Obama Corporate Tax Plan Would Create Big Winners And Big Losers

WASHINGTON -- Every one of the dozens of corporate tax loopholes and subsidies that President Barack Obama announced this week he'd like to expunge has something in common: Somebody fought really hard to get it passed into law.

So which industries have done the best job of fighting for loopholes? And which, therefore, would have the most to lose if the slate were wiped clean?

In return for nixing all those loopholes, Obama's plan -- which, it should be noted, was a political statement rather than a viable legislative proposal -- would lower the top corporate tax rate from 35 to 28 percent.

That would translate into a big tax cut for those corporations currently paying an effective rate of more than 28 percent, after all those deductions and credits are factored in. But it would be a big increase for those paying closer to zero -- or less.

According to a recent report from Citizens for Tax Justice and the Institute on Taxation and Economic Policy, effective tax rates vary widely within industry as well as by industry.

But after examining 280 major corporations, the report's authors found that industrial machinery companies (led by notorious tax avoider General Electric) enjoyed the lowest effective tax rate between 2008 and 2010, actually paying a negative rate of minus 13.5 percent of their profits in federal income taxes.

Other industries paying considerably less than half the statutory 35 percent over that period included information technology services (2.5 percent), utilities (3.7 percent), telecommunications (8.2 percent), chemicals (15.2 percent), financial (15.5 percent), and oil, gas and pipelines (15.7 percent).

Only three industries -- electronics and electronic equipment, retail and wholesale trade, and health care -- paid an effective tax rate equal or greater to Obama's proposed statutory level of 28 percent over that full three-year period.

See the following chart:

Source: Citizens for Tax Justice and the Institute on Taxation and Economic Policy report. For the effective tax rates on individual corporations, see the charts starting on page 25.

And while there's not a direct correlation between lobbying expenditures and tax avoidance during that period -- some industries, after all, had even more important things for which to lobby than tax breaks -- there is an undeniable relationship:

Source: Citizens for Tax Justice.

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Dan Froomkin is senior Washington correspondent for The Huffington Post. You can send him an email, bookmark his page, subscribe to his RSS feed, follow him on Twitter and on Facebook, become a fan and get email alerts when he writes.

Comments

[Laurel Sayler]

03:01 AM on 02/25/2012

If they have that much cash laying around to pay for lobbyists, then they can pay that much more in taxes.

[fortressfountain]

01:41 PM on 02/24/2012

Why should anyone pay one dime more in taxes until we find out where the money is squandered.
The far right is soooo dumb. I pay federal taxes on unemployment-yet my friend pays no federal taxes and owns 3 homes, a lot of people on ss pay no federal taxes as it is not counted as earnings.
It is not just some poor person on welfare not paying taxes. A lot of weathy people do not.
But this will not change the money being squandered.

[Cynthia Shore]

09:21 AM on 02/24/2012

everyone loses in obama's plan. He has no idea what he is doing and if he does he is insidious!

[Mr MOTO]

09:07 AM on 02/24/2012

Regulations: MidAmerican would like its customers to pay on average $2.33 more per month in 2012 and an additional $1.30 in 2013. The company blames, in large part, new federal environmental laws aimed at cutting coal-fired power plant emissions.

Read more: http://www.kcci.com/money/30530984/detail.html#ixzz1nJASxvLf

[l78lancer]

03:53 PM on 02/24/2012

To "save money" many of those same utilities failed to do maintenance on those fossil plants over the last 30, 40, 50 years making them both expensive and dirty to operate. Now they have a choice to upgrade and install the proper equipment under the regulations or in some cases, shut down and purchase replacement power. Some utilities don't have the easy access to purchase replacement power. In any case the cost will be passed on the the customer. But much of that increase has to do with poor decisions on the part of the utilities' management rather than the regulations. Their decisions were short term, not long term. Preventive maintenance and installing emission equipment years ago would have been much cheaper than the decisions they are faced with now.

[TOCB]

08:04 AM on 02/24/2012

This report is just one more piece of evidence that the claim by globalist that US companies moved production over seas due to taxes and regulations is CYA language. Everyone knows the real reason is labor cost at less than $2/hr.

[AZreb]

07:58 AM on 02/24/2012

Note: "Obama's plan....was a POLITICAL STATEMENT rather than a viable legislative proposal" (emphasis added).

We all have to remember that this is campaign season - words are cheap.

[Mr MOTO]

09:08 AM on 02/24/2012

But then you'll ask why companies are not investing in hiring. It's called uncertainty. Words have consequences.

[timm0]

01:41 PM on 02/24/2012

You should be embarrassed for parroting that canard.

Unless you know precisely what's going to happen a year from now or have time travel ability, EVERYTHING is uncertain. It's an immutable fact.

I'm uncertain as to whether or not I will fall down in the shower tomorrow. I make a choice to get out of bed anyway.

And anyone in this economy - whether running a business, owning a business, looking for work, contemplating leaving a job, etc. - has to make decisions without "uncertainty" getting in the way.

Corporations make deliberate, usually obsessively debated and researched, decisions on what to do with piles of cash. Their incentives and statutory obligations tend to encourage decisions to hoard or invest elsewhere. Those "elsewhere" investments often mean places where they pay nothing and lead to the exportation of US jobs. And there is nothing uncertain about that.

[pinetar]

05:46 AM on 02/24/2012

Obama is bad news for AMERICA...His dream of $5.00 a gallon is coming sooner than he planned..
It's a hi-jack of our tax money to fund his huge donors...When will we benefit from his giving Brazil and other foreign county our TAX MONEY to drill for oil...the answer is never...

[Arashi]

06:16 AM on 02/24/2012

You made four points. Each one more misguided than the last.
Find a legitimate news source.

[pinetar]

06:23 AM on 02/24/2012

My points were found on -line and they came direstly frim the White House, their aids and news releases..I know for a FACT of the cash for clunker failure and the reason they implemented this misguided, misrepresented MANDATE...To steer BUYERS to the so-called green cars that are a flop...A FLOP..A FLOP...A multi billion dolllar flop and robbery of the citizens...

[Mark Szarszewski]

07:03 AM on 02/24/2012

God knows HP isn't a legit news source

[morbius]

08:12 AM on 02/24/2012

Time for you to work on secession, bud. Your cool aid is from Jim Jones.

[Andrew Harvey]

04:30 AM on 02/24/2012

Interesting graphic. The amount of money an industry spends on lobbying is directly proportional to the amount of hassle and regulation that congress places on that industry. Who would have thunk it?

[Freddie Krueger]

12:48 AM on 02/24/2012

Let's see if Occupy will protest Obama.

[Freddie Krueger]

12:51 AM on 02/24/2012

Obama has more Goldman Sachs people working for him than Goldman Sachs does.

[Maxx Webber]

12:37 AM on 02/24/2012

Does mean those S olyndra Ceo's aren't going to get their bonuses as promised ?

[VoteThemAllOut]

11:48 PM on 02/23/2012

Have to wonder if the 'Great Obama' is going to close the 'loop-hole' that lets his good buddy's company, GE, pay zero on $6 Billions in profit.

[Nick Tarlton]

07:15 AM on 02/24/2012

That's part of the plan.

[VoteThemAllOut]

07:19 PM on 02/24/2012

Part of the plan - close the loop hole?

I doubt it.

[morbius]

08:13 AM on 02/24/2012

Ah, another Fox troll.

[UKLLee]

11:25 PM on 02/23/2012

Why is gas five dollars a gallon again?

[Nick Tarlton]

07:16 AM on 02/24/2012

Wall Street Speculators driving up the price on the world market due to tension in the middle east. Demand is down in the US and supply is high. It is simply huge profits driven by people trying to make quick bucks on Wall Street.

[Mr MOTO]

08:02 AM on 02/24/2012

Oli is $50 LESS per gallon now than when it was in 2008, the last time gas was this high.

[l78lancer]

04:12 PM on 02/24/2012

...And while US demand is down, world demand is up, making it more cost-effective to export sell oil abroad than here. That's why XL will be completely of no consequence to the US relative to bringing down the long-term cost of gasoline in the US. Plus limited refining capacity drives up the price of gasoline.

You stated that simply, but nicely.

[morbius]

08:13 AM on 02/24/2012

Because of the speculation of the big banks through derivatives.

[ConservativeChampion]

11:07 PM on 02/23/2012

Higher taxes on "unfavored" companies. That is to say companies that aren't controlled by the Democrat party.

[wtf is this]

11:20 PM on 02/23/2012

So those paying 0% tax today are "unfavored" & those paying 30+% are favored.
Would you feel better if we raised taxes on those paying more than 30%? Keeping all those loopholes that benefit the "unfavored" companies?

[UKLLee]

11:26 PM on 02/23/2012

Paying 0% in taxes? you mean like obama-owned GM?

[Nick Tarlton]

07:17 AM on 02/24/2012

Love the out of control, illogical spin you are putting on things.

[agathacallie]

10:28 PM on 02/23/2012

Such a comfy system for the defense and aerospace industries. Get paid whatever you ask from taxpayer dollars, guaranteed orders because its unpatriotic to question the need for a "strong" defense, and to top it all off, no need to pay back into the system by chipping off tax dollars from the mountain of profit.

[JustMeinNJ]

09:47 PM on 02/23/2012

I get paid a decent salary. Got a raise and bonus this year (and every year). I get paid vacation time. when I was out of work hurt - they paid me to sit at home laying on the couch, they pay a large portion of my insurance premium. They paid for my education, they let me manage my work+life so I can have both.

I will never complain so generally about corporations.

[morbius]

08:16 AM on 02/24/2012

Do you work for the financial industry? Big banks? Wall Street?