The Epoch Times: Many Large Firms Paid No State Taxes, Report Says
media mentionBy Alex Johnston
Epoch Times Staff
Created: December 8, 2011
Last Updated: December 8, 2011
A report released on Wednesday found that 68 large companies in the United States paid no state income taxes in at least one of the past three years, and 20 of these companies had a tax rate of zero or less in the same period of time.
The Institute on Taxation and Economic Policy (ITEP) research group’s report evaluated 265 of the Fortune 500 companies that disclosed the state and local income tax records, finding that on average, these firms paid 3 percent on profits in the United States between 2008 and 2010. The average statutory state corporate tax rate is about 6.2 percent.
Forty-four states have some kind of corporate tax in place, with only Ohio, Nevada, South Dakota, Texas, Wyoming, and Washington not having a tax.
“Our report shows these corporations raked in a combined $1.33 trillion in profits in the last three years, and far too many have managed to shelter half or more of their profits from state taxes,” Matthew Gardner, the executive director of the ITEP, said in a release.
A few well-known firms including Pepco, DuPont, Goodrich, International Paper, Intel, and the American Electric Power Co., paid no state income tax between 2008 and 2010, the report said.
Companies that avoided paying taxes in at least one of the three years include Yahoo, Hewlett-Packard, Boeing, Verizon, Wells Fargo, and other prominent firms with name recognition.
In 2009, 32 companies paid no net state income taxes at all, and 105 companies paid half the average on the statutory rate, “meaning that fully one-half of the companies in our sample paid less than half the average state tax rate,” the research group said.
The report noted that if the entire 265 firms paid the 6.2 percent average tax on the $1.33 trillion profits in the United States, around $82 billion would have been paid to states between 2008 and 2010. However, the companies only paid just under $40 billion, meaning that these companies avoided paying a net total of $42.7 billion in foregone revenue.
Companies use a number of methods to circumvent paying state taxes, the research group said, including using new ways of calculating the tax and getting tax breaks for fostering economic development.
“Hardly a week goes by without a state contemplating some kind of new corporate tax break, either as an across-the-board entitlement for all corporations or to attract a high-priority target,” the report said.
The study comes at a time when states are still reeling from the global economic downturn and are having to make tough new cuts to balance their budgets. Many states have been forced to raise taxes and curb spending on infrastructure, education, and lay off jobs.