Many US companies with big profits avoid federal taxes: study


AFP

WASHINGTON — Dozens of U.S. corporations paid no federal taxes in recent years and many received billions of dollars in government subsidies despite earning healthy profits, a new study showed Thursday. The report by Citizens for Tax Justice and the Institute on Taxation and Economic Policy, which examined 280 U.S. firms, found 78 of them paid no federal income tax in at least one of the last three years. It found 30 companies enjoyed a negative income tax rate — which in some cases means getting tax rebates — over the three-year period, despite combined pre-tax profits of US$160 billion. “These 280 corporations received a total of nearly US$223 billion in tax subsidies,” said the report’s lead author, Robert McIntyre, director at Citizens for Tax Justice. “This is wasted money that could have gone to protect Medicare, create jobs and cut the deficit.” The study comes as a growing “Occupy Wall Street” movement has been denouncing tax breaks for wealthy firms and individuals, claiming the vast majority of Americans — the 99 percent — are hurt by these policies. The study looked at 280 corporations from the Fortune 500 list, all of which were profitable in each of the last three years and provided sufficient data that their profits and taxes could be analyzed. It found the average effective tax rate for the companies over the three years was 18.5 percent, well below the statutory rate of 35 percent. “Many people will be appalled to learn that a quarter of the companies in our study paid effective federal tax rates on their U.S. profits of less than 10 percent,” the report stated. “Others may be surprised to learn that an almost equal number of our companies paid close to the full 35 percent official corporate tax rate.” The study concluded that 78 of the companies had at least one year in which their federal income tax was zero or less. Thirty companies had a negative income tax rate over the entire three-year period on their combined pre-tax profits of US$160 billion. The study said banking giant Wells Fargo topped the list of corporations receiving the most in tax subsidies, getting nearly US$18 billion in tax breaks in the last three years. The report said the big conglomerate General Electric (GE) paid no taxes and received tax breaks resulting in a negative tax rate over the 2008-2010 period despite earning profits of US$10.4 billion in the period. GE responded by saying the report was “inaccurate and distorted.” “GE paid billions of dollars in taxes in the United States over the last decade, and we expect our overall tax rate will be approximately 30 percent in 2011,” said a statement emailed to AFP. “We believe the U.S. tax system needs to be reformed to close all loopholes, to lower the corporate rate and to provide a territorial system like every other major country in the world.” Boeing was another firm that paid no taxes over three years and got tax breaks, as it earned US$9.7 billion, the report said. Other major firms that paid no tax in at least one of the past three years included ExxonMobil, Eli Lilly, Honeywell International and DuPont, according to the study. Helped by the tax breaks, the largest U.S. defense contractors had an effective tax rate of 10.6 percent in 2010, down from 19.3 percent in 2008, the two groups said. The report comes as U.S. lawmakers are struggling to find ways to curb a bulging US deficit and are looking at possible revenue sources, despite opposition by conservatives to any tax increases.