Just how bad has the corporate tax code gotten? The newest edition of Offshore Shell Games, a joint report by the Institute on Taxation and Economic Policy (ITEP) and U.S. PIRG, outlines the massive scale of the offshore tax avoidance undertaken by U.S. multinationals. It’s well known that Fortune 500 companies have accumulated a stash of $2.6 trillion in earnings offshore, which has allowed them to avoid an estimated $752 billion in taxes.
Corporate Taxes
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blog October 18, 2017 The Corporate Tax Code is in Dire Shape, But Trump-GOP Plan Would Make It Worse
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report October 17, 2017 Offshore Shell Games 2017
This study explores how in 2016 Fortune 500 companies used tax haven subsidiaries to avoid paying taxes on much of their income. It reveals that tax haven use is now standard practice among the Fortune 500 and that a handful of the country’s biggest corporations benefit the most from offshore tax avoidance schemes.
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blog October 11, 2017 Middle-Income More Likely Than the Rich to Pay More Under Trump-GOP Tax Plan
The Trump Administration and GOP leaders continue to wrap their multi-trillion tax cut gift to the wealthy in easily refutable rhetoric about boosting the nation’s middle class. Later today, trucks… -
blog October 5, 2017 The Data Belie the Trump-GOP Tax Cut Rhetoric
The Trump-GOP tax plan is touted as plan for the middle-class but delivers a boon to the wealthy, throws a comparative pittance to everyone else and even includes a dose of tax increases for some middle- and upper-middle-income taxpayers. The data belie the rhetoric.
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brief September 18, 2017 Fact Sheet: The Consequences of Adopting a Territorial Tax System
President Trump and Republican leaders in Congress have proposed a “territorial” tax system, which would allow American corporations to pay no U.S. taxes on most profits they book offshore. This would worsen the already substantial problem of corporate tax avoidance and result in more jobs and investment leaving the U.S. Lawmakers should know some key facts about the territorial approach.
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report September 6, 2017 Turning Loopholes into Black Holes: Trump’s Territorial Tax Proposal Would Increase Corporate Tax Avoidance
The problem of offshore tax avoidance by American corporations could grow much worse under President Donald Trump’s proposal to adopt a “territorial” tax system, which would exempt the offshore profits of American corporations from U.S. taxes. This change would increase the already substantial benefits American corporations obtain when they use accounting gimmicks to make their profits appear to be earned in a foreign country that has no corporate income tax or has one that is extremely low or easy to avoid.
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blog August 23, 2017 GOP Leaders Tout Corporate Tax Cuts at Boeing and AT&T, Companies that Already Have Single-Digit Tax Rates
House Speaker Paul Ryan plans to visit a Boeing factory in Washington State tomorrow to promote the GOP’s ideas for tax reform, which include a deep cut in the corporate tax rate, while House Ways and Means Chairman Kevin Brady is bringing the same message today to employees of AT&T in Dallas. What is unclear is how much lower taxes for these companies can possibly go.
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blog August 17, 2017 Context Is Everything
Today, the economic climate is starkly different, but it seems GOP leaders are relying on messaging and luck to push through the biggest tax package since 1986. The White House, Republican leaders and anti-tax advocates all have been toeing the same erroneous line: their plans to cut individual and corporate taxes will benefit middle class families and grow the economy. This is, of course, baloney.
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blog August 4, 2017 How to Think About the Problem of Corporate Offshore Cash: Lessons from Microsoft
For a corporation with deeply American roots, Microsoft seems remarkably unable to turn a profit here. Against all odds, the Redmond, Washington-based company continues to claim that virtually all its earnings are in foreign countries. Microsoft’s latest annual report, released earlier this week, shows that over the past two years, the company enjoyed worldwide income of almost $43 billion. It claims to have earned just 0.3 percent of that—$128 million—in the United States.
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blog August 4, 2017 Trump Administration May Make Corporate Inversions Great Again
During the presidential campaign, Donald Trump called out companies engaging in corporate inversions saying that one proposed inversion was “disgusting” and that “politicians should be ashamed” for allowing it to happen. Despite this rhetoric, the Trump Administration is considering rolling back critical anti-inversion rules as part of its broad regulatory review of recently issued Treasury Department regulations.
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blog July 27, 2017 Reviving U.S. Manufacturing, One Cheesecake Factory at a Time
In the latest example of how the tax code has been abused and distorted, the Cheesecake Factory is claiming the manufacturing tax deduction, apparently for manufacturing cheesecakes, burgers, and other treats.
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blog July 21, 2017 Tax Avoidance: Nike “Just Did It” Again, Moving $1.5 Billion Offshore Last Year
The Nike Corporation’s annual financial disclosure of income tax payments is always notable for two recurring trends: the Oregon-based company’s steady shifting of profits into offshore tax havens, and Nike’s apparent effort to conceal how it’s achieving this tax avoidance. This year’s report, released earlier this week, is no exception.
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blog July 18, 2017 FedEx Pays Just 7.5% of Its Profits in Taxes While Pushing for a Lower Corporate Tax Rate
The latest annual financial report released by shipping giant FedEx is yet another reminder that where you stand often depends on where you sit.
The report shows that last year FedEx paid a 7.5 percent federal income tax rate on nearly $3.6 billion of U.S. pretax income and this low rate is due in part to accelerated depreciation, a provision in the tax code that allows the company to write off capital investments faster than they wear out. It’s not surprising, then, that FedEx’s leadership is currently promoting a tax plan that would drop the company’s statutory tax rate even more, and allow it to write off capital investments even faster.
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blog June 23, 2017 Inverter Mylan Finds Yet Another Way to Avoid Taxes
Rather than being known for its pioneering pharmaceuticals, Mylan is increasingly becoming infamous for its pioneering tax avoidance strategies. In 2015, Mylan used an inversion to claim that it is now based in the Netherlands for tax purposes. It is a Dutch company only on paper because ownership of the company was mostly unchanged and it continues to operate largely out of the United States. This maneuver has allowed the company to avoid millions in taxes on its earnings in the U.S. and abroad.
But that’s not the end of Mylan’s innovation when it comes to tax planning. A new report by Reuters found that Mylan is using a surprising new technique for dodging taxes: investing in coal refineries.
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press release June 20, 2017 Speaker Ryan’s “Bold Agenda” for the Country Boils Down to Tax Breaks for the Wealthy
Speaker Paul Ryan today correctly outlined some of working people’s concerns, including the desire for more good jobs and access to the training required to secure those jobs. But his bottom line policy prescriptions for addressing the concerns of working people are the same old trickle-down economic policies that time after time have proven to primarily benefit the wealthy.
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blog May 25, 2017 Congressional Hearing Highlights Problems with the Border Adjustment Tax
The debate over the so-called border adjustment tax (or BAT) took center stage this week when the House Ways and Means Committee held its first hearing on the topic. Despite strong support by the House Republican leadership and the Chairman of the Ways and Means Committee, Rep. Kevin Brady, the proposal faced an onslaught of criticism during the hearing from invited witnesses and members of both parties.
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blog May 18, 2017 Tax Avoiding Companies Well Represented at Tax Reform Hearing
Today the House Ways and Means Committee will hold its first tax reform hearing of 2017, which marks the official opening of the tax reform debate in Congress. True tax reform, if the committee sought to achieve it, could create more jobs and ensure companies are paying their fair share by cracking down on the massive offshore tax avoidance that companies engage in. Unfortunately, the panel of witnesses for today’s hearing is largely made up of representatives of various major corporations that are beneficiaries of the loopholes in our current corporate tax laws. Given this, it seems likely that these panelists will not push for a fairer corporate tax code, but rather a code that allows them to avoid even more taxes and incentivizes moving more jobs offshore.
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report April 27, 2017 3 Percent and Dropping: State Corporate Tax Avoidance in the Fortune 500, 2008 to 2015
The trend is clear: states are experiencing a rapid decline in state corporate income tax revenue. Despite rebounding and even booming bottom lines for many corporations, this downward trend has become increasingly apparent in recent years. Since our last analysis of these data, in 2014, the state effective corporate tax rate paid by profitable Fortune 500 corporations has declined, dropping from 3.1 percent to 2.9 percent of their U.S. profits. A number of factors are driving this decline, including: a race to the bottom by states providing significant “incentives” for specific companies to relocate or stay put; blatant manipulation of loopholes in state tax systems by corporate accountants; significant cuts in state corporate tax rates; and the erosion of state corporate tax bases, largely due to ill-advised state-level linkages to the federal system.
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blog April 27, 2017 President Trump’s Corporate Tax Outline: At Least He Didn’t Use a Napkin
The most complimentary thing that can be said about the corporate tax changes outlined by President Trump earlier this week is that they weren’t scribbled on a napkin. Unlike supply-side… -
blog April 27, 2017 New State Corporate Study: 3 Percent and Dropping
States are experiencing a rapid decline in state corporate income tax revenue, and the downward trend has become increasingly pronounced in recent years. Despite rebounding bottom lines for many corporations,… -
blog April 25, 2017 Does a 15 Percent Corporate Tax Rate Sound Low? For Dozens of Major Corporations, Maybe Not
President Donald Trump has promised to release new details Wednesday on what he says could be “the biggest tax cut we’ve ever had.” While much is unclear about the shape… -
report April 13, 2017 Fifteen (of Many) Reasons We Need Corporate Tax Reform
Profitable Fortune 500 companies in a range of economic sectors have been remarkably successful in manipulating the tax system to avoid paying even a dime in tax on billions of dollars in U.S. profits. This ITEP report examines a select, diverse group of 15 corporations’ tax situations to shed light on the widespread nature of corporate tax avoidance. As a group, these companies paid no federal income tax on $21 billion in profits in 2016, and they paid almost no federal income tax on $111 billion in profits over the past five years. All but one received federal tax rebates in 2016, and almost all paid exceedingly low rates over five years.
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press release March 31, 2017 New Analysis Compares Tax Rates Paid by Companies Lobbying for/against Border Adjustment Tax
An Institute on Taxation and Economic Policy analysis finds that, on average, companies that are opposed to the Border Adjustment Tax pay higher tax rates than a coalition of companies… -
blog March 30, 2017 A Comparative Analysis: Tax Rates Paid by Companies for and Against the Border Adjustment Tax
It’s often noted that corporate tax reform is difficult, in part, because it creates so many winners and losers. As Congress turns its attention to federal corporate tax reform, the… -
blog March 9, 2017 Debunking the 35 Percent Corporate Tax Myth
For years, the number one tax policy talking point from corporate lobbyists has been the claim that the United States has the highest corporate tax rate in the world. The… -
report March 9, 2017 The 35 Percent Corporate Tax Myth
Profitable corporations are subject to a 35 percent federal income tax rate on their U.S. profits. But many corporations pay far less, or nothing at all, because of the many tax loopholes and special breaks they enjoy. This report documents just how successful many Fortune 500 corporations have been at using loopholes and special breaks over the past eight years. As lawmakers look to reform the corporate tax code, this report shows that the focus of any overhaul should be on closing loopholes rather than on cutting tax rates.
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blog February 22, 2017 The Border Adjustment Tax Creates More Problems Than It Solves
In recent weeks, the Republican congressional leadership’s effort to introduce a comprehensive tax reform bill has increasingly faced opposition from major business groups and skeptical lawmakers from across the aisle.… -
report February 22, 2017 Regressive and Loophole-Ridden: Issues with the House GOP Border Adjustment Tax Proposal
In the summer of 2016, House Republicans released a blueprint for tax reform that is likely to be used as the starting point for major tax legislation in 2017.[1] One of the most radical provisions is a proposal to shift the corporate tax code from a residence-based to a destination-based system through applying a border adjustment on exports and imports. This proposal has major flaws that would make it a challenge to implement. Further, it is inherently regressive, rife with loopholes and would violate international agreements.
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blog August 9, 2016 Tim Cook’s Disingenuous Argument to Justify Apple’s $215 Billion Offshore Cash Hoard
Tim Cook is a persuasive CEO. In a wide-ranging interview published earlier this week in the Washington Post, he discussed his vision for the company, thoughts about leadership succession, and… -
report February 25, 2014 The Sorry State of Corporate Taxes
Many of America’s Most Profitable Corporations Pay Little or No Federal Income Taxes; Multinationals Pay Higher Rates Abroad Than in the U.S.
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report November 13, 2011 Corporate Taxpayers & Corporate Tax Dodgers
Earlier this year, Berkshire Hathaway Chairman Warren Buffett made headlines by publicly decrying the stark inequity between his own effective federal tax rate (about 17 percent, by his estimate) and… -
report April 15, 2010 Massey Pays One-Sixth of 35% Federal Tax Rate, Little in State Income Tax
A new analysis shows that Massey Energy, which owned the Upper Big Branch mine where 29 West Virginia miners were killed last week, paid an average of 5.6 percent of… -
report September 15, 2004 Corporate Income Taxes in the Bush Years
This study details which companies have benefitted the most from the decline in corporate taxes over the past three years, and which have been less fortunate. It also measures the…