Friday, November 4, 2011

Corporate Taxpayers & Corporate Tax Dodgers 2008-10

Citizens for Tax Justice, a nonpartisan research and advocacy group, and The Institute on Taxation & Economic Policy has engaged in tax policy research since 1980. Their New Report provides a detailed information on corporate taxation in recent years.  It looks at the federal income taxes paid or not paid by 280 of America’s largest, most profitable corporations in 2008, 2009 and 2010.  Over these three years the 280 companies in this survey reported total pretax U.S. profits of $1.4 trillion.

The federal corporate tax code requires big corporations to pay a 35 % income tax rate. The 280 corporations surveyed paid about half that amount on average, and many paid little or nothing.  Some corporations pay their fair share, but corporate tax loopholes are such that General Electric, Boeing, DuPont, Wells Fargo, Verizon, and many other large companies combined paid less in taxes than any person who reads this.  The effective tax rate for all 280 companies  in the past two years averaged only 17.3 %, less than half of the statutory 35 percent rate. Read the full report here:
Here is a brief summary of some of the reports findings.

  • The table on this page summarizes what the 280 companies paid (or didn’t pay) in effective U.S. income tax rates on their pretax U.S. profits.

  • The good news is that 71 of our companies, 25 percent of the total, paid effective three-year tax rates of more than 30 percent. Their average effective tax rate was 32.3 percent.

  • The bad news is that an almost equal number of companies, 67, paid effective three-year tax rates of less than 10 percent. Their average effective tax rate was zero.

  • Seventy-eight of the 280 companies paid zero or less in federal income taxes in at least one year from 2008 to 2010.

  • Thirty corporations paid less than nothing in aggregate federal income taxes over the entire 2008-10 period. Their effective tax rate averaged –6.7 percent.

  • Over the 2008-10 period, these 280 companies earned almost $1.4 trillion in pretax profits in the United States while  receiving tax payer subsidies of  $222.7 billion.

  • In 2009, 49 companies paid zero or less in federal income taxes yet they earned combined U.S. pretax profits of $78.6 billion while receiving tax payer rebates totaling $10.8 billion.

  • In 2008, 22 companies paid no federal income tax, and got $3.3 billion in tax payer rebates. 

  • In 2010, 37 companies paid no income tax, and got $7.8 billion in tax payer rebates.

  • More than half of the total tax subsidies over the three years ($114.8 billion) went to just 25 companies, each with more than $1.9 billion in tax subsidies.

  • Wells Fargo topped the list with $18 billion in tax subsidies over the three years.

  • Industrial machinery companies (such as GE) enjoyed the lowest effective tax rate over the three years of –13.5 percent in federal income taxes. This industry’s taxes declined sharply over the three years, falling to –36.4 percent in 2010.

  • Only two industries, Retail & Wholesale Trade and Health Care, paid an effective tax rate of 30 percent or more over the full three-year period.

  • Notably, 56% of all tax subsidies went to just four industries: financial (16.8%), utilities (14.0%), telecommunications (13.8%), and oil, gas & pipelines (10.8%).

  • Corporate taxes paid for 25% of federal expenses in the 1950s and 20% in the 1960s. This began to decline during the Nixon administration to about 11% in the 1990’s. In fy 2010, corporate taxes covered only 6%  percent of federal expenses.

  • Two-thirds of these U.S. companies paid higher foreign taxes on their foreign profits than they paid in U.S. tax on their U.S. profits (about one-third more).

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