News Max: Big Firms Pay No Taxes
media mentionFriday, 04 Nov 2011 12:53 PM
By Jim Meyers
With the federal government drowning in debt and lawmakers struggling to curtail the deficit, a new report shows that many of the nation’s biggest companies paid no federal taxes over the past three years — and some even made money through credits and refunds from the government.
The report was compiled by the nonprofit groups Citizens for Tax Justice and the Institute on Taxation and Economic Policy. The authors examined the finances of 280 corporations from 2008 through 2010 and found that while they made pretax U.S. profits of $1.4 trillion, they used an array of loopholes and tax breaks to lower their tax burdens.
Many Republicans are calling for a reduction in the corporate tax rate of 35 percent to make the United States more competitive in world markets, and would compensate for any reduced revenue by closing tax loopholes. This report could add impetus to their efforts.
Of the 280 firms, 30 paid zero taxes during that 3-year period, or wound up with negative tax rates. Pepco Holdings, a utility, paid the lowest rate of all the companies probed, minus 58 percent, and General Electric paid minus 45.3 percent.
Other major firms that actually received rebates from the government by applying tax credits to earlier years when they paid taxes include DuPont, Verizon Communications, Consolidated Edison, Boeing, Wells Fargo, Tenet Healthcare, PG&E, Mattel, and Corning.
Corporations will say rightly that the loopholes that allow them to slash their taxes were perfectly legal, the report said.
“But that does not mean that low-tax corporations bear no responsibility. The laws were not enacted in a vacuum; they were adopted in response to relentless corporate lobbying, threats and campaign support,” according to the report.
One large tax break corporations enjoy is accelerated depreciation that lets them write off equipment faster than it actually wears out. Other tax breaks include deductions on executive stock options, and write-offs for research and development and for making products in the United States instead of overseas. Offshore tax shelters play a role as well.
Retail companies and healthcare firms tend to pay more in taxes because they usually have less intellectual property that can be shifted overseas to exploit other nations’ lower tax rates, The Washington Post observed. Tech companies, manufacturers, and utilities tend to pay less.
Pepco Holdings made $229 million in pretax profits last year, the report noted, and claimed $270 million in federal tax credits, making the company’s tax rate that year about minus 118 percent.
The authors of the report conclude: “Just as workers pay their fair share of taxes on their earnings, so should successful businesses pay their fair share on their success.
“But today corporate tax loopholes are so out of control that most Americans can rightfully complain, ‘I pay more federal income taxes than General Electric, Boeing, DuPont, Wells Fargo, Verizon, etc., etc., all put together.’ That’s an unacceptable situation.”