August 1, 1985 02:36 PM | Permalink |
1984 was a banner year for corporate profits. They were up 26% over 1983, reaching an all-time high of $286 billion. Their share of national income fell just short of 10%, the highest level since 1978.
Despite this spectacular rebound in profitability, 1984 was yet another banner year for corporate tax avoidance.
Last year, we released a widely-circulated study, Corporate Income Taxes in the Reagan Years, which examined the profits and federal income taxes of 250 corporations in the years 1981, 1982 and 1983. With the addition of the 1984 data, the full story of corporate tax avoidance during President Reagan’s first term can be told. It is a story of unparalleled corporate success at beating the federal tax collector.
Our new survey, which covers the four years from 1981 to 1984, expands on our earlier work. The new study is based on the annual reports to shareholders of 275 major American corporations. All of the companies covered by the report were profitable over the four years. In fact, their total 1981-84 pretax profits exceeded $400 billion—or more than a third of the $1.1 trillion in total adjusted pretax corporate profits included by the Commerce Department in its National Income Accounts.
In this report, we look at the 275 companies’ domestic profits and the income taxes they paid—or failed to pay—on those profits to the federal government. We assess the impact of the Reagan administration’s 1981 corporate tax cut program on corporate tax liabilities and on the economy. Finally, we discuss the current popular outcry for tax reform and examine how the President’s latest tax change proposals measure up.
A description of the methodology used to select the 275 companies included in the study, calculate their domestic pretax profits, and determine the actual federal income taxes they paid or the tax benefits they received is included at the end of this report.