More Than Two-Thirds Of U.S. Corporations Pay No Federal Corporate Income Tax

Huffington Post

At a time when the federal government is starved for cash -- and facing layoffs and cuts in services across the board -- more and more corporations are sidestepping their traditional tax rate and keeping millions of dollars for themselves.

The number of U.S. corporations structuring their businesses in such a way that they can avoid higher taxes has skyrocketed in the past quarter century, The Wall Street Journal reports.

In 1986, about 24 percent of corporations were what's known as nontaxable businesses -- meaning the companies themselves pay no federal income taxes -- instead passing on the earnings to individual investors to pay taxes on. By 2008, these businesses accounted for about 69 percent of all corporations, a designation that can save companies hundreds of millions of dollars in a single year

Advocates for the business community have expressed frustration with the country's 35 percent corporate income tax rate, calling it unreasonably high. In practice, though, it's common for big businesses to pay much less, thanks to a cornucopia of tax-code loopholes and exemptions won by lobbyists.

The issue of corporate tax participation has become especially pressing in recent years, as the country struggles to manage its ballooning deficits. Corporate taxes for non-financial companies have fallen more than 13 percent since 2007, according to Bloomberg. At the same time, the national debt grew to $15.23 trillion from $9.13 trillion -- a number larger than the economy itself.

According to a recent analysis of nearly 300 Fortune 500 companies by the Citizens for Tax Justice, the average company was paying just 18.3 percent in taxes -- a little more than half the official rate. And by using techniques like industry subsidies, stock option packages, and moving assets overseas where they can't be taxed, 30 companies mentioned in the report -- including Wells Fargo, Verizon, Boeing and General Electric -- didn't pay a cent in federal taxes in 2008, 2009 or 2010, the report found.

Comments

[Den]

If the Corporate tax rate in the U.S. stays above 30% and Obamalama wants to raise it higher, what is 45% good enough, then why shouldn't I or anyone else move our company to Ireland or wherever Corporate taxes are below 10%. Fact is the higher the taxes the less likely the people with money will stay here, why should they? They are the ones who have enough to be mobile.

It's a fact of life. We all would do it. Not paying taxes IS the American dream...so get rid of the FED!

[Josie]

Den--Like all of us, companies don't exist in a vacuum, so the leaving thingy is an empty threat. Why stay here? Answer: because like it or not, the world's biz and talent, for the most part, resides in the USA. Go to Ireland? Good luck with that...

[Josie]

BTW, thanks DB!! TJ is one of my heroes...

[Den]

Josie, I don't think it is an empty threat. The very article above complains that companies are moving there assets overseas to circumvent taxes. Happens all the time. Other countries love corporations.

[Josie]

Den--Not the point. Of course moving "assets" for tax "efficiency," as executives like to say, is nothing more than clicking a mouse...but you don't see GE making aircraft engines in Bangladesh, or Ireland, for example; they make them in Cincinnati. Close the loopholes and GE aircraft still ain't moving.

[CommunismSucks]

My house doesn't pay property taxes; I do. Corporations don't pay income taxes; consumers do.

[DailyBail]

I think many would agree to the following. Lower the corporate rate to somewhere between 20-25% and eliminate all loopholes and deductions. The reason I keep posting stories such as these, is not to demonize corporations, but to show how they game the system to avoid paying taxes.

[Econoranter]

"At a time when Federal Government is starved for cash......?" They're spending $4 trillion a year. Isn't the fact that they're facing layoffs and cuts in services a good idea? With the politicians the voters elect making deals that let the Big Money people avoid taxes, (as well as the 48% who are small money people who pay nothing), what should we expect? At least we haven't gotten into a war in almost a year now.
So non-financial companies are paying less and less taxes. The financial companies are swamped with massive tax-payer funded bailouts from the Bush-Obama administration and even some of the non-financial companies; GM, Chrysler, GE, etc. have made deals that get them "big taxpayer money/no taxes due" as well. What surprises me is that any of the Fortune 500 companies "pay taxes" at all; with our government as it is, our "leaders" will "work something out" for anyone.
As our friend, Communismsucks, points out, corporations pay no taxes anyway, the consumers pay all the taxes.
Is the point of the article that our government is an insane mess of crooked, overspending #*^%$%#s? Maybe so, but it's what the voters want or they wouldn't vote the way they do. At least democracies that have reached the stage of greed and corruption the US has don't last very long. Perhaps the next iteration of our country will have better sense. Perhaps.

[realsolutions]

Raise the tariffs on foreign products/materials entering into this country to a level above that which it would cost to reproduce the
same material/product in this country. We will immediately gain back American manufacturing/production, farming, mining,etc...
Consumers will pay more for foreign materials and products. Look back to the creation of "WaMart". Cheap chinese products
flooded our market, destroyed our economic mainstream and our mom and pop businesses throughout this nation. Family businesses on every "Main Street" lost/failed and struggle to stay alive. Check your household purchases for country of origin?
Take inventory. Become aware. Are you supporting foreign corporations and foreign countries? Could this or that product, if made in America benefit your countrymen, your neighbor, your family. Would your community circulate currency within its community of citizens?

Will our children and grand children once again have greater opportunities for employment, for family businesses, for real wealth
building and financial security? Listen up all Walmart shoppers, as you think you save on foreign made products, you actually deplete
your own community, your own family, your own children and resources from real opportunities, you pass economic stability from your household to foreign corporations, in foreign countries to foreign households.
Foreign corporations, foreign shareholders, foreign materials and products should be taxed higher and never compete against the citizens of this country.

[LugNut]

Daily Bail; you are wrong. Lower it to 0%. Watch the money come back. When corporations have to play footloose with the tax code, it causes them to have make irrational economic decisions. The reason for their existence is to provide goods and services at the lowest possible cost; not enable the Federales to fund failed social engineering experiments based on "fairness".