Group Lists 42 Firms That on Average Paid No U.S. Income Tax
Wall Street Journal. (Eastern edition). New York, N.Y.: Jul 18, 1986. pg. 1
WASHINGTON -- Citizens for Tax Justice, a labor-backed lobbying group, released its list of 42 major U.S. companies that have earned sizable profits over the past four years but have on average paid no federal income tax.
Top honors went to American Telephone & Telegraph Co., which the study said reported $24.9 billion in domestic profit from 1982 through 1985 but didn't pay any federal income tax. Du Pont Co. was second on the list with profit of $3.8 billion, Boeing Co. third with $2.3 billion, and General Dynamics fourth with $2 billion.
The study, which included 250 large and profitable corporations, found that 130 of them had managed to escape taxes in at least one of the past four years.
New York-based AT&T said the report is "way off the mark." The telecommunications giant said that with the exception of one unusual year, it "has been a substantial federal income-tax payer. Over the four-year period cited in the report, we incurred federal income taxes of three-quarters of a billion dollars."
Du Pont said it paid more than $4 billion in taxes in the U.S. over the four years, of which about $200 million was federal income tax. The Wilmington, Del.-based chemicals concern said it paid federal income tax for each of the four years. In this time period, Du Pont's world-wide effective income-tax rate averaged more than 60%, the company said.
General Dynamics said it has "complied fully" with all applicable federal income tax laws and regulations. The St. Louis, Mo.-based company noted that the accounting method used by most defense contractors "provides for deferral, not forgiveness, of certain taxes. General Dynamics expects payment of these deferred taxes to start next year and to continue for several years thereafter."
Boeing said the Seattle, Wash.-based aircraft maker and defense contractor "has paid all taxes that are due when they're due, according to federal tax regulations."
Citizens for Tax Justice began calculating effective tax rates of major corporations two years ago, using information available in the companies' annual reports and other public documents. The study only counts taxes actually paid, and ignores taxes that are deferred as a result of depreciation allowances or other tax preferences, since in many cases those taxes will never be paid.
The group's studies have helped propel the tax-overhaul effort, and a provision in the Senate bill is particularly designed to ensure that no company that reports profit to its shareholders will be able to escape paying federal income tax.
Calculating a company's true tax rate is fraught with difficulties, and the results of the Citizens for Tax Justice report differ somewhat from a study released Wednesday by Tax Analysts, a nonprofit organization, which showed that 95 large companies paid no federal income taxes last year.
But while the studies differ, both illustrate how the proliferating use of corporate tax breaks in recent years has enabled many companies to pay little or no corporate income tax.
advocate of tax overhaul, Mr. McIntyre is frequently quoted in the media saying favorable things about the Treasury plan.
Mr. McIntyre's zeal for tax overhaul has caused some tension between him and his union backers. Most labor leaders are opposed to the plan because it would tax many fringe benefits provided by employers. Mr. McIntyre attempts to play down his differences with labor leaders, arguing they aren't as opposed to tax overhaul as they may seem. "They have a political problem being in favor of something that Reagan might be for, and they're afraid if they support this the rug will be pulled out from under them."
At any rate, Mr. McIntyre doesn't plan to get directly involved in the congressional lobbying over taxes this year. "When it gets down to the nitty-gritty, we won't be that helpful," he admits. "What we can do is help set the tone."
Credit: Staff Reporter of The Wall Street Journal