State Income Tax Avoided By 68 Large Profitable U.S. Companies In Recent Years: Study

Large U.S. corporations are not only figuring out ways to avoid federal income taxes, but taxes at the state level too.

Of the country's most consistently profitable large companies, a full fourth of them -- 68 companies in total -- paid no state income tax at least once over the past three years, according to a study released on Wednesday by the left-leaning Citizens for Tax Justice. Moreover, twenty large consistently profitable U.S. companies paid an average state income tax of zero or less between 2008 and 2010, according to the study.

News of the tax-dodging comes at a time when states are imposing layoffs and slashing services to combat widening budget deficits. Overall, state-level revenue from corporate taxes has been plummeting for the past 20 years as tax-avoidance schemes have become more sophisticated, according to an interview with Gardner by Bloomberg News. Today, only six states do not levy income taxes, according to Bloomberg News.

"They're so busy avoiding taxes, it's no wonder they're not creating any new jobs," Matthew Gardner, executive director of the Institute on Taxation and Economic Policy and a co-author of the study, said in a statement. He added that large corporations "devote their money and legal firepower to coming up with tax avoidance schemes."

Companies that avoided paying state income taxes at least once in the past three years include Boeing, Goldman Sachs, Wells Fargo, General Electric, Yahoo, J.C. Penney, Hewlett-Packard, American Express, Merck, and Verizon, according to the study. And on average, the 265 companies surveyed paid taxes at roughly half of the official rate, costing states $42.7 billion in revenue over the past three years, the study found.

Many large U.S. corporations also have shifted their profits overseas in order to avoid federal taxes.

A study by Citizens for Tax Justice released in June found that 12 large U.S. corporations -- including General Electric and DuPont -- paid far less in federal corporate taxes than the official rate. A separate report by the Citizens for Tax Justice found thirty large U.S.-based multinational companies paid negative federal income taxes over the past three years, with Wells Fargo taking home the most in tax subsidies.

Google and Microsoft were excluded from the report because both report most of their profits as foreign. The IRS currently is investigating Google, which has been saving about $1 billion per year by shifting its profits overseas, for tax evasion.

U.S.-based multinational companies also have slashed jobs at home while hiring abroad, cutting 864,000 U.S. jobs between 1999 and 2009, while adding 2.87 million jobs elsewhere, according to the Commerce Department.

Comments

[Johnnyrotten5]

12:15 PM on 12/13/2011

I just love this writer,she calls citizens for tax justice,left leaning.Since when is paying your fair tax burden,left leaning?Politicians keep saying"lower the corp tax rate",lower it to what?What will make them happy,a refund for all?As the article states,most pay half the rate,and the really big ones get refunds,in the way of credits.G.E. gets a tax refund,and still fires US workers and hires hundreds of thousands overseas.So let me ask,is it that high rate thats keeping these job creators at G.E. from creating jobs for us.The next time you hear a politician say we need to lower taxes on the job creators,try not to vomit.

[Carl Crooks]

06:39 AM on 12/13/2011

"U.S.-based multinational companies also have slashed jobs at home while hiring abroad, cutting 864,000 U.S. jobs between 1999 and 2009, while adding 2.87 million jobs elsewhere."

Jerks....

[sweety9936]

11:15 AM on 12/12/2011

It is simple, Lower the tax rate to 20-25% close all Tax Loop Holes and make them bring back at least 3 factories back to America that employ at least 3000 employees. If they do bring them back drop the tax rate to 15-20%. We Need Separation of Business and State!

[James Fun]

03:35 PM on 12/09/2011

Flat tax.
Low reasonable rate.
No deductions.
Problem solved.

But then HP bloggers would have to find something else to complain about.

[fortressfountain]

04:35 PM on 12/08/2011

Of course they do not pay taxes. They are even given money from the state and local governments because they are such a prize to locate in a community and hire low wage, part-time workers to swell the welfare rolls.
They will even move down the street if the money is better from the next community.

[Mister Grumpy]

02:27 PM on 12/08/2011

In Illinois, Sears Holding told the Governor that if they don't get their taxes reduced they'll move to another state. Of course the gutless politicians will fold and give in to the threat. Leaving its citizens (who are unable told just pack up and leave) to pay down the Billions of debt the state owes to its vendors and retirees.

[Ashok Hegde]

03:15 PM on 12/09/2011

What is wrong with that? Shouldn't Sears minimize its costs? If a nearby state offers Sears a better deal, it has a responsibility to its shareholders to move...

[Carl Crooks]

06:31 AM on 12/13/2011

Sears has a responsibility for all the people they do business with,customers,employees and even the shareholders too,They have every right minimize their costs,but not at the expense of a society that keeps them in business....This is where the great debate comes in about corporate personhood,Yes absolutely,a business has every right to do whatever it takes to stay in the black and turn a profit,but when that business goes out of it's way for profits and harms the community then everyone suffers from the decision.

[sking007]

01:48 PM on 12/08/2011

Let's clear up a few things. Isn't the basic premise of tax planning to minimize ones tax liability based on legal tax code entitlements? Can't tax avoidance be labeled as the same thing as long as it's legal by IRS rules. If it's illegal then that's called tax evasion. Let's not be naive that it's a corporate moral obligation to willingly hand over money to Uncle Sam because it's the right thing to do. Rather, blame the ridiculous encyclopedias of tax code that our brethren congress has bestowed upon us over the years.

[darkmark]

02:04 PM on 12/08/2011

and after all what are lobbyists for if not writing rules so they benefit, oh say, corporations that pay them to find ways to buy what they want. we have dems and repubs kissing the corporate tail so the corporate pacs send the pols money. yes let us be clear about a few things. after all what is citizens united all about?

[frank day]

03:45 PM on 12/08/2011

Trouble is, that we have a revolving door between corporations and regulatory agencies.

The industries being regulated are the same ones who write the rules.

[alunsulen]

11:10 AM on 12/08/2011

Even I avoid state income tax by simply living in Texas. Suck it up, libs. I'm proud I don't contribute a penny towards feeding the public union thugs in hellholes like IL, NY or CA.

[Views from the Middle]

12:13 PM on 12/08/2011

California State taxes paid to put out Texas fires this year. California firemen, who are part of the "public union thugs" risked their lives to put out fires in Texas because Texas cut their Fire Protection from their State budget. Please be a little more thankful and little less disrespectful.

[TaiJi2]

12:42 PM on 12/08/2011

State taxes get spent inside the State, Einstein. How could they possibly affect anything in IL, NY or CA?

[AndrewNY2011]

01:26 PM on 12/08/2011

I moved to NY in June from SC and the payroll tax rate is lower in NY. In NY you don't have to pay taxes on your car like SC, no food taxes in NY, etc. Overall, the tax rate in liberal NY is less than conservative SC. This is coming from first hand experience and the math that I did. Also, the pay is higher in NY compared to SC.

[Adam Woehler]

10:18 AM on 12/08/2011

And they consistently appeal their real property tax year after year, shifting the burden to smaller businesses and homeowners.

[AZreb]

09:28 AM on 12/08/2011

But these same companies can use all that saved money to "donate" to the various politicians. Isn't that nice?

Many of these corporations are the ones listed on the Stock Exchange. We seem to use the market as a barometer of our economy, but how is the fact that many of these international companies outsourced their labor and factories helping our economy? Especially if they pay no taxes? Big investors are helped, but the working class is not.

[ivanstermonster]

10:58 AM on 12/08/2011

That what funny. They only have to give a donation (legal bribe) of $20,000 to a campaign and they can have the rules rewritten so they can save $1,000,000. You would be stupid not to use this method if you were a corporation. By the way, this donation (legal bribe) system works on both Democrats and Republicans.

[ivanstermonster]

11:22 AM on 12/08/2011

Corporations: Hey we want a free trade agreement with Columbia. Someone get on the phone with our lobbyist and have them start making some donations.
Politicians: $50,000, wow that’s great. Here is your free trade agreement.
Columbians: Master, my fingers hurt I have been working for 18 hours straight. Can I take the three cents I made today and have a lunch break?
Master: No. One cent deduction for even asking.
Americans: Where did all the jobs go???

[ran6110]

09:22 AM on 12/08/2011

Yeah and some lame a$$ed executives (CFO's) probably got bonuses for saving the company some money.

[Atwill]

08:27 AM on 12/08/2011

And at the same time us state workers got our pay cut. I work for the state of Calif. so i pay MORE in my taxes, becaue the furloughs were an illegal tax. We had to pay an extra 15% out of our monthy gross. OK, we are getting a little back now. But since Arnie did this to us, I lost about $30,000. That is about $30,00 more i paid in taxes to Calif then most people here in Calif. and I still had to go to my state job. And raise my 3 kids. On that pay. I'd like to see what the majority of the nation , joe average worker, would do it their taxes were suddenly riased by 15%. and not yearly tax. Thier monthly tax.

[DeanWormer]

07:41 AM on 12/08/2011

I guess if you are not paying more taxes than legally required, you are also "avoiding" taxes.

[marijam]

07:05 AM on 12/08/2011

States make tax deals with companies, only to be betrayed. North Carolina made a tax deal with Dell for a plant in Winston-Salem only to have the company move out and go to China just a few years later. Kansas has made many a deal with Boeing, only to have Boeing stab them in the back with their most recent decision to consider moving the military side of Boeing out of the state. Kansas has done a lot for the Boeing company, Kansas is No. 2 in the nation after Massachusetts for the most college educated population with the most scientists and engineers. Kansas keeps losing out on jobs and business because states like Texas, South Carolina and Washington have no state income tax. It's a really big problem for states with a state income tax. If they increase sales taxes then it hurts the poor. If they increase property taxes then it hurts the elderly and the poor, forcing them out of their homes. If they don't increase property taxes then they wreck their tax base as has California. Something has to be done though, good high-paying jobs are impossible to get in Kansas.

[Realist2011]

11:33 AM on 12/08/2011

Corporations have been getting sweet-heart "one-way" deals from the states for years. Guaranteed reduction in taxes for an illusive number of jobs. Even those jobs go away as soon as the tax reductions run out.

State governments need to grow up. Every dollar in tax breaks you give a corporation is an additional dollar of taxes that you'll be recovering from the average taxpayer.

It's time to make it illegal for any state to give tax breaks to corporations unless the government agrees to a reduction in their spending to "pay" for the tax breaks.

[AndrewNY2011]

01:28 PM on 12/08/2011

I am from SC and they have a state income tax.

[frank1946]

06:55 AM on 12/08/2011

Hammer and Sycle is now answer to Economic Growth !

Agree with gameused4 below.

Whole Class of Walking Dead who assume raising Taxes will earn them a nice Living ?

Obama has killed the American Job Machine, Future looks Grim, Thanks Obama !

Tax Revenue is down dramatically because Incomes are down.

[marijam]

07:23 AM on 12/08/2011

It was NOT BHO that killed the goose that laid the golden egg. THAT was the Republicans under George W Bush.

[Gonzo333]

07:40 AM on 12/08/2011

Look it raining outside! Must be Obama's fault. Can't you guys come up with anything else. Pretty desperate huh?

[special38x2]

11:42 PM on 12/08/2011

Look, the guy has authorized crap loads of bailouts, put our money in bad investments, and taken more choice from the people than anyone in recent years. He's got to go and we need someone to level the playing field.