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More Than Two-Thirds Of U.S. Corporations Pay No Federal 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 centuryThe 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.

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Reader Comments (28)

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!
Jan 27, 2012 at 12:07 PM | Unregistered CommenterDen
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...
Jan 27, 2012 at 12:26 PM | Unregistered CommenterJosie
BTW, thanks DB!! TJ is one of my heroes...
Jan 27, 2012 at 12:28 PM | Unregistered CommenterJosie
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.
Jan 27, 2012 at 12:42 PM | Unregistered CommenterDen
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.
Jan 27, 2012 at 1:28 PM | Unregistered CommenterJosie
My house doesn't pay property taxes; I do. Corporations don't pay income taxes; consumers do.
Jan 27, 2012 at 1:40 PM | Unregistered CommenterCommunismSucks
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.
Jan 27, 2012 at 5:15 PM | Registered CommenterDailyBail
"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.
Jan 27, 2012 at 5:47 PM | Unregistered CommenterEconoranter
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.
Jan 28, 2012 at 2:49 AM | Unregistered Commenterrealsolutions
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".
Jan 30, 2012 at 1:27 AM | Unregistered CommenterLugNut
Since corporations are "Citizens" & I being a "Citizen", should be able to use the same tax laws(loopholes) or they should should have to use the same tax laws that I as a "Citizen" am required to follow. Any punishment that I as a "Citizen" receive for breaking any law must extend to Corporations("Citizens") : All Management, Board of Directors,Stockholders.They are all a single entity (Citizen).

Since we are all Citizens United I'm all in for my taxes to be 0%
Oct 31, 2012 at 4:22 AM | Unregistered CommenterTR
Corporations shouldn't pay income taxes to the federal government, nor should individuals.
Will we ever get over the idea that we have a right to take the incomes of others using the coercive threats of the government as a collection agency?
Even if you vote on it, it's still theft & immoral.
Oct 31, 2012 at 12:22 PM | Unregistered CommenterDave

I understand what you are saying. But let's be honest. Govt. will have to shrink by 95% before we can get rid of income taxes. And that's not going to happen anytime soon, capisce? In the meantime, it should be a fair system, and corporations are using the crony political system to make sure it's not fair.
Oct 31, 2012 at 12:35 PM | Registered CommenterDailyBail
I love this argument. It so distracts us from the real issue, our corrupt political system. Our sleazy, grimy politicians get cash bribes to do things they shouldn't. Like screwing the taxpayers and giving corporate subsides and allowing of outsourcing manufacturing to other countries. Because THAT creates bigger profits that can be shared with the politicians that make it all happen. being honest creates ZERO profits.

These politicians that take cash bribes are no better than drug dealers, and both should be in jail. Only public funding of campaigns will fix the system. Yet we R's and D's that soak in the political Kool-Aid just don't get it yet.
Oct 31, 2012 at 2:07 PM | Unregistered CommenterJack Lohman
("Corporations shouldn't pay income taxes to the federal government, nor should individuals.")

How do you build and maintain the national infrastructure and necessary social and defense programs?

I suppose a good start would be to, put toll gates on every federal highway, bridge, and waterway. Coin or credit card operated school entry doors and mandatory service in the active military, government, or in industry building weapons, for every citizen no exceptions and no pay. Cancel all domestic and foreign aid programs and shut down Social Security and Medicare. Make everyone, including veterans and politicians pay for all their medical expenses.

Some taxation is necessary, but it seems to me that corruption, greed, and criminal behavior by our government, the corporations, and the ultra rich 1% have become a black hole, sucking the wealth and livelihoods of the poor and the middle class into their own pockets, delivering nothing in return. The FED makes sure the taxes we pay end up in that hole with everything else, and nothing escapes a black hole, not even light.

Far less taxes then we pay today could fund a government that supports the Constitution and truly works for the protection of the United States and the welfare of the American People. That government could put this country back on the road to prosperity. Sadly we do not have that government.

We have a corrupt Black Hole!!!!!
Oct 31, 2012 at 2:18 PM | Unregistered CommenterSagebrush
A Corrupt Black Hole Indeed

Next stop $20 trillion.

All aboard.
Oct 31, 2012 at 2:23 PM | Registered CommenterDailyBail
Why not lower taxes to zero for corporations and tax all personal income at the same rates, whether it's capital gains, interest, investment, carried interest, or wages. Free up corporations to do what they do best, maximize profits. Then, when executives extract wealth from companies in the form of capital payouts, tax them at the same rate as any hard-working doctor or nurse ... none of this 10-15% capital gains BS.
Nov 4, 2012 at 10:40 AM | Unregistered CommenterTruthyNews
I agree with zero taxes on corporations that manufacture their products in the US. Otherwise tax the hell out of them. Or implement import tariffs. And I support a progressive income tax, and giving shareholder authority on CEO salaries and political payola (sorry, contributions).
Nov 4, 2012 at 10:47 AM | Unregistered CommenterJack Lohman
When I say tax income at the same rates, I mean don't differentiate between wage income and investment income, which then allows people to decide how best to invest their time and money. You could implement this principle regardless of whether you propose a flat tax or a progressive tax.
Nov 4, 2012 at 10:57 AM | Unregistered CommenterTruthyNews
I agree with that. Though we could solve most of this by getting our politician bastards off the payroll of special interests and let them run the country honestly. THEN we'd have reasonable taxation.
Nov 4, 2012 at 11:04 AM | Unregistered CommenterJack Lohman
Distracting from other problems. I agree. But I don't hear/read about the use of/or destruction of the infrastructure! Big business as well as everyone else who uses it, adds their share of tearing it down. Yet, in all the write ups, nary a word is said about repairing same. The costs or replacing a bridge, repaving highways, adding new lanes to those highways, all cost money, yet the only source of financing it is to screw the little people, those who pay taxes. Consider what the U.S. would look like if we didn't have the highway system? Everyone who complains about taxes, should be ready to string up the corrupt politicians who enable the manufactures to escape paying for the convenient use of receiving and shipping the materials/products they make. Where is the outcry about this?
Dec 4, 2012 at 2:02 PM | Unregistered CommenterNorman
.... let's see....add interest......penalties......sixteen years(2016-2000)...... whoa! That's a lot of money. Heh heh heh. Will that first payment be in cash, gold or silver?'''''....Oh! You really DO want jail time on top of that!....OK. What is your profession? A pre-briber?
Dec 5, 2012 at 12:15 AM | Unregistered CommenterHoward T. Lewis III
Taxes on corporations or any business for that matter is an added cost of doing business which is passed on to the consumer to offset that cost. The focus on corporate taxation is misguided. Think they will pay a 45% tax? No, you will ! Shifting assets for tax avoidance allows them to be more price competitive in the market. It is one less cost they have to pass on. Thats one of the reasons they need to do it. We have a choice. Corporate taxation or tariffs on foreign goods. At least with the latter we will have a growing domestic economy to expand the tax base and JOBS !
Dec 5, 2012 at 5:37 AM | Unregistered CommenterRaytom
To Raytom, Costs, jobs, shifting assets, tariffs, call it what you may, the facts still are that businesses add the taxes into the prices they charge, even though they don't pay them to the government. They also avoid paying tariffs, but they add those costs as well. Loop-holes, that's the problem. Eliminate those, would be a start. Consider that before the U.S. got into manufacturing over seas, they did all that here. The prices reflected the costs, the taxes, the transportation, labor costs, infrastructure, they still made a profit, along with keeping prices reasonable enough for the consumer to buy, otherwise they didn't stay in business. It's when the consolidation grew and the regulations were thrown out the window, the corruption in & out of government became the cancer it is today, along with the greed factor. This idea that taxes are the root of all evil is P.R. flack that is bought by more people today, but is what allows the oligarchy to steal from all the rest of us. Wars also, the one big drain on the economy, keeping the Military/Industrial Cabal going. Food for thought, if you've a mind too.
Dec 5, 2012 at 7:59 AM | Unregistered CommenterNorman
"More Than Two-Thirds Of U.S. Corporations Pay No Federal Income Tax". Great! Maybe the corporations can teach we the people how to do this. The government uses our money for bailouts, illegal wars, graft and to limit our freedoms. the less they collect the better.
Dec 5, 2012 at 10:29 AM | Unregistered CommenterParis
All corporations pay income tax in some form. There are no major corporations that does not pay "indirect taxes," which is an income tax. Those taxes come in many forms not known to the public per se. The only problem is that the taxes are always passed to the buyer of the goods and services of the payer;.ergo no corporation actually pays anything the taxpayers pay it for them. All of them.
Dec 6, 2012 at 12:34 AM | Unregistered CommenterEdward Gill
I agree businesses don't pay taxes. They are passed on to consumers. Leveling out capital gains taxes on personal earnings plus enforcing taxes on services given as partial compensation to ceos such as use of corporate jets, country club memberships and other perks would actually bring in revenue and make the whole affair more transparent.
Feb 11, 2013 at 9:42 AM | Unregistered CommenterDale

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