Many US Corporations Not Paying Taxes At All
In a stunning report released by the United States Government Accountability Office in July 2008, Americans learned that many corporations, including those with assets over $250M, reported no tax liabilities. In fact, from 1998-2005, 72% of foreign-controlled domestic corporations (FCDC's), and 55% of US-controlled corporations (USCC's), reported zero tax liability for at least one of those years.
In total, two-thirds of the corporations doing business in the U.S. paid no taxes from 1998-2005, while collectively reporting $2.5 trillion dollars in sales.
John McCain's official website would make it seem as if corporate taxes are somehow crippling American business. He calls for a plan that would:
Cut The Corporate Tax Rate From 35 To 25 Percent. A lower corporate tax rate is essential to U.S. competitiveness. America was once a low-tax business environment, but as our trade partners lowered their rates, America failed to keep pace, leaving us with the second-highest rate among the world's advanced economies.
The rate may be high on paper, but in the reality of business deductions, loopholes, and special tax breaks, it's clearly not the rate being paid by corporate America -- not even close.
Barack Obama also calls for corporate tax cuts, but with the caveat that the benefactors of reduced taxes create American jobs. His plan would also "repeal tax breaks and loopholes that reward corporations that retain their earnings overseas and use those savings to lower corporate tax rates for companies that expand or start operations in the United States". Unlike McCain, Obama seems to be keenly aware that special interests, and not zero profit or net losses, are responsible for the high number of U.S. corporations that do not pay taxes.
While McCain's plan calls for deeper cuts on taxes that are largely mythical -- since they're not actually being paid -- and would allow even more deductions, Obama's plan takes a much more considered approach, including:
Reforming international tax loopholes: including reforming deferral to end the incentive for companies to ship jobs overseas and closing the offshore pension loophole; Closing domestic tax loopholes: including clarifying the economic substance doctrine and increasing reporting of capital gains to close the tax gap; Eliminating special tax breaks for oil and gas companies: including repealing special expensing rules, foreign tax credit benefits, and manufacturing deductions for oil and gas firms; Closing other loopholes: including taxing carried interest as ordinary income, and closing the CEO pay loophole.
In their final debate of the election season, McCain asked why Obama would want to raise taxes on even 5% of the population. A better question might have been why so many U.S. corporations aren't paying at all.
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I ran across the GAO report that Senators Carl Levin, MI and Byron Dorgan, ND requested. This is an outrage to the American people. Even worse, why were the DEM and GOP not discussing this during the election and why is the media not trouncing all over this? We the people are going to be paying for a very long time on these bail-outs. Have these corporations that are recieving billions of dollars even paying taxes? How many jobs have they offshored in the past few years?
We should not be bailing out companies that have gone beyond measure in contributing to the current economic meltdown. Nor should we be bailing out companies that continue to offshore jobs that could be done here at home.
Jee whiz! Those deductions allow the corporations to lease skyboxs at sports parks, sponsor NASCAR, and take luxury vacations, (I meant training seminars.)
Introduction
The IRS exists only to collect taxes to pay the interest we owe to the Federal Reserve. Not one dime of our income taxes goes to operate the government; it all goes to the richest banks in the world, which by the way will never need a bailout as long as we are paying them interest on the federal debt. If corporations paid the taxes they should there would be no need for individual income taxes. In fact our founding fathers never intended for the government to impose a tax on transactions between individuals - only when that individual chooses to start a business should the government get involved, to insure that the corporation is treated as a separate entity to be "governed" on behalf of "we the people" of the United States. Bush can truly say "mission accomplished" because he has enslaved American every man, woman, and child for the next 500 years.
"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks...wi
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Thanks so much for mentioning this! The GAO report got far too little press. I'm very glad Obama wants to address this and as such, it must get more attention. If it doesn't, it may just fall by the wayside because big business has so much leverage in Washington. Corporate welfare is one of the few places where money can be recovered that could pay for some of his other plans.
To pay back the 700B Wall Street bailout the IRS should impose a 1 tenth of 1 percent tax on all Wall Street transactions. Economists claim this would generate 500B in one year alone.
That is exactly what Ralph Nader is proposing.
I AM SO GLAD SOMEONE FINALLY BROUGHT THIS UP SMALL BUISNESSES PAY MORE TAXES BECAUSE THE BIG COMPANIES DON'T PAY ANYTHING AND YET WE BAIL THEM OUT. THEY PAY NOTHING AND GET MORE FOR FREE SOUNDS LIKE WELFARE AT IT'S FINEST YET THESE SAME PEOPLE DON'T WANT TO PAY THEIR FAIR SHARE. I AM SO OVER WATCHING PEOPLE PROFIT OFF THE POOR DISPORPORTIONALTLY AND YET THE POOR GET BLAMED FOR THE HOUSING MESS AND CREDIT CARD DEBT EATING OUR COUNTRY, BUT BIG CORPORATIONS PAY NOTHING WHAT COUNTRY DO WE LIVE IN? IT IS VERY TELLING TO ME THAT THE ONLY PEOPLE I KNOW THAT ARE VOTING FOR MCCAIN ARE PEOPLE WHO ARE AFRAID THERE INHERITANCE IS GOINGTO BE TAXED AWAY RATHER THAN GO OUT AND EARN IT THEMSELVESIT'S THE HUGE CORPORATIONS THAT DON'T PAY ANYTHING, OR THEY ARE THE PEOPLE WHO GO INTO THE ER FOR CARE BECAUSE THEY DON';T HAVE INSURANCE AND IT ALWAYS THE LIBERALS FAULT THAT THEY CAN'T HAVE SOMETHING BECAUSE IT WAS TAXED AWAY. I AM THINKING OF TWO FAMILIES I KNOW ONE HAD THERE HOUSE FORCLOSED AND THE OTHER DOESN'T HAVE HEALTH INSURANCE BOTH ARE ON FOODSTAMPS AND OR MEDICAID. THESE ARE ALSO THE FIRST PEOPLE TO LINE UP TO VOTE AGAINST SCHOOLS, ROADS AND FIREFIGHTERS THE TAX CODE NEEDS A ENTIRE OVERHAUL. I DON'T REMEMBER WHICH JUSTICE SAID IT BUT ONE SAID ( I AM PARAPHRASING)" I LIKE PAYING TAXES IT BUYS CIVILITY" JUST A THOUGHT
Would you please not post in all caps, and consider breaking your post into paragraphs? I'd like to read your post, but it messes with my old eyes.
Posting in all caps is considered yelling and rude. Thanks for your consideration.
20 years ago I read an article explaining that if U.S. corporations paid their true taxes instead of employing loopholes and tax dodges there would be no such thing as a national deficit or debt. Its about time we take back our country from all the fat cats and rats of big business. VOTE OBAMA / BIDEN 2008!
We'll have to fight not only the rightwing, but the DLC Dems, too.
It's deceptive to talk about the cost of doing business overseas strictly in terms of corporate taxes. There are so many other factors. In Europe, for example, the cost of human capital is dramatically higher. Many Europeans are used to receiving six months paid parental leave, a minimum of three weeks of paid vacation, numerous holidays, 30-35 hour work weeks, high minimum wages, required retirement benefits etc. It's an entirely different environment, and it's difficult to fire underperformers or lay off personnel if economic conditions change because the law favors worker rights over businesses.
V-Grrrl, the foreign-controlled corporations discussed in the GAO report aren't doing business in Europe or Asia, but in the U.S.
And shouldn't the United States be aspiring to treat their workers as well as those in Europe and many many other countries are? Employees are the most important, absolutely the most important, asset any company has and it's disgraceful that so many people in the U.S. think they shouldn't be paying the workers a living wage and giving them benefits that allow them to raise their families with dignity.
Then why would companies prefer to go overseas? I have no paid leave - ZERO - and I'm a Union Ironworker.
So please explain to my why it is cheaper to physically ship products form anywhere vs making the product here. Especially in this day and age where supply and demand can waver on a dime while they could have up to 3 full shipping vessels full of crap no one wants.
Note to everyone - That's why there are outlet malls. It's crap they had too much of.
Time to make the corporations pay for the fact they expect the US gov.& especially the military to do there bid overseas, then they want to pay zero taxes thru corp. loop holes. This makes them corp welfare cheats and McSame want the middle class to continue this BS. He is absolutely another Bush/Cheney and thinks the public is as dumb as he and Palin. Vote for Obama/Biden to eliminate this rediculous corp. welfare and idiot icy.
I read this report back in July and I wish EVERY time the Republican spinners come to the table to spout their BS, the media would call them on it. Obama did at the last debate, but let it slide this time. I'm really sick of big business getting richer and richer on the backs of the working class. We work hard, and keep paying more and more for goods and services so they can reap huge profits to sock away in UBS's tax haven accounts. Enough! If they truly used it to create jobs, it would be one thing, but how many have been laid off in all the downsizing that's taken place over the last several years. If we're not being downsized, the jobs are getting sent overseas to be manufacutured at slave wages so they can sell the stuff back to us and not at LOWER prices.
Anyone interested in learning how corporations avoid taxes should read David Cay Johnston's book, "Perfectly Legal." It will open your eyes as to how corporations use offshore registration, foreign subsidiaries, tax breaks passed by Congress and other means to avoid taxes or as the earlier poster said, get refunds or rebates while paying nothing.
Newsweek columnist and Fortune senior editor Alan Sloan is another good source. He often offers relatively easy to understand explanations of complicated transactions, such as a "reverse Morris Trust" where huge amounts of capital gains taxes are avoided through complicated stock swaps when one company buys another.
McCain can boohoo all he wants about high corporate tax rates, but the actual rate most corporations pay is far less than the "retail" rate, once they deduct all of their expenses and special tax breaks. A slight increase (3% is what I read) isn't going to overly burden anyone.
At least you cannot cut zero, but this is hardly new to me; Mother Jones came out with a similar study not long ago. There's even a bigger problem: did the GAO report the number of companies who net government money -- that is, they not only pay no taxes, they gain credits or incentives that give 'em more, so that their tax liability is a negative number?
"so that their tax liability is a negative number" - that seems to be a nice way of saying Corporate Welfare Queens.
Yes you can, it's called a subsidy.
I did not find that information, Lisa, but would also be interested. I would also like to know what Exxon's tax liability has been for the last several years, as well as this year, since they reported two record-breaking quarters of profit in a row.
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