Corporate Tax Dodging

Corporate tax dodging has cost states more than $42 billion in revenue over the last three years.

Repeated tax dodging of large corporations, some of which, like GE, have gone entire years without paying taxes despite hauling in massive profits. Now, that phenomenon has spread to the states, where many corporations have largely avoided paying state corporate income taxes despite growing profits. Some companies, like DuPont, avoided state taxes altogether, paying nothing from 2008 to 2010 even as its profits piled up.

DuPont would rather sponsor race cars than pay taxes

But DuPont wasn’t alone. According to a study from Citizens for Tax Justice and the Institute on Taxation and Economic Policy, 68 corporations avoided state taxes entirely for at least one year from 2008 to 2010, costing state governments at least $42.7 billion, as the New York Times reports:

To gauge how much Fortune 500 companies are paying in corporate income taxes, the study looked at the 265 of them that are both profitable and disclose their state tax payments. It found that 68 reported paying no state corporate taxes in at least one year between 2008 and 2010. All together, the study found that the companies reported $1.33 trillion in domestic profits from 2008 to 2010, but paid states only about half of what they would have if they had paid at the average corporate income tax rate of all states — reducing their state taxes by some $42.7 billion.

As the Times notes, the share of state revenues coming from corporate taxes has steadily declined since 1980, from about 10 percent then to less than 6 percent now. And despite Republican rhetoric calling for lower corporate taxes on the national level, America’s rate there remains low as well. Corporations continue to sit on huge amounts of cash without investing in job creation, but GOP politicians and corporate leaders have called for even larger tax giveaways.

Meanwhile, the lost tax revenue would have gone a long way toward plugging budget holes that were instead filled by cutting education, social services, and programs that helped states’ most vulnerable and needy residents.



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The Republican Way of Life

REPORT: 25 Corporations paid more to their CEO last year than they paid in taxes.

Last year, as Americans across the country grappled with the widespread effects of the Great Recession, tax dodging by corporations and the wealthy cost the average U.S. taxpayer $434, even as corporate profits soared 81 percent. In fact, according to a new report from the Institute for Policy Studies, “corporate tax dodging has gone so out of control that 25 major U.S. corporations last year paid their chief executives more than they paid Uncle Sam in federal income taxes”:

Of last year’s 100 highest-paid corporate chief executives in the United States, 25 took home more in CEO pay than their company paid in 2010 federal income taxes.

These 25 CEOs averaged $16.7 million, well above last year’s $10.8 million average for S&P 500 CEOs. Most of the companies they ran actually came out ahead at tax time, collecting tax refunds from the IRS that averaged $304 million.

CEOs in 22 of these 25 firms enjoyed pay increases in 2010. In 13 of these companies, CEO paychecks ratcheted up while the corporate income tax bill either declined or the size of the corporate tax refund expanded.

Included amongst the 25 are well-known corporate behemoths like General Electric, Boeing, Verizon, and Ebay. Prudential CEO John Strangfeld, in one example, made $16.2 million last year while his company reaped a $722 million tax refund. Bank of New York Mellon CEO Robert Kelly received $19.4 million, after his bank got a $670 million tax refund.

Eighteen of the 25 companies that the IPS studied operated subsidiaries in offshore tax havens. In fact, “the firms, all combined, had 556 tax haven subsidiaries last year,” including 128 for just one company (the reinsurance corporation Aon).

Currently, corporate taxes have plunged to historic lows, with many of America’s largest companies literally paying no federal income taxes. Meanwhile, according to researchers at Northeastern University, corporate profits accounted for 88 percent of real national income growth since 2009, while wages and salaries made up less than 1 percent. In 2010, executive pay grew by 27 percent while wages grew by only 2 percent.

The IPS also found that “of the 25 companies that paid their CEO more than Uncle Sam, 20 also spent more on lobbying lawmakers than they paid in corporate taxes. Eighteen gave more to the political campaigns of their favorite candidates than they paid to the IRS in taxes.”



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Pay Increases While Taxes Decrease

For 32 corporations that is - 32 Corporations Spent More On Compensation For Top Executives In 2010 Than They Paid In Income Taxes.  

Over the last few decades, executive pay at large corporations has skyrocketed. Today, American CEOs make 263 times the average compensation for American workers, up from the 30 to 1 ratio in the 1970s. In 2010 alone, CEO pay went up 27 percent while average worker pay went up just 2 percent.

At the same time, corporate tax revenue has plunged to historic lows. During the 1960s, for instance, the United States consistently raised nearly 4 percent of GDP in corporate revenue. During the 1970s, the total was still above 2.5 percent of GDP. But the U.S. now raises less than 1.5 percent of GDP from the corporate income tax.

According to a new report called “S.& P. 500 Executive Pay: Bigger Than …Whatever You Think It Is,” put together by the independent research firm R. G. Associates, there are currently 32 companies that actually spent more on compensation for their top executives in 2010 than they paid in corporate income taxes:

Total executive pay increased by 13.9 percent in 2010 among the 483 companies where data was available for the analysis. The total pay for those companies’ 2,591 named executives, before taxes, was $14.3 billion…Warming to his subject, Mr. Ciesielski also determined that 158 companies paid more in cash compensation to their top guys and gals last year than they paid in audit fees to their accounting firms. Thirty-two companies paid their top executives more in 2010 than they paid in cash income taxes.

This isn’t really surprising when you consider that several of the largest U.S. corporations simply paid no taxes at all last year. General Electric, for instance, made more than $5 billion last year, but had a tax rate of -64 percent, meaning it received billions in tax benefits. Boeing hasn’t paid any federal income tax in three years, while CEO Jim McNerny made $19 million last year.

At the moment, a slew of multinational corporations — who already pay exceedingly low taxes — are lobbying for yet another tax boondoggle that would cost the government nearly $80 billion in revenue over the next ten years. With corporate taxes already so low, and corporations flush with cash and paying tens of millions to their CEOs, there’s little reason to grant these huge companies yet another giant tax giveaway.


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Bachmann Follows Same Radical Ideology

Tax the poor, and cut the taxes for corporations.

Several of the 2012 GOP presidential hopefuls have laid out economic platforms that would include huge cuts in the corporate tax rate. Former Massachusetts Gov. Mitt Romney (R) called for lowering the corporate tax rate from 35 percent to 25 percent, while former Minnesota Gov. Tim Pawlenty (R) went a step further, calling for a cut to 15 percent.

In an interview published today by the Wall Street Journal, Rep. Michele Bachmann (R-MN) — who is toying with a presidential run herself — decided to one-up both Romney and Pawlenty, calling for a reduction in the corporate tax rate to 9 percent. Adding insult to injury, Bachmann wants to pair that huge tax cut with giant tax reductions for the rich, as well as a tax increase on the working poor:

“In my perfect world,” she explains, “we’d take the 35% corporate tax rate down to nine so that we’re the most competitive in the industrialized world. Zero out capital gains. Zero out the alternative minimum tax. Zero out the death tax.” [...]

Her main goal is to get tax rates down with a broad-based income tax that everyone pays and that “gets rid of all the deductions.” A system in which 47% of Americans don’t pay any tax is ruinous for a democracy, she says, “because there is no tie to the government benefits that people demand. I think everyone should have to pay something.”

Let’s take these one at a time. First, cutting the corporate tax rate to 9 percent — a reduction about two and a half times larger than that called for in the radical House Republican budget — would cost more than $2 trillion over ten years. (The Tax Policy Center estimated that a 10 point reduction in the corporate tax rate would cost about $915 billion.)

Second, zeroing out the capital gains tax and the estate tax would overwhelmingly benefit the wealthy, as about 68 percent of capital gains taxes are paid by the richest one percent of the country, and fewer than the richest one quarter of one percent pay the estate tax.

Finally, Bachmann implies that she would raise taxes on those Americans who earn too little to have any income tax liability. (It’s simply not true that they pay nothing, as Bachmann seems to believe, since those who have no income tax liability still pay payroll taxes and any state and local taxes.)

The reason so much of the income tax liability has become concentrated at the top of the income scale is because over the last few decades income inequality has skyrocketed. The richest one percent of the country currently earn nearly one quarter of the income, and therefore pay the lion’s share of the income tax. Bachmann would raise taxes on those who have seen their incomes stagnate or even drop over the last ten years, even as she cuts taxes on the ultra-wealthy.


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We Need ‘Lowest Corporate Tax Rate We Can Get’

GOP Rep. Woodall’s Response To Exxon Paying Nothing In Taxes:

Last week, Rep. Rob Woodall held a tele-town hall meeting with his constituents, allowing them to call in and ask questions. At one point, a constituent called in and challenged Woodall’s belief that all we need is spending cuts to move towards a more balanced budget. The caller pointed out that closing corporate tax loopholes on big companies like Exxon Mobil — which paid zero federal corporate income taxes in 2009 — and Google, which only paid a 4.2 percent rate in taxes, would do a lot to help balance the budget as well.

Woodall replied by saying he’s “not a fan of class warfare” and that the only people who’ve ever employed him are rich people. He then went on to say that corporate taxes are really taxes on the customers of these companies and that we need to get “corporate taxes as low as we can in this country”:

CALLER: I have a quick comment and then a question. I certainly agree with moving towards a balanced budget, and containing costs, and cutting where we can, including the Defense Department, which I think is terribly bloated, but I just don’t think it’s feasible to balance the budget with cuts alone. I think you’ve got to also include income and place a fair tax on the wealthiest two percent and closing corporate loopholes that allow huge corporations like Exxon to pay no taxes. For example, Google earned eleven billion dollars last year overseas and paid 4.2 percent in taxes. So I think a fair tax on the wealthy and those who can chip in a little more has to be part of the bigger picture.

WOODALL: Bill, I absolutely agree with you that we can’t do it on spending cuts alone. [...] Now you talk about raising taxes. Now I’m not a fan of class warfare. Now the only people who’ve given me a job in my life is rich people. I’ve never had a poor man offer me a job. [...] At the end of the day, it’s going to be one of us, individuals, that pays every nickel in corporate taxes. I want use to get corporate taxes as low as we can in this country. Which means businesses don’t want to be here, they don’t want to provide jobs here. [...] We have to attract new businesses to our shores, the way to do that is with the lowest corporate tax rate we can get, to make sure folks want to come here.

Listen too it here @ NFTOS:



One has to wonder how we can possibly get taxes any lower when massive corporations like Exxon Mobil and Bank of America are paying nothing in federal corporate income taxes. Perhaps Woodall would prefer that these companies were like General Electric, which not only paid zero in income taxes in 2009 and 2010, but also received a $3.2 billion tax benefit. When Sen. Ron Johnson (R-WI) was asked about GE’s tax dodging, his response was also that we need to cut corporate taxes.
 
Typical radical republican ideology, put the tax woes on the poor and working middle class.


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