RTT: Study Finds Many Corporations Pay No Income Tax
media mention11/4/2011 11:04 AM ET
(RTTNews) – While many of the Republican presidential candidates have proposed slashing the corporate tax rate as a way to stimulate the economy, a recent study found that many of the nation’s most profitable companies are already paying well below the current corporate tax rate.
The study, conducted by Citizens for Tax Justice and the Institute on Taxation and Economic Policy, examined 280 of the country’s most profitable companies and found that their average effective tax rate over the last three years was 18.5 percent compared to the statutory rate of 35 percent.
For the period 2009-2010, the average effective tax rate for the companies was 17.3 percent, less than half of the statutory rate.
“These 280 corporations received a total of nearly $223 billion in tax subsidies,” said Robert McIntyre, Director at Citizens for Tax Justice and the report’s lead author. “This is wasted money that could have gone to protect Medicare, create jobs and cut the deficit.”
The study found that 78 of the companies had at least one year in which their federal income tax was zero or less, while 30 companies had a negative income tax rate over the last three years.
The companies with a negative income tax rate, which can reflect tax rebates, had combined pre-tax profits of $160 billion.
According to the study, Pepco Holdings (POM) had the lowest effective tax rate of the companies examined, at negative 57.6 percent over the three year period.
Pepco released its third quarter financial results on Friday, reporting earnings from continuing operations of $80 million compared to $21 million in the third quarter of 2010.
The study also said that the 280 companies received a total of $222.7 billion in tax subsidies over the three year period, with Wells Fargo (WFC) topping the list with nearly $18 billion in tax breaks.
While corporations continue to lobby for lower tax rates and an exemption for profits they shift offshore, McIntyre, said, “Our study provides proof that too many corporations are already being coddled by our tax system.”
Of the 280 companies examined, 111 paid effective three-year tax rates of less than 17.5 percent, including 67 that paid less than 10 percent. Ninety-eight paid between 17.5 percent and 30 percent, while 71 paid more than 30 percent.
by RTT Staff Writer