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.