(Original Post)
By Conan Milner
Epoch Times Staff
Last Updated: November 13, 2011
U.S. taxpayers can safely claim that they pay more in federal income taxes than Wells Fargo, AT&T, General Electric, DuPont, Verizon, and many more of the nation’s largest corporations. As America’s most profitable companies continue to lobby for even lower corporate tax rates, a recent study shows that many of these businesses benefit from Uncle Sam and the tax system.
A review of the nation’s top companies has found that, while some businesses have paid substantial sums in annual income tax over the last three years, nearly 80 corporations managed to avoid paying anything at all.
In the report titled “Corporate Taxpayers and Corporate Tax Dodgers, 2008–2010,” research and advocacy group Citizens for Tax Justice (CTJ) examined the most recent tax records of 280 highly profitable Fortune 500 companies.
Over the three-year period, these companies reported a total of $1.4 trillion in U.S. pre-tax profits, while managing to pay very little, if any, taxes by comparison. Because of billions in subsidies, 30 of these companies actually enjoyed a negative income tax rate, despite combined pre-tax profits of $160 billion.
Although some argue that U.S. companies are burdened by rates much higher than those seen overseas, a closer examination reveals a complex mix of loopholes and subsidies that allow businesses to pay far less than the 35 percent mentioned in the federal tax code. The CTJ study found that only about one-quarter of the surveyed corporations paid close to this amount. The vast majority paid considerably less, and many enjoyed U.S. rates that were far better than those found overseas.
The CTJ report characterizes the U.S. corporate tax system as one “plagued with problems” that allow many of America’s most profitable corporations to pay little or nothing in federal income taxes. According to Robert McIntyre, CTJ’s director and the report’s lead author, the study proves that too many corporations are “being coddled” by our tax system.
McIntyre and his colleagues noted that the examined companies received $225 billion in subsidies over the course of the study. Wells Fargo made the most with $18 billion in tax subsidies over the three years, with AT&T and Verizon not far behind at $14 billion and $12 billion, respectively. General Electric and IBM enjoyed over $8 billion apiece, while Exxon-Mobil and Boeing also saw a substantial share, with each receiving a few billion dollars in subsidies.
According to CTJ, if these businesses had paid the statutory 35 percent corporate tax rate, it would have amounted to $473 billion in income taxes—twice as much as what the surveyed companies actually paid over the three years.
“This is wasted money that could have gone to protect Medicare, create jobs, and cut the deficit,” said McIntyre in a press release.
In addition to announcing the big subsidy “winners,” CTJ also pointed out a few of the casualties that have resulted from the current corporate tax system—including public respect for the system itself. According to CTJ, allowing America’s biggest companies to report only half of their actual earnings, while demanding that ordinary wage-earners report every penny, directly undermines public support of the tax code.
“Ordinary taxpayers have a right to be suspicious and even outraged about a tax code that seems so tilted toward politically well-connected companies,” states the report. “In a tax system that by necessity must rely heavily on the voluntary compliance of tens of millions of honest taxpayers, maintaining public trust is essential—and that trust is endangered by the specter of widespread corporate tax avoidance.”