Over Two-Thirds Of Corporations Pay No Federal Corporate Income Tax

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.

The phenomenon affects state income taxes as well as federal. Last month, another study from the Center for Tax Justice found that corporate tax avoidance had cost states a combined $42.7 billion between 2008 and 2010 -- a period when budget shortfalls forced states to cut spending for health care, public schools and care for the elderly and disabled.

Comments

[B T T]

02:15 PM on 10/31/2012

It is obvious most are ignorant about "Income Taxes" per se. Those 2/3's that say these corps. do not pay income taxes, do in fact pay income taxes, all taxes paid to the Federales are income taxes with different names. The 2/3 all pay "Having Employee Taxes [matching taxes] SS, Medicare Taxes, Unemployment Taxes, Property Taxes, Sales Taxes etc. Although property and sale go state coffers.

So when anyone says 2/3 of corps do not pay income taxes that statement comes from people that are "Ignorant" about taxes or mostly trying to spin their own agenda for whatever reason.

Thanks.

[freetothinkformyself]

11:44 AM on 03/23/2013

And when Mitt and others say that 47% pay no income tax, they are also ignorant or trying to spin their own agenda for whatever reason?

[tia444222]

02:39 PM on 09/21/2012

Behold: The Job Creators.

[LeaderofMen]

10:30 PM on 09/19/2012

There's your 47%, right there.

[stuart100s]

09:32 AM on 02/20/2012

The reason for these corporations is not for tax reasons, but for protection of asset reasons. This article should be entitled "Litigators overwhelmingly support Dems". Taxes are paid by these corporations, they are paid by the owners of the corporations. The only reason these are corporations and not sole proprietors, and partnerships, are due to lawsuits.

[Franktalk33]

01:48 PM on 04/15/2013

......love your micro-bio!....

[ian0000]

10:17 AM on 02/17/2012

did anyone read the story? to quote "non tax able businesses, meaning the cos themselves pay no tax , instead passing on the earnings to the individual investors to pay tax on" so whats the difference? another reason some taxable businesses pay no taxes is that their depreciation expense is so high, meaning they are making a lot of investment in new capital equipment , which is good for the economy. what do posters want ? for cos to cut back on capital expenditure and , have less depreciation expense , therefore have some earnings which would be taxes but hurt the economy

[tman418]

11:23 PM on 02/16/2012

There is no doubt in my mind that Reagan and his buddies laughed behind close doors when they told us all of the wealth would "trickle down."

[Sardeth Wynn]

01:26 AM on 02/17/2012

That's because "Reaganomics" is like "Communism" on paper looks great, in practice.....you get the GOP

[Franktalk33]

01:49 PM on 04/15/2013

......laughing with champagnes while mouthing "suckers"......

[Sardeth Wynn]

11:04 PM on 02/16/2012

But, but, but, the Republicans Swear they are paying Taxes and more then the socialist middle class and them Communist Poor!!!!
Does this really surprise anyone?

[SHRED]

10:52 PM on 02/16/2012

Leeches...all of them.

[forestnfama]

04:24 AM on 01/12/2012

Wells Fargo, Verizon, Boeing and General Electric -- didn't pay a cent in federal taxes in 2008, 2009 or 2010,

And now you know why people are pissed.....raking in hundreds of millions and not paying for the defense of their capital and country.....blood sucking greedy capitalist....

[Claudius II]

02:56 AM on 01/12/2012

The title of this article... just those few words... Is the root of most of America's problems. Yes, I said "most". Because it's true.

If America increased Corporate Taxes, and got rid of all loop-holes...America would have enough money to fund departments that desperately need it - FDA, EPA, VA, Education (especially education). Ect...

But not only departments... States desperately need money to re-build their infrastructure, like roads and schools.

I'm not American, I'm Canadian that is actually is pretty right-wing, I have been voting Conservative up here. But even I recognize that in any modern society, some redistribution of wealth is required.

And unfortunately, America is in such a desperate state right now... only strong dose of Socialism can save it.

[forestnfama]

04:27 AM on 01/12/2012

The Republican mantra is and has been for years.........Starve the beast...... They see their own government as a beast to be starved...... Greed alone is the heart and soul of the Republican party.......

[LeaderofMen]

10:33 PM on 09/19/2012

And those greedy Republicans (eg, the ones who are greedy, not ALL Republicans) have convinced a gigantic voting bloc that their way is good for everyone, despite the evidence to the contrary.

[Smarty5]

12:21 AM on 01/12/2012

Corporate rate should be reduced and loopholes must be slashed. The pass through entities must be regulated and should have caps.

[Neufield]

11:50 PM on 01/11/2012

we should issue incorporation certificates instead of birth certificates ?

[special38x2]

11:50 PM on 01/11/2012

If 35% is too high, and 0% is too low, what's the magic number?

[Derek Wayne 46]

12:33 AM on 01/12/2012

It should vary. It should be zero for US manufacturing companies

[special38x2]

12:34 AM on 01/12/2012

If they remain in the U.S., right?

[chickennwaffles]

07:17 PM on 09/19/2012

the current corporate tax rate is 25%... it use to be 35%... bringing it back up is a start. and i dont favor not taxing U.S. companies just because they manufacture here. they use the systems and infrastructures... they should be taxed. I do suggest getting rid of or strenghtening 501c deductions...

[Rusty Boersma]

11:33 PM on 01/11/2012

When, and only when, all of their loopholes are closed, would I even think about lowering the corporate tax rate. And capital gains is income. It should be taxed as such.

[Dosadi]

10:24 PM on 01/11/2012

I am the 33%.