The Examiner: Report shows profitable corporations paid no tax in 2011
media mentionApril 10, 2012
Robert Bowen
Economic Policy Examiner
A new report released today shows that many very profitable corporations paid no federal tax in 2011. In fact, many received big taxpayer subsidies. This news may not make the average middle class taxpayer feel great when they pay their taxes this week.
Citizens for Tax Justice and the Institute on Taxation and Economic Policy did a study last year on federal income taxes paid, or not paid, by 280 big, profitable Fortune 500 corporations. That report found, among other things, that 30 of those companies paid no net federal income tax from 2008 through 2010 despite making huge profits.
An update for 2011 shows that almost all these 30 companies have maintained their “tax dodging ways.” In fact, all but four of the 30 companies still paid no federal tax in 2011. In fact, many got refunds in the form of subsidies from the taxpayers.
Profitable corporations avoid taxes but small businesses pay
The report showed that 26 of the 30 companies not only paid no tax, but made more money after tax than pre-tax meaning taxpayers gave them a gift in the form of subsidies. Of the remaining four companies, three paid four year effective tax rates of less than 4 percent (specifically, 0.2%, 2.0% and 3.8%). One company paid a 2008-11 tax rate of 10.9 percent.
The study found that in total, 2008-11 federal income taxes for the 30 companies remained negative, despite $205 billion in pretax U.S. profits. Overall, they enjoyed an average effective federal income tax rate of –3.1 percent over the four years.
Does any one wonder why the government has a deficit?
Citizens for Tax Justice Director Bob McIntyre said in the press release “These big, profitable corporations are continuing to shift their tax burden onto average Americans. This isn’t fair to the rest of us, it makes no economic sense, and its part of the reason our government is running huge budget deficits.”
Taxpayers subsidize profitable companies
The report concluded that if these 30 companies paid the full 35 percent corporate tax rate over the 2008-11 period, they would have paid $78.3 billion more in federal income taxes. Or put another way, over the four years, the 30 companies received more than $78 billion in total tax subsidies.
Wells Fargo alone garnered $21.6 billion in tax subsidies over the four years, followed by General Electric ($10.6 billion), Verizon ($7.7 billion), and Boeing ($6.0 billion). This is on top of the $4 billion taxpayers give to profitable oil companies each year while paying up the nose at the pump.
Despite these seeming tax inequities, Republicans are clamoring for lowering the corporate tax rate. The Ryan/Romney budget slashed it to 25%. Some want to eliminate it altogether. Even the President’s budget proposed cutting the corporate tax rate but his was accompanied by closing loopholes and eliminating some of the most egregious subsidies. Not so with the GOP proposals.
If the tax rate were cut and no loopholes are closed, these companies would get even more money from taxpayers.
The Treasury Department reports that corporate taxes fell to only 1.2 percent of our gross domestic product over the past three fiscal years. That’s lower than at any time since the 1940s except for one single year during President Reagan’s first term the report stated. By comparison, corporate taxes averaged almost 4 percent of our GDP during the 1960s.
If we want to really do something about the deficit and our national debt, we have to deal with the revenue side of the ledger. We hand out money to profitable companies that don’t need it, and borrow the money from China to pay for it.
When you pay your taxes, keep this tax inequity in mind. When you hear political clap trap about the deficit, think of this. This issue is likely to get a lot of discussion in the next few months.