Thanks largely to getting over $62.4 billion in federal tax subsidies, 12 major U.S. corporations managed to pay no federal taxes in 2008, 2009 or 2010, despite posting $171 billion in combined profit, according to a new report from the Citizens for Tax Justice (CTJ).
In fact, according to CTJ's analysis, the 12 companies - though enjoying over $171 billion in pretax U.S. profits - report their federal income taxes were negative: -$2.5 billion.
None of the 12 companies; American Electric Power, Boeing, Dupont, Exxon Mobil, FedEx, General Electric, Honeywell International, IBM, United Technologies, Verizon Communications, Wells Fargo and Yahoo, paid "anything close" to the 35% tax rate required by the tax code, according to CTJ's report.
The most highly taxed company, Exxon Mobil, paid a tax rate of 14.2% over the three years, a full 60% lower than the required 35% tax rate. In 2009 and 2010, Exxon Mobile paid only $39 million on its $9.9 billion profit - an effective tax rate of only 0.4%.
"Had these 12 companies paid the full 35 percent corporate tax, their federal income taxes over the three years would have totaled $59.9 billion. Instead, they enjoyed so many tax subsidies that they paid $62.4 billion less than that," reported CTJ.
According to CTJ, had the 12 companies analyzed paid a 35% tax rate, total federal revenue for the three years would have been 12% higher than it actually was.
In other words, you paid taxes so the likes of Exxon Mobil didn't have to.
"These 12 companies are just the tip of an iceberg of widespread corporate tax avoidance," said Bob McIntyre, director of Citizens for Tax Justice. "Our elected officials have a duty to the American public to make reducing or eliminating the vast array of corporate tax subsidies the centerpiece of any deficit-reduction strategy."
In August 2008, the Government Accountability Office (GAO) reported that from 1998 to 2005, two-thirds of all large U.S.- and foreign-controlled business operating in the U.S. managed to pay no (zero) federal income tax on a combined $2.5 trillion in sales.
Also See:
Big Business Pays No Taxes, GAO Finds
Should the U.S. End Federal Subsidies and Tax Breaks for Oil Companies?
What's New on US Government Info?
Follow us on Facebook and Twitter
Photo: Activists Protest at Wells Fargo Shareholders Meeting - Justin Sullivan/Getty Images
Comments
This is no surprise to those who keep up with the way the tax code is written. Republicans would say that we would have lost even more jobs if these tax breaks would go away. The truth is American companies are sitting on two trillion dollars they refuse to reinvest in America. They spent billions every election cycle to buy the polications who write the tax code.
The real tax a business pays is it employee income tax. Labor cost is the biggest expense of any business. If the business is owned by a church it operates tax free, so do hospitals. We should make all businesses tax free to avoid this cat and mouse game of trying to tax a business directly and then watching it jump through hoops to avoid taxes. This is simply cheaper and the Federal Government is supported by the income tax on individuals anyhow. We want business to operate is our country instead of going somewhere else to get a better deal.
If you want to improve the economy place a “LOST JOBS TAX” on all imported products. Don’t worry if other countries do the same thing we want business to move back into this country. We import more than we export so we will come out ahead on this deal.
I hope this is easier to read, I cleaned up some of the grammar.
The real tax a business pays is its employee income tax. Labor cost is the biggest expense of any business. If the business is owned by a church it operates tax free, so do hospitals. We should make all businesses tax free to avoid this cat and mouse game of trying to tax a business directly and then watch it jump through hoops to avoid taxes.
It is simply cheaper and easier to drop the business income tax. The Federal Government is supported by the income tax on individuals anyhow. We want business to operate in our country instead of going somewhere else to get a better deal.
If you want to improve the economy place a “Lost Jobs Tax” on all imported products. Don’t worry if other countries do the same thing. That will help business move back into this country. We import more than we export so we will come out ahead on this deal.
Anyone who has been in a major corporation and knows accounting, knows that the so-called pre-tax profit is a complex issue and at which pre-tax profit, even on the 10K which is just an reporting document. The real issue is where did the numbers come from and how these were reconciled and consolidated to be reported. What I mean by the 10K reporting is that you can legally report one way for reasons of selling a company or another way to save taxes. Also, to understand a company you have to examine the Balance Sheet for many factors. Even with closing some of the Offshore Loopholes, which is a good idea, we have to watch just eliminating tax subsidies for companies that provide needed products. One of the reasons for tax breaks for oil companies, is to encourage drilling in the US, this due to these were and are hitting way too many dry holes. Also, the computer companies mentioned in the 1985 report are all out of business except for IBM. CTJ states that this money is needed to support education, health and infrastructure, but the corporations did not cause the massive spending debt brought on by the unions, local governments not consolidating , federal government spending, and completely out of control spending states like California., etc. But the tax code does needs to be simplified for corporations; but even here if there is foreign investments the problem is complex with or without the tax codes.