Tag: Archive

January 7, 2003 05:20 PM | Permalink |

President Bush’s new, $674 billion tax cut plan would boost the size of his 2001 tax cuts by more than half over this decade, sending our country even deeper in debt and endangering important public programs, while doing little to stimulate the economy. A computer analysis of the effects of Bush’s new tax cut proposals shows:

• Despite some tax changes slightly lowering taxes on average families in the short run, three-fifths of Bush’s proposed tax reductions for this year would go to the best-off 10 percent of all taxpayers.
• The typical taxpayer would get a tax cut of $289 this year.
• In contrast, taxpayers in the top one percent of the income scale, whose average income exceeds $1 million, would get tax cuts this year of more than $30,000 each.
• By the end of the decade, more than half of the President’s proposed new tax reductions would go to the top one percent.

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December 16, 2002 05:23 PM | Permalink |

According to White House sources quoted in today’s Washington Post, the Bush administration has revealed what it thinks are the central problems facing America today: the very rich don’t have enough money and working people don’t pay enough in taxes.

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December 9, 2002 04:05 PM | Permalink |

Click here to see this analysis in PDF format.

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John W. Snow, President Bush’s choice to replace the fired Paul O’Neill as Secretary of the Treasury, is the CEO of a champion corporate tax dodger, CSX Corporation.

CSX’s 2001 annual report states the following company motto: “CSX will pursue all available opportunities to pay the lowest federal, state and foreign taxes.”

As a result of those efforts, CSX reports that:

• In three of the past four years, CSX paid no federal income tax at all.
• In fact, instead of paying taxes, CSX supplemented its $934 million in pretax U.S. profits over the four years with a total of $164 million in tax rebate checks from the federal government.

“If the President’s goal is to encourage even more corporate tax sheltering, then Mr. Snow looks like a fine choice to help him do so,” said Robert S. McIntyre, director of Citizens for Tax Justice.

CSX Corporation: US Profits & Federal Income Taxes or Refunds, 1998-2001
$-millions	2001	2000	1999	1998	1998-01
Pretax US profit	$ 347	$ 154	$ 46	$ 387	$ 934
Federal income tax or rebate (–)	–68	–54	60	–102	–164
Effective tax rate	–19.6%	–34.9%	131%	–26.4%	–17.5%
Notes: Profits are US pretax profits as reported by the company, less currently payable state and local incomes taxes and a small amount of earnings reported after tax. Federal income taxes are US federal income taxes currently payable as reported, less tax benefits from stock option exercises, which are reported separately. The strangely high tax rate in 1999 reflects payment of $75 million in taxes previously deferred. Despite that reversal, CSX indefinitely deferred a net total of $472 million in federal taxes over the four years, largely due to excess depreciation write-offs for tax purposes. Source: CSX annual reports. Citizens for Tax Justice, Dec. 9, 2002

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September 25, 2002 04:06 PM | Permalink |

On September 5, 2002, CTJ director Robert S. McIntyre wrote to Pamela Olson, the new assistant secretary of the Treasury for tax policy, asking her to withdraw the revisions to the research tax credit proposed by her predecessor, Mark Weinberger, in late 2001.

McIntyre wrote:

“You may or may not concur with the conventional wisdom that Mr. Weinberger’s actions with regard to the research credit represented a gross conflict of interest, given his close relationship with Ernst & Young and his long-time lobbying to gut the 1986 research credit reforms. But I hope you will agree, in light of the plain language of the 1986 law and the court decisions interpreting it, that the December 2001 research credit regulations are inconsistent with both the statute and the public policy underlying it.”

The full text of McIntyre’s letter and two attachments are linked in PDF format.

CTJ letter to Treasury
October 2002 “Taxonomist” column
January 2002 “Taxonomist” column

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September 20, 2002 02:32 PM | Permalink |

Four flights up in a dilapidated building on L Street, Robert S. McIntyre holds a candle for liberal America. Steps up from Stoney’s Beef-N-Beer on one side and the Washington headquarters of the SEIU (Service Employees International Union) on the other, McIntyre serves as the director of what is officially described as the nonpartisan, nonprofit Citizens for Tax Justice . . . .

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June 12, 2002 05:25 PM | Permalink |

A new study released today by Citizens for Tax Justice and the Children’s Defense Fund reveals for the first time who stands to benefit from the 2001-enacted Bush tax cuts in each year from 2001 through 2010. Among the key findings:

• Over the ten-year period, the richest Americans—the best-off one percent—are slated to receive tax cuts totaling almost half a trillion dollars. The $477 billion in tax breaks the Bush administration has targeted to this elite group will average $342,000 each over the decade.
• By 2010, when (and if) the Bush tax reductions are fully in place, an astonishing 52 percent of the total tax cuts will go to the richest one percent—whose average 2010 income will be $1.5 million. Their tax-cut windfall in that year alone will average $85,000 each. Put another way, of the estimated $234 billion in tax cuts scheduled for the year 2010, $121 billion will go just 1.4 million taxpayers.
• Although the rich have already received a hefty down payment on their Bush tax cuts—averaging just under $12,000 each this year—80 percent of their windfall is scheduled to come from tax changes that won’t take effect until after this year, mostly from items that phase in after 2005.
• In contrast, the vast majority of taxpayers have already received most of their tax cuts from the 2001 legislation.
  • For the four out of five families and individuals making less than $73,000 this year, three-quarters of the tax cuts—averaging about $350 this year—are already in place.
  • Tax cuts for the 19 percent of taxpayers making between $73,000 and $356,000 this year will grow a little over the next four years as the cuts in the upper tax rates continue to kick in, but then will dwindle thereafter. By 2010, the tax cuts for this group will be no bigger as a share of income than they are now.
• As a result, freezing the Bush tax cuts at their 2002 levels would have little or no effect on 99 percent of the taxpayers, whose tax cuts are already mostly or completely “frozen.” Only the best-off one percent of the taxpayers will receive significant additional tax cuts if the rest of the Bush tax program continues to be implemented.

Click here to see this analysis in PDF format.

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April 18, 2002 05:26 PM | Permalink |

More than half of the Bush tax cuts enacted last year that are scheduled to take effect after 2002 will go to the best-off one percent of all taxpayers. In contrast, for four out of five Americans, most of the tax cuts have already taken effect this year.

The future tax cuts, if implemented, will be worth an average of $44,800 a year to the wealthiest one percent when fully in place. For the bottom 60 percent, the corresponding average tax cut figure is $95 a year.

“Every American has a major stake in whether the Bush tax cuts continue to be phased in,” said Citizens for Tax Justice director Robert S. McIntyre. “For the very rich, hundreds of thousands of dollars in tax reductions over the upcoming decade hang in the balance. For the vast majority of us, continuing to phase in the Bush tax plan will provide little tax relief, but will entail large costs—including higher interest rates, reduced government services and a bleaker future for Social Security.”

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April 17, 2002 04:07 PM | Permalink |

Click here to see this analysis in PDF format.
Click here for a chart showing trends in corporate income taxes.

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A startling surge in corporate tax welfare is expected to drive corporate income taxes over the next two years down to only 1.3 percent of the gross domestic product. That will be the lowest level since the early 1980s—and the second lowest level in at least six decades.

Corporate Tax Welfare, fiscal 2002 & 2003
$-billions	2002	2003	Source
Official tax-expenditure list, pre-stimulus bill	$ 91.3	$ 95.1	JCT
Plus items not on official list—
Meals & entertainment	4.1	4.3	CTJ/CBO
Offshore tax shelters	>18.0	>19.0	CTJ
Inconsistent treatment of stock options	>20.0	>21.0	CTJ
Plus new corporate items in stimulus bill	37.7	35.8	JCT/CTJ
Total corporate tax welfare	$ 171.1	$ 175.2
Compare:
Expected corporate income tax payments*	$ 136.3	$ 151.2	CBO
*FY 2002 figure excludes FY 2001 to 2002 two-week estimated tax payment shift. Sources: Joint Committee on Taxation (JCT), Citizens for Tax Justice (CTJ) and Congressional Budget Office (CBO), 2002, as noted.

Driven in part by the new corporate tax breaks just enacted in the so-called “stimulus” bill, the total cost to ordinary American taxpayers of corporate tax welfare will exceed $170 billion annually in each of the next two years.

In fact, for the first time since the early eighties, corporate tax loopholes will actually cost more than companies pay in income taxes in fiscal 2002 and 2003.

What has this meant for specific companies?

Even before this year’s new corporate loopholes, corporate tax welfare had been expanding rapidly. Tax breaks for stock options, congressional indifference to abusive offshore corporate tax shelters, and other tax breaks have allowed many companies to earn billions in profits, yet pay little or nothing in federal income taxes.

From 1996 through 2000, just ten large profitable companies enjoyed a total of $50 billion in corporate tax breaks. That brought their combined tax bills down to only 8.9 percent of their $191 billion in U.S. profits over the five years. In just the most recent two years for which data are available, these ten companies got $29 billion in tax welfare, and paid a mere 5.9 percent of their profits in federal income taxes.

Microsoft enjoyed more than $12 billion in total tax breaks over the past five years. In fact, Microsoft actually paid no tax at all in 1999, despite $12.3 billion in reported U.S. profits. Microsoft’s tax rate for the past two years was only 1.8 percent on $21.9 billion in pretax U.S. profits.

General Electric, America’s most profitable corporation, reported $50.8 billion in U.S. profits over the past five years, but paid only 11.5 percent of that in federal income taxes. That low tax rate reflected almost $12 billion in corporate tax welfare for GE.

Ford enjoyed $9.1 billion in corporate tax welfare over the past five years. It reported $18.6 billion in U.S. profits over the past two years, but paid a tax rate of only 5.7 percent.

Worldcom paid no taxes at all in two of the last three years, despite reported U.S. profits of $15.2 billion. Worldcom’s total tax rate over the three years was only 1.6%. Corporate tax welfare slashed Worldcom’s tax bill by $5.3 billion over the past five years.

IBM reported $5.7 billion in U.S. profits in 2000, but paid only 3.4 percent of that in federal income taxes. In 1997, IBM reported $3.1 billion in U.S. profits, and instead of paying taxes, got an outright tax rebate. Over the past five years, IBM enjoyed a total of $4.7 billion in corporate tax welfare.

General Motors paid no taxes at all in three of the last five years, despite $12.5 billion in reported U.S. profits. GM’s tax rate for the past three years was negative 1.3 percent. Its corporate tax welfare totaled $3.6 billion over the past five years.

Enron paid no income taxes at all in four of the past five years, despite $1.8 billion in reported U.S. profits. Enron’s total taxes over the five years were a negative $381 million. Its corporate tax welfare totaled $1.0 billion.

El Paso Energy reported $1.6 billion in U.S. profits over the past five years, but paid less than nothing in federal income taxes, getting tax rebates of $254 million. El Paso’s tax rate over the five years was negative 15.5 percent. Its corporate welfare totaled $827 million.

Colgate-Palmolive paid no taxes at all in three of the past five years, despite $1.6 billion in reported U.S. profits. Colgate’s total tax rate over the five years was negative 1.3 percent, due to $595 million in corporate tax welfare.

Navistar, on $1.4 billion in U.S. profits over the past five years, paid only $28 million in federal income taxes, a tax rate of only 2 percent. Navistar’s corporate tax welfare totaled $451 million.

U.S. Profits, Federal Income Taxes & Tax Breaks for Ten Major American Companies
$-millions	2000	1999	1998	1997	1996	1996-2000	1999-2000
Microsoft *
Pretax US profit	9,611.9	12,254.6	11,586.3	6,448.3	4,343.2	44,244.3	21,866.5
Federal income tax	1,177.0	–791.0	920.0	965.0	914.0	3,185.0	386.0
Effective rate	12.2%	–6.5%	7.9%	15.0%	21.0%	7.2%	1.8%
Total tax breaks	2,187.2	5,080.1	3,135.2	1,291.9	606.1	12,300.5	7,267.3
General Electric
Pretax US profit	13,102.4	11,471.6	9,848.5	8,323.2	8,118.8	50,864.5	24,574.0
Federal income tax	2,312.9	949.8	925.0	850.6	807.5	5,845.9	3,262.7
Effective rate	17.7%	8.3%	9.4%	10.2%	9.9%	11.5%	13.3%
Total tax breaks	2,272.9	3,065.2	2,522.0	2,062.5	2,034.0	11,956.7	5,338.2
Ford
Pretax US profit	9,443.0	9,182.0	8,323.0	8,378.0	5,482.0	40,808.0	18,625.0
Federal income tax	598.5	461.3	1,405.3	2,104.3	632.5	5,201.9	1,059.8
Effective rate	6.3%	5.0%	16.9%	25.1%	11.5%	12.7%	5.7%
Total tax breaks	2,706.5	2,752.4	1,507.7	828.0	1,286.2	9,080.9	5,458.9
Worldcom
Pretax US profit	6,324.3	6,123.5	2,724.2	670.7	183.4	16,026.0	12,447.8
Federal income tax	1,122.6	–763.6	–112.6	21.2	30.9	298.5	359.0
Effective rate	17.8%	–12.5%	–4.1%	3.2%	16.9%	1.9%	2.9%
Total tax breaks	1,090.8	2,906.9	1,066.1	213.6	33.3	5,310.6	3,997.7
IBM
Pretax US profit	5,679.0	5,620.0	2,821.0	3,110.0	3,302.0	20,532.0	11,299.0
Federal income tax	191.0	1,214.0	752.0	–266.0	564.0	2,455.0	1,405.0
Effective rate	3.4%	21.6%	26.7%	–8.6%	17.1%	12.0%	12.4%
Total tax breaks	1,796.7	753.0	235.4	1,354.5	591.7	4,731.2	2,549.7
General Motors
Pretax US profit	2,947.0	3,848.0	952.0	3,215.0	1,506.0	12,468.0	6,795.0
Federal income tax	–104.8	22.6	–19.0	1,236.9	–395.4	740.3	–82.2
Effective rate	–3.6%	0.6%	–2.0%	38.5%	–26.3%	5.9%	–1.2%
Total tax breaks	1,136.2	1,324.2	352.2	–111.6	922.5	3,623.5	2,460.5
Enron
Pretax US profit	618.0	351.0	189.0	87.0	540.0	1,785.0	969.0
Federal income tax	–278.0	–104.9	–12.5	17.4	–3.4	–381.4	–382.9
Effective rate	–45.0%	–29.9%	–6.6%	20.0%	–0.6%	–21.4%	–39.5%
Total tax breaks	494.3	227.7	78.7	13.1	192.4	1,006.1	722.0
El Paso Energy
Pretax US profit	1,032.8	–213.4	383.7	371.9	62.0	1,636.9	819.4
Federal income tax	–161.0	–57.0	–3.0	–56.0	23.0	–254.0	–218.0
Effective rate	–15.6%	nm	–0.8%	–15.1%	37.1%	–15.5%	–26.6%
Total tax breaks	522.5	nm	137.3	186.2	–1.3	826.9	504.8
Colgate-Palmolive
Pretax US profit	473.7	387.0	348.5	261.6	166.9	1,637.7	860.6
Federal income tax	49.7	–57.8	–19.6	–19.3	25.4	–21.7	–8.2
Effective rate	10.5%	–14.9%	–5.6%	–7.4%	15.2%	–1.3%	–0.9%
Total tax breaks	116.1	193.3	141.6	110.9	33.0	594.9	309.4
Navistar
Pretax US profit	141.0	485.0	400.0	236.0	106.0	1,368.0	626.0
Federal income tax	4.0	11.0	4.0	8.0	1.0	28.0	15.0
Effective rate	2.8%	2.3%	1.0%	3.4%	0.9%	2.0%	2.4%
Total tax breaks	45.4	158.8	136.0	74.6	36.1	450.8	204.1
Total, these 10 Cos.
Pretax US profit	49,373.0	49,509.3	37,576.2	31,101.7	23,810.3	191,370.4	98,882.3
Federal income tax	4,912.0	884.4	3,839.6	4,862.0	2,599.6	17,097.5	5,796.3
Effective rate	9.9%	1.8%	10.2%	15.6%	10.9%	8.9%	5.9%
Total tax breaks	12,368.6	16,461.6	9,312.1	6,023.6	5,734.0	49,882.1	28,812.5
*Microsoft’s fiscal years end in June of year following the calendar years listed. Source: Corporate annual reports and forms 10-K.

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March 15, 2002 04:08 PM | Permalink |

Click here to see this analysis in PDF format.

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The big corporate tax cut bill just passed by Congress and signed by President Bush will slash corporate income tax payments this year to their lowest level as a share of the economy since the early Reagan administration. This will be the second lowest level in the past 60 years.

The latest data from the Congressional Budget Office and the Joint Committee on Taxation indicate that corporate taxes will plummet to only 1.3 percent of gross domestic product this year. That will be the lowest since fiscal 1983, when corporate taxes bottomed out at 1.1 percent of the GDP level on the heels of the huge corporate tax reductions enacted in 1981.

Despite the expected economic recovery, the continuing effects of the 2002 corporate tax cuts will keep next year’s corporate tax payments at only 1.4 percent of GDP, the third lowest level in the past 60 years.

In comparison, over the past 60 years corporate income taxes averaged:

• 5.6 percent of the GDP during World War II,
• 4.5 percent in the Truman and Eisenhower administrations,
• 3.7 percent under Kennedy and Johnson,
• 2.7 percent under Nixon and Ford,
• 2.4 percent under Carter,
• 1.6 percent in the Reagan and Bush I administrations, and
• 2.1 percent under Clinton.

Corporate Income Taxes as % of GDP, 1942-2003
1942	3.3%	1963	3.6%	1984	1.5%
1943	5.3%	1964	3.7%	1985	1.5%
1944	7.1%	1965	3.7%	1986	1.4%
1945	7.2%	1966	4.0%	1987	1.8%
1946	5.3%	1967	4.2%	1988	1.9%
1947	3.7%	1968	3.3%	1989	1.9%
1948	3.8%	1969	3.9%	1990	1.6%
1949	4.1%	1970	3.2%	1991	1.6%
1950	3.8%	1971	2.5%	1992	1.6%
1951	4.4%	1972	2.7%	1993	1.8%
1952	6.1%	1973	2.8%	1994	2.0%
1953	5.7%	1974	2.7%	1995	2.1%
1954	5.6%	1975	2.6%	1996	2.2%
1955	4.5%	1976	2.4%	1997	2.2%
1956	4.9%	1977	2.8%	1998	2.2%
1957	4.7%	1978	2.7%	1999	2.0%
1958	4.4%	1979	2.6%	2000	2.1%
1959	3.5%	1980	2.4%	2001	1.7%
1960	4.1%	1981	2.0%	2002e	1.3%
1961	3.9%	1982	1.5%	2003e	1.4%
1962	3.6%	1983	1.1%

Corporate income taxes, $-billions and as shares of GDP (fiscal years)
	2001	2002e	2003e	2004e	02-04e
Corporate income taxes before “stimulus”	$ 151.1	$ 197.0	$ 187.0	$ 202.0	$ 586.0
Add back (+) or subtract (–) artificial shifts in corporate tax payments in 2001 tax cut act*	+23.0	–23.0	—	+6.6	–16.4
Revised corporate taxes before “stimulus”	174.1	174.0	187.0	208.6	569.6
“Stimulus” corporate tax cuts**	—	–37.7	–35.8	–22.7	–96.1
Revised corporate taxes after “stimulus”	$ 174.1	$ 136.3	$ 151.2	$ 185.9	$ 473.5
Corporate taxes as a % of GDP	1.7%	1.3%	1.4%	1.6%	1.4%
*Takes out the effects of the two-week delay in the Sept. 2001 corporate estimated tax payment date (which shifted $23 billlion from fiscal 2001 to fiscal 2002) and a smaller shift in fiscal 2004 (from fiscal 2005). **Excludes estimated portion of $114 billion in 2002-04 “stimulus” business tax cuts going to non-corporations. Sources: Congressional Budget Office, Joint Committee on Taxation, Citizens for Tax Justice, 2002.

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March 7, 2002 04:10 PM | Permalink |

Click here to see this analysis in PDF format.

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Related CTJ Analyses
Analysis of 12/01 Stimulus Plan	12/18/01
$7.4 Billion in AMT Relief for 16 Corporations	10/26/01
Corporate Income Taxes in the 1990s	10/19/00

The so-called “stimulus” bill that the House overwhelming passed today offers the same $114 billion in corporate tax concessions over the next three years as the failed bill House Republicans put forward last December. Despite growing public pressure on House GOP leaders to pass a clean extension of unemployment benefits, almost all House Democrats cravenly joined in kowtowing to corporate special interests instead.

The changes will wipe out more than a fifth of otherwise expected corporate income tax payments over the next three years. In doing so, the bill provides $8 in corporate tax cuts for every dollar allocated to help unemployed workers.

The centerpiece of the corporate tax-break program remains the same: 30 percent in extra “depreciation” write-offs in each of the next three years, at an estimated cost of $97 billion. This new loophole will supposedly “sunset” thereafter, but experience shows that it is more likely to be routinely extended. Last year, Democrats correctly condemned the three-year plan as far too costly and economically nonsensical.

The March 2002 “Stimulus Bill” and its Predecessor Cost FY 2002 – 2004
	Mar. 02	Dec. 01
Corporate tax cuts	-114.0	-114.7
Individual Tax Cuts	-1.4	-56.7
Miscellaneous Tax Changes	+6.3	+6.3
Total Tax Changes	–109.2	-165.1
Unemployment & TANF	-14.6	-15.1
Total cost	-123.8	-180.1

Like the December legislation, the new bill offers $9 billion in tax relief to multinational corporations using offshore tax havens to shelter their U.S. profits from taxes. It also makes it easier for companies with an excess of loopholes to apply for rebates of taxes paid in earlier years, and waives the corporate alternative minimum tax’s curbs on profitable companies using the new loopholes to pay little or no tax.

Also like the earlier bill, the new bill provides $15 billion in extended unemployment and welfare benefits over the next three years.

There are some changes from the failed December legislation. The new bill drops a $14 billion Democratic effort to extend last year’s tax rebates to low-income people who were ineligible. It also scraps almost all of the other individual tax cuts in the earlier bill and drops a contentious plan to repeal the corporate alternative minimum tax (which in its December version would have cost $6 billion over the next three years).

Assuming future extension of the supposedly “temporary” corporate tax loopholes, the bill will slash corporate taxes by some $330 billion over the upcoming decade.

“Every penny of this latest batch of corporate giveaways will come straight out of the Social Security trust fund,” said Citizens for Tax Justice director Robert S. McIntyre. “Those who voted for it should be ashamed to ever again style themselves as defenders of Social Security, fiscal responsibility or tax fairness. And they should stifle their hypocritical complaints about Enron’s egregious tax avoidance, too.”

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