By John D. Oravecz
Published: Thursday, Feb. 27, 2014, 12:01 a.m.
Companies with a history of not paying income taxes still don't pay, say authors of a study that named 26 corporations they contend paid no levies over five years.
The study arrived as Congress again takes up tax reform that members have been unable or unwilling to enact. A reform plan introduced on Wednesday by Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee, would cut the corporate tax rate to 25 percent — the first overhaul of the tax code since 1986.
The study by the left-leaning Citizens for Tax Justice in Washington found that profitable Fortune 500 corporations that paid no federal income tax include Verizon Communications, FirstEnergy Corp. and NiSource, parent of Columbia Gas of Pa., which have ties to Western Pennsylvania.
A spokesman for Verizon said the study is flawed because it misstates facts, with a political agenda, when it describes Verizon and other companies.
“We paid $2.9 billion in federal, state and local income taxes over that period. We're one of the largest taxpayers in America,” said Verizon's Ray McConville. The study “cherry picks,” ignoring legal deductions for investment, he said. “They look at that and throw it out the window as we're not paying, which we are ... and ignore how U.S. accounting rules work.”
The study said one-third of the profitable corporations paid less than 10 percent during 2008 to 2012. The legal corporate income tax rate is 35 percent, one of the highest in the world, said the study, the second the group has issued since 2011.
“An awful lot of these companies are paying little or nothing in corporate taxes — the list is long,” said its director Robert McIntyre, the main author. “What's new in this report? These companies are continuing to pay low taxes, blaming the recession” or other reasons. “The ones that don't pay taxes keep on paying no taxes.”
The 288 companies paid an effective federal tax rate of 19.4 percent over the five-year period, the study said. In addition, 111 of those, or 39 percent, paid zero or got a refund in federal taxes in at least one year.
Companies with Pittsburgh area ties include Allegheny Technologies Inc., FedEx Corp., PNC Financial Services Group, H.J. Heinz Co. and Chesapeake Energy.
Curtis Dubay, senior tax policy analyst at The Heritage Foundation in Washington, a conservative policy group, said corporations are not evading taxes, as the study implies. “They are avoiding taxes as best they can under the law,” Dubay said.
“The bottom line is that most companies pay a good deal of taxes,” he said. During the period in question, companies paid less in taxes because of the recession. “But tax revenues are rising sharply now because the economy is recovering, according to the Congressional Budget Office.”
Karl Brack, a spokesman for NiSource, of Merrillville, Ind., said its taxes were lower because of bonus depreciation, passed by Congress to encourage utilities to spend on pipeline improvements and other repairs, he said.
“Only the timing of the deductions was changed, and not the amount that could be deducted. This means our income tax expense will likely be higher in the future,” he said.
FirstEnergy has the same deductions, said spokesman Doug Colafella in Akron. “We pay just over $1 billion in federal, state and local taxes.” In Western Pennsylvania, West Penn Power paid $110 million last year, he said.
PNC spokesman Fred Solomon declined to comment. PNC's annual report shows it paid total income taxes of $1.04 billion in 2010 and $867 million in 2009. But those figures were calculated by taking into account deferred, or future, tax payments the bank expected to make, Citizens for Tax Justice has said.
Spokesmen for Allegheny Technologies and FedEx, whose FedEx Ground unit is headquartered in Moon, said their companies pay taxes that the law requires. Spokesmen for Heinz and Chesapeake could not be reached.
John D. Oravecz is a Trib Total Media staff writer. He can be reached at 412-320-7882 or firstname.lastname@example.org.