About.com: Corporate Tax Dodgers Hurting States, Group Says
media mentionBy Robert Longley, About.com Guide December 16, 2011
If your state, like most states, is hurting for money and is putting the squeeze on you for more, then this news will not make it hurt any less. A new report from the Citizens for Tax Justice (CTJ) identifies 256 Fortune 500 corporations which, while racking up $1.33 trillion in profits during 2008, 2009 and 2010, managed to pay little or no state income taxes during those three years.
In its report, Corporate Tax Dodging in the Fifty States, CTJ profiles 68 of the 256 Fortune 500 corporations that paid no (zero) state corporate income tax in at least one of the past three years and 20 corporations that averaged paying a zero tax rate or less during the 2008-2010 period.
Had those corporations paid their full tax share, CTJ estimates the combined 50 states would have collected $82.6 billion over the three-year period. Instead, says CTJ, they paid only $39.9 billion in state taxes while avoiding paying $42.7 billion.
Some of the 20 corporations that managed to pay zero or less in state corporate income taxes during 2008-2010 were: Utility provider Pepco Holdings (D.C.); pharmaceutical maker Baxter International (Illinois); chemical maker DuPont (Delaware); fast food maker Yum Brands (Kentucky) and high tech manufacturer Intel (California).
For example, California-based Intel reported making a net profit of $9.3 billion over the years 2008 and 2009. Over those two years, Intel not only paid no state taxes, California paid it $40 million in tax refunds, resulting in an effective -0.4% tax rate for Intel over the period.
In Corporate Tax Dodging in the Fifty States, CTJ identifies three reasons for steadily declining state corporate tax revenues. First, corporations continue to ask for and state lawmakers continue to grant corporate tax subsidies and credits, most of which fail to produce their promised economic results. Second, federal tax breaks enacted in the past decade further reduce state corporate income tax revenues since states generally accept corporations’ federal tax numbers. Third, the largest, multi-state corporations devote increasingly more money and “legal firepower” to developing and lobbying for tax breaks.
As the report’s co-author Matthew Gardner of CTJ’s Institute on Taxation and Economic Policy said of the tax-avoiding corporations, “They’re so busy avoiding taxes, it’s no wonder they’re not creating any new jobs.”
Just to be Fair: On the other hand, all of these corporations, despite paying little or no corporate state taxes, employ thousands of people in these states who spend their money in these states and, in all but nine states, pay state income tax. Indeed, in many cases, the overall economic benefit these corporations provide to their states may equal or even outweigh the state taxes they do, or do not pay. In other words, don’t look for California to ask Intel to pack up and move to Texas anytime soon.