Seattle Post Intelligencer: Report claims Boeing paid no taxes over past three years
media mentionBy AUBREY COHEN, SEATTLEPI.COM STAFF
Published 09:53 p.m., Thursday, November 3, 2011
Boeing has paid less than nothing in taxes on its billions of dollars in profits over the past three years, according to a new report.
But Boeing disputes the accounting, saying it paid hundreds of millions in taxes from 2008 through 2010.
“We’re following the rules, we’re paying our taxes and we’re investing in the future,” spokesman Charles Bickers said.
First the report, by the Citizens for Tax Justice & the Institute on Taxation and Economic Policy. The authors say the average effective rate among the 280 profitable Fortune 500 companies it examined was just 17.3 percent in 2008, 2009 and 2010, less than half the actual corporate tax rate of 35 percent.
“(W)e, like most Americans, want our businesses to do well. In a market economy, we need managers and entrepreneurs, just as we (and they) need workers and consumers,” the authors wrote. “But we also need a much better balance when it comes to taxes. 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.”
The authors aren’t accusing companies of doing something illegal. Rather, they say these powerful players are shaping the law to their advantage.
“Corporate apologists will correctly point out that the loopholes and tax breaks that allow low-tax corporations to minimize or eliminate their income taxes are generally quite legal, and that they stem from laws passed over the years by Congress and signed by various Presidents. But that does not mean that low-tax corporations bear no responsibility for their low taxes,” the report says. “The laws were not enacted in a vacuum; they were adopted in response to relentless corporate lobbying, threats and campaign support.”
As for Boeing, the report says the company paid an effective tax rate of -1 percent, -9.1 percent and -0.1 percent, respectively in 2008, 2009 and 2010, while making profits of nearly $3.8 billion, $1.5 billion and $4.5 billion. That adds up to an effective rate of -1.8 percent, or -$178 million, over the three years.
Boeing pointed to its 2010 annual report, which says the company paid an effective rate of 33.6 percent in 2008, 22.9 percent in 2009 and 26.5 percent last year, including federal, state and foreign taxes. But, in a sign of just how convoluted corporate accounting can be, the same page of the report lists net income tax payments of $599 million in 2008, -$198 million in 2009 and $360 million last year.
How can a refund of $198 million in 2009 square with a reported effective rate of 22.9 percent? It all has to do with how accounting rules tally things differently for different purposes. Such rules muddy efforts to figure out what’s really going on.
In another sign of how confusing this all is, the nonprofit Institute for Policy Studies cited a Boeing tax figure of $13 million in 2010 in a recent report listing the company as one of 25 large corporations paying their chief executives more than Uncle Sam. Boeing also disputes that amount, noting, among other things, that it received a $371 million tax settlement from the IRS last year.
Boeing’s annual report shows tax credits for such activity as research and development, and deferrals for such spending as employee healthcare and pensions in 2008, 2009 and 2010. Bickers defended this via email Thursday, saying:
Over that period — even at the depths of the recession — Boeing made substantial investments in our U.S. manufacturing capacity, in the retirement security of our employees (funding our pension plans) and in the development of innovative new products. Many of those investments are incentivized specifically by federal tax laws (reducing our tax liability) to help stimulate the economy and create and maintain new jobs – which is exactly what we have done: Boeing has added more than 9,000 direct jobs in the U.S. this year alone, which also has created many thousand more jobs indirectly.