We retired Tax Justice Blog in April 2017. For new content on issues related to tax justice, go to www.justtaxesblog.org
Wendy’s: Where’s the tax payments?
When the Burger King Corporation announced plans to renounce its U.S. citizenship through a corporate inversion last year, Ohio Sen. Sherrod Brown encouraged his constituents to boycott the company’s restaurants in favor of Ohio-based Wendy’s. But the burger company’s latest financial statements suggest that Brown might want to rethink his recommendation. Over the past three years, Wendy’s reports $440 million in U.S. pretax income on which it has paid zero in state corporate income taxes. At the federal level, Wendy’s reported a tax rate of just 1.8 percent over this three-year period. When the company’s use of tax breaks for executive stock options is factored in, its federal tax rate is also zero. While ending frivolous corporate inversions should be a priority for Congress so should eliminating generous corporate tax breaks.
Duke Energy: How’d They Do That?
A 2014 CTJ/ITEP report identified Duke Energy as one of 26 Fortune 500 corporations that paid zilch in federal income tax over the five-year period between 2008 and 2012. Three years later, nothing has changed. The company has since reported $10.7 billion in pretax U.S. income, on which its total current federal income taxes were minus $123 million. This astonishing eight-year, tax-free stretch is the product of perfectly legal tax breaks, primarily accelerated depreciation provisions that allow companies to write off the cost of their capital investments faster than they actually wear out. Since Congress’s main recent activity on accelerated depreciation has been to expand this tax break, it’s worth noting that the reason profitable corporations often are able to avoid paying income taxes is because Congress passes laws that make it easy for them to do so.
Citrix: Taking “Remote Access” to a New Level
The Citrix Corporation is a widely known provider of remote-access software, which allows employees to use “remote login” technogy to access a centrally located computer from their home offices. If the company’s corporate report is to be believed, it seems a substantial number of its 9,500 employees must be remotely logging in from homes in the Cayman Islands. How else to explain the fact that domestic sales accounted for 56 percent of its worldwide revenues last year but the company claimed none of its profits were earned in the United States? One clue to this mystery lies in the company’s income tax note, which states that the company’s $2.3 billion in permanently reinvested foreign earnings are “primarily held by its foreign subsidiary in the Cayman Islands.” $2.3 billion also happens to be the total amount of profit the company has reported outside the United States in the last 11 years, dubiously suggesting that the lion’s share of the company’s income-generating activities must be taking place in the Caymans.