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U.S. Companies Pay Just One-Third Of The Legal Tax Rate: GAO Study

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Apple and other big, profitable U.S. companies paid an average tax rate of less than 13 percent in 2010, according to a new study. Photographer: Koichi Kamoshida/Bloomberg via Getty Images | Getty

Big, profitable U.S. companies paid an average federal tax rate of less than 13 percent in 2010, according to a new study -- or about a third of the statutory rate many of those same companies are lobbying hard to cut.

Profitable companies with more than $10 million in assets paid an average rate of 12.6 percent of their global profits in 2010, the latest data available, according to a new study by the Government Accountability Office, a nonpartisan congressional watchdog. That compares to the statutory corporate tax rate of 35 percent.

"When some U.S. corporations use unjustifiable loopholes and offshore gimmicks to avoid paying Uncle Sam, their tax burden is shifted onto hardworking American families and small business," Sen. Carl Levin (D-Mich.), who commissioned the study, said in a statement, according to The Hill. "Today’s GAO report quantifies just how much of the corporate tax burden has been shifted onto other taxpayers: America’s large, profitable corporations are now paying a lower tax rate than our teachers and firefighters.”

Even when foreign, state and local taxes were added, the average corporate tax rate rose to just 17 percent, according to the GAO. And when unprofitable companies were added to the mix, the average tax rate still rose to only 22 percent of profits.

The study, which the GAO conducted at the request of Sens. Levin and Tom Coburn (R-Okla.), comes at a time when U.S. companies are complaining that their tax rate is among the highest in the world and should be cut to help them stay competitive.

Their heavy lobbying has impressed President Barack Obama, who has said the corporate tax rate should be cut to 28 percent. But it has not convinced most Americans, who oppose lowering taxes for corporations, according to a new survey conducted by a corporate lobbying group called RATE, short for Reforming America's Taxes Equitably. (Though a majority support cutting the tax rate if it's accompanied by closing unnamed loopholes.)

The GAO study is consistent with a slew of others, mainly done by reform-minded groups, that have shown actual corporate tax rates are consistently well below the statutory rate. Another recent GAO report found that corporate tax avoidance might cost the U.S. government $180 billion per year. Many companies not only do not pay taxes, but they actually get money back from the government. An earlier GAO study found that 55 percent of big U.S. companies had avoided paying taxes altogether in at least one year between 1998 and 2005.

Companies have lots of legal loopholes that help them avoid paying taxes, including the ability to stash foreign profits offshore indefinitely. A recent study by the reform-advocacy group Citizens for Tax Justice found that at least 18 big U.S. companies, including Apple, Microsoft and Nike, are avoiding paying a combined $92 billion in taxes by using offshore tax shelters.

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