minnesota attorney general, Mike Hatch, said, "Essentially, the utility ratepayers pay the tax twice, once through the utility bill and again through the lost revenue to government that means either higher taxes for them or less government services." Mr. Hatch is trying to require that any taxes included in Xcel bills be paid to the government. Xcel opposes this.

The critics say that while many profitable businesses use losses to minimize their tax bills, utilities are unique because their taxes are built into the bills that customers pay.

Critics also say utility companies are enriched beyond the limits set by law if they pocket the tax money. "Utilities are entitled to a just and reasonable return," said Myer Shark, a 93-year-old lawyer who sued unsuccessfully to recover $300 million in taxes paid by Minnesota customers of Xcel. "But when they keep the taxes, they are earning an unjust and unreasonable rate of return."

Enron was a pioneer in turning taxes into profit. Since 1997 the company, now in bankruptcy, has collected nearly $900 million from customers of a utility it acquired, Portland General Electric, to cover income taxes. But none of that money reached the federal government from Enron, and only a quirk in the law forced Portland G.E. to pay about $800,000 in income taxes, of which $20 went to the state of Oregon.

Q.....a tax system thats got more holes in it than a La. levee.

03-15-2006, 06:16 AM
Are you telling us this is your new business venture? Good luck breaking in. /ccboard/images/graemlins/smile.gif


03-15-2006, 09:53 AM
I wish! /ccboard/images/graemlins/laugh.gif

Is that your only comment?
Maybe next you are about to blame the welfare 'scoungers' for taking all your taxes, you might think back to these 2 threads!


03-15-2006, 10:15 AM
At the other end of the ladder.

Food Stamp Sign-Ups Low in N.Y.
Shortfall Exists Despite a Rising Demand for Provisions

By Michael Powell
Washington Post Staff Writer
Wednesday, March 15, 2006; A17

NEW YORK -- Amid cans of kidney beans and bags of white rice, Denise Conyers sits in her wheelchair at a Manhattan food pantry, plotting to keep the hunger at bay for one more day.

Her food stamp allotment just got cut. She is really not sure why -- she has not been able to work for 20 years.

"It was hard getting food stamps in the first place; they kept asking for more and more paperwork," said Conyers, a fine-cheekboned 53-year-old who was long ago disabled by multiple sclerosis. "Then they said that I make too much on SSI [Supplemental Security Income], so they're cutting my monthly food stamp dollars."

Snarls of red tape, bureaucratic resistance to a "welfare program" and the fact that many New Yorkers are not aware of food stamps have depressed participation here in the federal program. Overall, about 700,000 poor New York residents, more than the entire population of the District, are eligible for food stamps but not enrolled.

New York state ranks 36th in the nation in the percentage of eligible people participating in the program, a low-performing tier that includes some of the nation's most populous states, from Texas and Florida to California and Massachusetts.

The shortfall occurs against a backdrop of rising demand for emergency food in New York and across the nation. Food pantries such as that run by the Westside Campaign Against Hunger -- where Conyers was interviewed -- report a 40 percent spike in demand in the past five years.

This speaks to the paradox of New York. This largest of cities has the densest concentration of millionaires in the nation -- yet 21 percent of the residents live below the poverty line, and some walk the razor edge of hunger.

"Working poor people and immigrants are the fastest-growing groups in New York, and we're failing them," said Joel Berg, executive director of the New York City Coalition Against Hunger. "It's a daily shame."

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.and a record deficit!

03-15-2006, 10:43 AM
Is that your only comment? <hr /></blockquote> Yep, that is it. There is nothing to say, since your only comment was, "a tax system thats got more holes in it than a La. levee". You don't really say anything, so I don't see any reason why someone else needs to lead the charge on a subject you brought up. If you had something interesting to say, I would have thought you would say it. Why wait for someone else to get your subject off the ground.