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The latest study from Citizens for Tax Justice and the Institute on Taxation and Economic Policy should lend credence to the larger “Occupy” movement.
Many of this country’s biggest companies paid no federal taxes — or even made money through credits and refunds from the government — over the past three years by using an array of loopholes and tax breaks, according to a report released Thursday.
The authors examined the finances of 280 corporations from 2008 through 2010 and found that 30 paid zero taxes or used loopholes to wind up with negative tax rates. Local utility Pepco Holdings paid the lowest rate of all the firms investigated, clocking in at nearly minus 58 percent.
Under the federal tax code, corporations are supposed to pay 35 percent of their profits in taxes. But the study found many of the companies used legal tax breaks that allowed them to pay lower rates than ordinary Americans.
Plenty of politicians complain about the larger 35% corporate tax rate, which is high by international standards. But that assumes corporations are actually paying it — and they’re not.
As President Obama put it in his State of the Union address, “[O]ver the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries. Those with accountants or lawyers to work the system can end up paying no taxes at all. But all the rest are hit with one of the highest corporate tax rates in the world. It makes no sense, and it has to change.”
It’s why the notion of “corporate tax reform” has merit. For the right, the goal is to bring down the 35% rate, but for the left, the goal is to start getting these large, prosperous companies to start paying something.
The Citizens for Tax Justice’s report added, “[J]ust as workers pay their fair share of taxes on their earnings, so should successful businesses pay their fair share on their success. But today corporate tax loopholes are so out of control that most Americans can rightfully complain, ‘I pay more federal income taxes than General Electric, Boeing, DuPont, Wells Fargo, Verizon, etc., etc., all put together.’ That’s an unacceptable situation.”
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mikefromArlington on November 03, 2011 11:36 AM:
Good, now find a way to tell the other 99.999999999999% of American's that won't read this blog post or find a way to get it through the head of the 40% who watch Fox that believe lowering corporate tax rates will mean more jobs.
Jack Lindahl on November 03, 2011 11:46 AM:
“[O]ver the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries..."
Well, Congress passed laws and presidents signed them, so blaming lobbyists alone is cheap and lazy. Let's lay the blame where it truly belongs.
citizen_pain on November 03, 2011 11:47 AM:
Why can't their business Charter's be revoked?
If a company operates outside of the U.S. by having most if not all of it's factories in third world countries, the majority of it's employees are third world laborers, and of course all their assets in offshore accounts, why do we keep affording them the protections a charted company receives, for instance contract and copywrite enforcement, etc.?
If they are not willing to pay their dues for being able operate in America, why should we continue to tolerate them?
paul on November 03, 2011 11:49 AM:
Could you imagine if corporations had to keep just one set of books for profit and loss, rather than one for the IRS, one for stockholders, one for executive compensation, one for actually running the business...
Dredd on November 03, 2011 11:51 AM:
Wow, they pay no taxes, but they use the infrastructure that we taxpayers pay for.
Even when they use our tax dollars to plunder and amass booty, they do not share the booty with the 99%.
In fact, they try not to tell us about the booty at all.
FRP on November 03, 2011 11:57 AM:
The pious have a needy habit of violence towards any challenge to whatever doxy their sheltered hearts (and purses) belong to . Lieutenant Cally and Colonel North come to mind as robust examples of the support wild eyed acts of brutality in fealty to the church of anti communism can muster .
The only way to get the pious to recognise an epiphany when they see one is the old fashioned way . When the term of contract expires and they get their seventy two virginal lots , with picket fences , and decorator mailboxes , then with a little bit of luck the next generation devoutly adopts a less fragrant hypocrisy .
Ben on November 03, 2011 11:57 AM:
I think we should develop some guideline to evaluate tax loopholes (kind of like the Buffett Rule for tax rates).
Something like: If 90% of corporations benefit from a given tax rule, the rule should be regularized and kept in the tax code in a way that makes it available to all (perhaps by reducing the tax rate and removing the loophole). If 25% benefit from a rule, it goes. If 5% benefit from a rule, the rule goes and those companies pay an additional tax penalty. If only one company benefits from a tax loophole, the rule goes, the company pays an additional penalty, and the board of directors goes to jail.
CDW on November 03, 2011 12:05 PM:
Right doesn't mean might. The #ows people should go home and make sure their state legislatures have Democratic majorities and Democratic Governors by 2020 so the wingnut gerrymandering of 2010 can be undone. Otherwise, conditions will only become unbearable.
c u n d gulag on November 03, 2011 12:07 PM:
I was on F*CKING UNEMPLOYMENT last year and I PAID MORE TAXES!!!!
Meet C U N D GULAG, Inc.
Paging Delaware!
FRP on November 03, 2011 12:24 PM:
citizen_pain offers the useless bromide of logic . Political arguments in this country tolerate the more blatant the arrogant lies as "debate" da better .
Where on earth would any response in a political "debate" profit from logic ...
Where o Where o Where o
To find a liar who cares so
Threatening the golden parachute ?
Sorry
It can't happen here
The land opportunity
Has no room for excess value
Return the horns that toot
Marching to the jingles of sacred loots
All is well in heaven
And
General Electric Boeing DuPont Wells Fargo Verizon
The need for the OWS is so great, so overdue , that without instant cash for outrageous extroverts with nothing beyond being rewarded for embarrassing vanity , it carries on like the men at "The Battle of Cold Harbor" expecting only to suffer then die .
Today we watch as every known practicing principle of economics , law , and government get dismissed for as virtuous a reason as it pisses off a liberal .
Logic ? we don't need no steenk....
ADD on November 03, 2011 12:25 PM:
lowing corporate tax from 35% to 25% while reducing tax loopholes and subsidies is a good idea. and to balance the budge and economic fairness, we just need to make sure that we raise personal income tax on the top 2% back to clinton era.
they are also talking about tax on financial institutions on capital gains and transactions. who wouldn't love that?
let's be careful to over-generalize all the big businesses with risky banks and lobbying corporations, though. america should be both pro-business and pro-labor.
Joe Friday on November 03, 2011 12:25 PM:
This is why the RightWing's agenda to lower the corporate income tax is heresy. What's the point of lowering the tax rate of a tax practically no corporation pays ?
This also goes hand-in-hand with the so-called tax reform agenda to "lower the rates" (MORE TAX CUTS FOR THE RICH & CORPORATE) and "broaden the base" (RAISE TAXES ON THE MIDDLE-CLASS AND WORKING POOR).
Peter C on November 03, 2011 12:43 PM:
I hate all of this "eliminate the loopholes and lower the rates" bull$hit. NO! Eliminate the loopholes, ELIMINATE THE NATIONAL DEBT, then adjust the rates.
If the debt is so f'ing scary, if it is core of the problem, then the rates shouldn't go down until the debt is paid. Without the middle step, it's just a three-card-monty con. Business don't get their icecream until they've eaten their vegetables!
In 2000, before Bush mucked about in the tax code, we had a surplus and the BIG PROBLEM that people saw was the elimination of the national debt and the prospect that there wouldn't be any treasury bills to use as the 'riskless rate'.
tamiasminmm on November 03, 2011 12:46 PM:
I'm leery of any plan to lower corporate rates in exchange for eliminating tax loopholes. In the current environment, once the rates are lowered, they'll stay lowered forever. But the loopholes will be sneaked back into the code pretty quickly.
Scott on November 03, 2011 12:52 PM:
I would eliminate the corporate income tax; it would put whole corporate tax departments out of business and make companies more efficient. But I would only do it with a couple of caveats: 1)Tax all individual income (including interest, dividends, capital gains) the same on a progressive scale. 2) Take away corporate personhood and make corporate officers civilly and criminally liable for their actions.
SYSPROG on November 03, 2011 1:13 PM:
Yes, JoeFriday. 'or used loopholes to wind up with negative tax rates.' So not only do they pay no tax but they get credit for negative tax rates?
Neil B on November 03, 2011 1:15 PM:
See also the excellent http://www.salon.com/2011/11/03/the_great_corporate_tax_scam
I think the author is too pessimistic, but maybe Mr. Leonard just means that we can't trust our "public servants" to fix things, and we must take them somehow into our own hands. In any case, Republicans are the worse of two evils and must be stopped, however much "hard swallowing" you want to avoid (and sadly, it can't be.)
Joe Buck on November 03, 2011 1:36 PM:
"It’s why the notion of “corporate tax reform” has merit. For the right, the goal is to bring down the 35% rate, but for the left, the goal is to start getting these large, prosperous companies to start paying something."
Yeah, right. If you talk like this, what will happen is that the 35% rate will be lowered but the loopholes will remain and corporations will pay even less. The price for any lowering should be an alternative minimum tax on corporations, based on GAAP profit number scaled by fraction of sales that is in the US. Rules should be set up to forbid "two sets of books": you can't tell the IRS you are losing money but tell the stockholders that you are making money.
Jill on November 03, 2011 2:38 PM:
Well, the right-wingers have their talking point about the poor not having any "skin in the game", simply because they don't pay any federal income tax -- there must be an effective way of tying the corporations that aren't paying corporate income tax to that.
Altho, it's not like the cognitive dissonance of advocating for the poor to pay more yet arguing that it's ok for corporations to not pay anything would bother them. :-(