Sun Sentinel: You paid more in taxes than FPL and other companies
media mentionBy Julie Patel November 4, 2011 12:40 PM
Thirty companies, including the parent company of Florida Power & Light, legally paid less than zero in federal income taxes in recent years, according to a report this month by the Citizens for Tax Justice and the Institute on Taxation and Economic Policy.
The two liberal-leaning groups examined federal income taxes for 280 of the largest and most profitable U.S. companies from 2008 to 2010. All were profitable those years.
Corporations are supposed to pay an average tax rate of 35 percent but there are many exemptions and exceptions allowed by federal law.
Some companies included in the report criticized its methodology, saying the tax rate estimates shouldn’t include deductions that are allowed to encourage investments and jobs.
The report found 71 companies paid effective three-year tax rates of more than 30 percent; 67 paid less than 10 percent, with an average tax rate of zero; and 30 companies paid less than zero percent, an average rate of –6.7 percent.
Altogether, the 30 companies, including Verizon, AT&T and Duke Energy, earned a profit of $160 billion, before taxes, over the three years. NextEra Energy, FPL’s parent company, earned $6.4 billion before taxes, and paid an average tax rate of –2.2 percent, according to the report.
FPL Spokesman Mark Bubriski said a provision of federal tax law allows for bonus depreciation, or for businesses to deduct from their income taxes a percentage of the cost of an eligible property during its first year. Nearly all of NextEra’s billions of dollars of investments in infrastructure and clean energy during the three years qualified for bonus depreciation so naturally, the tax rate was negative, he said.
He noted that an official from the Edison Electric Institute, an industry trade group, said the study is misleading because electric utilities in the report invested $235 billion during the three years, offsetting federal tax requirements. The official said their investments increased sharply during the economic downturn, generating hundreds of thousands of jobs.
The companies in the report also paid billions in other taxes. NextEra, for instance, pays $1 billion in taxes in Florida, making it the state’s largest taxpayer, Bubriski said.
NextEra, one of the country’s largest renewable energy producers, and its subsidiaries received more than half a billion dollars in federal renewable energy grants from 2009 to 2010. It also has loan guarantees from the federal government that were criticized recently because NextEra Chairman Lew Hay is on President Barack Obama’s jobs panel, which has recommended federal incentives for clean energy projects.
Updated at 1:50 p.m.