Concord Monitor: No tax holiday for profits held offshore
media mentionBy Monitor staff
November 4, 2011
The driving force behind the Occupy Wall Street protests that have cropped up across the nation is the participants’ belief that the game is rigged. Corporations and wealthy political campaign donors concoct the rules and a Congress more concerned with reelection than governing makes them the law of the land.
That belief, one we in good measure share, was reinforced this week by Citizens for Tax Justice and the Institute on Taxation and Economic Policy, reform groups that analyzed the regulatory filings of 280 Fortune 500 corporations that made a profit in 2008, 2009 and 2010. Their findings show that for many companies the 35 percent corporate tax that Republicans complain so bitterly about is a farce. Few companies pay it; the average effective tax rate, for the 280 analyzed, came to less than 19 percent.
The nation’s 70,000-page tax code is so laden with loopholes, injected with incentives and larded with credits that 30 of the 280 companies either paid nothing in federal taxes or got money back. And 78, during at least one of the three years studied, paid nothing in federal taxes.
Pepco Holdings, an energy company that delivers electricity in New Jersey, Maryland and other mid-Atlantic states was the king of the tax avoidance companies; its effective tax rate over the three-year period was a negative 57.6 percent, the group’s report said. GE came in a close second, with a tax rate of negative 45.3 percent.
The study found a huge disparity in the effective tax rate paid by some of the most profitable corporations; 71 paid 30 percent or more while 67 paid less than 10 percent. The companies that paid the least tended to come from the industries that receive the biggest government subsidies, oil and gas industries, financial services, telecommunications and utilities.
The study was released with debate under way in Congress and among presidential candidates over tax reform, whether to lower the corporate tax rate, and a request by companies for a temporary tax holiday to repatriate their foreign earnings.
Nice word, repatriate. Sort of like Old Home Day for money. The problem is the corporations lobbying for repatriation want to bring the money home at a tax rate, in a bill in the Senate, of 8.75 percent, and in a House bill, 5.25 percent.
Ostensibly, the companies would use the money to create jobs, which is what they said they would do with profits repatriated in a 2004 tax holiday. That money went instead, to boost CEO salaries, buy back stock and profit shareholders. There should be no tax holiday. Collectively, corporations are sitting on an estimated $2 trillion in cash that they’ve been unwilling to invest in ways that create jobs.
The tax study’s authors, in the preface to their report, said this: “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.”
It’s also why across America people are protesting by sleeping in parks and just 6 percent of people polled by the CBS News and the New York Times think most members of Congress should be re-elected. Charlie Bass and Frank Guinta – take note.