We retired Tax Justice Blog in April 2017. For new content on issues related to tax justice, go to www.justtaxesblog.org
PG&E: Eight Straight No-Tax Years (And Counting)
California-based Pacific Gas and Electric (PG&E) continues its tax-avoidance hot streak. The company’s 2015 annual report shows that PG&E enjoyed $861 million in profits in 2015. Far from paying federal income taxes on this impressive haul, the company actually got a rebate of $89 million from the feds. This marks a remarkable eight straight years in which PG&E has completely zeroed out its federal income tax bill. Their untaxed profits during this period were over $10.8 billion. As with many big utilities, accelerated depreciation tax breaks explain most of PG&E’s tax reductions.
There’s Manufacturing, and then There’s “Manufacturing.”
Since Congress passed a special lower tax rate for manufacturing income in 2004, corporate lobbyists and accountants have gradually widened the scope of what counts for “manufacturing” for tax purposes. What was originally envisioned as a strategy to save the rust belt now looks like it was designed to save Hollywood: Discovery Communications has cut its taxes by $99 million over the last two years using the manufacturing tax break, presumably for developing new shows for its “Animal Planet” and “Oprah Winfrey Network.” Walt Disney raked in $290 million in tax cuts from its movie-related “manufacturing” activities last year, and even World Wrestling Entertainment’s new 10-K shows them benefiting, for the third straight year, from the manufacturing deduction.
Owens Corning Continues to Offshore Profits to Tax Havens
Ohio-based Owens Corning continues to shift its profits offshore into low-rate jurisdictions. At the end of 2015, the company reported a total of $1.6 billion in “permanently reinvested” offshore profits, and estimates that it would pay over 35 percent in U.S. taxes if these profits were repatriated. Since the U.S. income tax on repatriated profits is 35 percent minus any foreign taxes already paid, this amounts to an admission the company is stashing its offshore profits in a zero-rate tax haven—possibly in one of its two Cayman Islands subsidiaries.