Does the Federal Reserve, a corporation, pay corporate income taxes?

[SaratogaForRonPaul]

I was just thinking about this. The Federal Reserve and its member banks make billions a year on interest off tax payers, by printing/electronically-creating money out of thin air. They charge interest by buying government bonds and securities. All of this is against the Constitution, which states only Congress can coin money, and it doesn't have the authority to delegate this to a private central bank.

So my question is, does the Federal Reserve, which is not part of the Federal Government, but a private cartel of member banks, many of whom are foreign banks, file annual corporate income taxes?

If so, how much do they pay? Is it pushed off to the member banks? If so, who are they officially.

The Justice Department took down Al Capone for tax evasion, let's see if the Federal Reserve is committing tax fraud. Any ideas how to find out?

[nullvalu]

hmm good question

[nullvalu]

Hmm this doesn't answer the question exactly but goes into some detail about ownership
http://www.usagold.com/federalreserve.html

[decatren]

wasn't income tax created to pay off interest to the fed? if so, why would they pay tax to themselves? prolly not

[nullvalu]

wasn't income tax created to pay off interest to the fed? if so, why would they pay tax to themselves? prolly not

I guess a better question would be what laws/statutes govern their business practice? Like a 501(c) is tax-exempt. Is the Fed a 501(c) entity? Are there articles in the tax code that apply directly & only to the Fed?

[Chester Copperpot]

Ive read that they do not pay income taxes.

If Individual States want to tax the Fed branches that exist within their boundaries they are declared "federal instrumentalities" and so are outside the reach of the States' power to tax..

[nullvalu]

Ah, here's potentially an answer

http://www.lectlaw.com/files/tax13.htm

Other Tax Deductible Contributions

In addition to the 501(c)(3), 501(c)(19), and the kinds of 501(c)(4)
organizations previously named, the following classifications of tax
exempt groups are eligible to receive contributions deductible as
charitable donations:

* Cooperative hospital associations-501(e).
* Cooperative service organizations of operating educational
organizations-501(f).
* Nonprofit cemetery companies [501(c)(13)], if the contribution is
given for care of the cemetery as a whole rather than for a particular
plot.
* Domestic fraternal societies and associations [501(c)(10)] and
fraternal beneficiary societies and associations [501(c)(8)], if the
contributions are used for charitable [that is, 501(c)(3)] purposes.
* Corporations organized and tax exempt under an Act of Congress, which
serve as instrumentalities of the U.S.-501(c)(1). Examples include the
Reconstruction Finance Corporation, Federal Reserve Banks, and Federal Credit Unions.

[Chester Copperpot]

I guess a better question would be what laws/statutes govern their business practice? Like a 501(c) is tax-exempt. Is the Fed a 501(c) entity? Are there articles in the tax code that apply directly & only to the Fed?

According to Alan Greenspan, the Fed is not answerable to ANY agency of government. So, it seems they basically dont have to do whatever they dont want to.

On face value after all some people view the FEd as a non profit because it remits a portion of the interest income it receives when it holds T-Bills, Bonds, etc... But they make alot more money than just their interest from that.

[Fox McCloud]

The Fed isn't a private banking institution, nor is it a public one; it's a little of both; it serves the interest of Congress (buying up treasuries to help fund deficit spending), and it helps keep all banks towing the same line, not to mention it can help bail them out and keep them from failing.

As for interest on the dollars that is borrowed from the Fed? It's stipulated that all interest on the dollar is to be deposited into the treasury.

As for commercial banks? Of course they pay income tax, just like every other corporation.

edit: now, they can use some of their profit for "expenses", and those expenses are in books that none of us will ever get to see...that said, IIRC it's been calculated only a very very very small percentage of the profits is used for these expenses. Imagine, however, if the Fed was a for-profit institution; it'd likely be one of (if not the) most profitable corporation in the world.

[TonySutton]

wasn't income tax created to pay off interest to the fed? if so, why would they pay tax to themselves? prolly not

Why do military people pay income tax on their pay which is payed by the US Government? Since they do, the Fed should pay also ;)

[Fox McCloud]

Why do military people pay income tax on their pay which is payed by the US Government? Since they do, the Fed should pay also ;)

Because, that would make too much sense and be far too logical.....heaven forbid we have that in the government.

[sratiug]

As for interest on the dollars that is borrowed from the Fed? It's stipulated that all interest on the dollar is to be deposited into the treasury.



No it's not. They take 6% off the top, I believe. Six percent of a trillion dollar bailout is... 60 billion dollars.

[Elwar]

Best answer here is to play to the liberals weakness and propose that the Fed be made to pay corporate taxes just like everyone else.

Show them that $60 billion figure and show how many school lunch programs could be funded.

[SaratogaForRonPaul]

Best answer here is to play to the liberals weakness and propose that the Fed be made to pay corporate taxes just like everyone else.

Show them that $60 billion figure and show how many school lunch programs could be funded.

Good point. You can also go with their regulation obsession, and say the Federal Reserve needs to be regulated with oversight, transparency, and heavy bureaucracy. Maybe that will put enough red tape to slow them down while we work to abolish them.

[RSLudlum]

Of course they are exempt because of the history of states trying to tax the past Bank of the United States out of existence (Ohio's legislature started it after passing a $50,000/year tax on it's Ohio branches, with other states following), and finally suceeded with Jackson's help...This is actually where Marshall's phrase "the power to tax, is the power to destroy" came from, albeit it was in his defense of the BUS.

[HOLLYWOOD]

Of course they are exempt because of the history of states trying to tax the past Bank of the United States out of existence (Ohio's legislature started it after passing a $50,000/year tax on it's Ohio branches, with other states following), and finally suceeded with Jackson's help...This is actually where Marshall's phrase "the power to tax, is the power to destroy" came from, albeit it was in his defense of the BUS.

I do not think this is correct. I read some legislation and the court rulings that states could NOT tax the Bank of the United States.

I'll digg it up later... gotta run

[Roxi]

Actually don't assume even if it is a corporation they would pay federal income tax

MOST CORPORATIONS DON'T

the GOA (general accounting office, an investigative arm of congress now known as the Government Accountability Office) examined millions of tax returns from 96-01 and found that 61% of US based corporations paid no income tax. For foreign controlled corps that operate in the US 71% didn't pay.

When they looked strictly at large corporations (those with assets of at least 250 Million) the percentages are switched (71% US and 61% foreign).

Most of the corporations that actually do owe taxes pay a rate less than 5%, even though the base rate for corporate entities is 35% (only .06 paid 30% or more)

So when you add the corporations that pay no taxes with those that pay tiny taxes, 94% of US controlled companies and 89% of foriegn controlled companies operating here paid 0-4% taxes.

[RSLudlum]

I do not think this is correct. I read some legislation and the court rulings that states could NOT tax the Bank of the United States.

I'll digg it up later... gotta run

Yeah, there were rulings, but then again, that was back when the States legislatures actually had balls and occasionally threatened with Secession and Nullification. ;)

[emazur]

It would be odd for the Fed to pay income taxes since the dollars they print are backed by the taxing power of the federal government (whether or not the taxing power is entirely backed by the income tax or not I don't know, I'd be greatful if someone could clear up that issue. But it can't be a coincidence the Federal Reserve Act was passed the same year as the income tax was imposed upon us - 1913).



A) SHORT EXPLANATION - A PHONE CALL TO THE FED (from rense.com):
CALLER - Are Federal Reserve Notes backed by anything?
MR. SUPINSKI-Yes, by the assets of the Federal Reserve but, primarily by the power of congress to lay tax on the people.
CALLER - Did you say, by the power to collect taxes is what backs Federal Reserve Notes?
MR. SUPINSKI - Yes

B) LONGER EXPLANATION - ALAN GREENSPAN IN 1966:
"But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline-argued economic interventionists-why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely-it was claimed-there need never be any slumps in business. And so the Federal Reserve System was organized in 1913. It consisted of twelve regional Federal Reserve banks nominally owned by private bankers, but in fact government sponsored, controlled, and supported. Credit extended by these banks is in practice (though not legally) backed by the taxing power of the federal government."