The Street: Big Corporations Exploit Big Tax Loopholes
media mentionBy Brian O’Connell 11/04/11 – 11:31 AM EDT
NEW YORK (MainStreet) — Taxes are at the heart of the ongoing social debate in cities across the U.S., as the Occupy Wall Street movement flexes its muscles and escalates its visibility in clashes with police in Oakland, Calif.
A study from the polling organization Quinnipiac shows that the movement is losing favor with the public, with 30% approving and 39% disapproving of the OWS movement (the rest have no opinion).
But OWS still fares slightly better than the Tea Party in the eyes of the public when measured in percentage of disapproval. Quinnipiac reports that The Tea Party movement gets disapproval from 45% of survey respondents (versus the OWS disapproval rating at 39%), with 31% viewing the Tea Party favorably (actually one 1% higher than OWS approval), and 24% who don’t know enough about it for an opinion.
While both political factions battle it out, U.S. corporations are dealing with the tax issue in their own ubiquitous way — by dodging them.
A study from Citizens for Tax Justice and the Institute on Taxation and Economic Policy Release, called Corporate Taxpayers and Corporate Tax Dodgers, 2008-2010, notes that 78 of 280 of America’s “most profitable” companies paid no federal income tax in at least one of the past three years.
The study also claims that 30 of the 280 companies tracked by the study actually had a negative federal income tax rate during the past three years. Collectively, all of the companies tracked got hundreds of billions of dollars in tax relief, the study says.
“These 280 corporations received a total of nearly $223 billion in tax subsidies,” says Robert McIntyre, director at Citizens for Tax Justice and the report’s lead author, in a statement. “This is wasted money that could have gone to protect Medicare, create jobs and cut the deficit.”
“Our study provides proof that too many corporations are already being coddled by our tax system,” he adds.
All of the companies monitored by the study were big ones — each was included in the Fortune 500, the largest, most profitable companies in the U.S. The data show that, by and large, America’s largest companies pay a lower tax rate than the secretaries, customer service reps and line workers the companies employ.
Here’s a breakdown from the Citizens for Tax Justice Web site:
The average effective tax rate for all 280 companies in the study over the three-year period was 18.5%; for the period 2009-10 it was 17.3%, less than half the statutory rate of 35%.
Total tax subsidies given to all 280 profitable corporations amounted to $222.7 billion from 2008-10.
Wells Fargo(WFC) tops the list of 280 U.S. corporations getting the most in tax subsidies, with nearly $18 billion in tax breaks from the U.S. treasury in the last three years.
Pepco Holdings(POM) had the lowest effective tax rate of all the companies in the study, at negative 57.6% over the three-year period.
Some companies within sectors fare worse than others. For example, the report finds that Fedex(FDX) paid a 0.9% tax rate over the three-year period while its competitor, UPS(UPS), paid a 24.1% rate.
Financial services got the largest share (16.8%) of all federal tax subsidies over the past three years. More than half of federal corporate tax subsidies for companies in the study went to four industries: financial services, utilities, telecommunications, and oil, gas and pipelines.
Considering these numbers, the fact that 2012 is an election year implies that whoever can do a better job making the case for tax reform stands a better chance of helping their preferred candidates gain or keep elected office.
Expect more studies highlighting who is and isn’t paying their “fair share” of taxes in the next year.