Many Large Corporations Avoid Paying US Income Tax, Study Finds
While small-business owners say they are struggling to pay their taxes, many large corporations haven't paid any taxes at all during the last few years, according to a report released on Friday (Nov. 3).
Verizon, Boeing, DuPont, Mattel, Honeywell and a variety of others paid no income taxes at all between 2008 and 2010, according to Citizens for Tax Justice, a non-profit advocacy group that aims to expose tax-paying inequities. The report also found that many corporations paid significantly reduced taxes, including FedEx and Amazon. Wells Fargo received more tax subsidies than any other company.
Defense contractors, financial services, utilities, telecommunications, and oil, gas and pipeline companies received the greatest share of tax subsidies or benefitted the most from tax shelters.
Overall, the report looked at 280 companies in the Fortune 500:
- The average effective tax rate for all 280 companies in the study over the three-year period was 18.5 percent; for the period 2009-2010 it was 17.3 percent, less than half the statutory rate of 35 percent.
- Seventy-eight of the companies enjoyed at least one year in which their federal income tax was zero or less.
- Thirty companies enjoyed a negative income tax rate over the entire three- year period on their combined pretax profits of $160 billion.
Small business groups , particularly those with a more progressive agenda, have spoken out against the findings of the report, calling for greater parity between the tax rate paid by small businesses vs. large ones.
"Big businesses are getting away with taxation murder,” said Frank Knapp, President and CEO of the South Carolina Small Business Chamber of Commerce and Vice Chairman of the American Sustainable Business Council. "They pay little or no taxes on massive U.S. profits and then have the gall to lobby for lowering the high corporate tax rate. Patriots pay their taxes; they don’t dodge them."
Others are encouraging Congress and the President to enact a so-called "Buffett Rule" for businesses which would require that big companies pay a tax rate similar to that of smaller firms.
"We need a Buffett Rule for corporations as well as wealthy individuals,” said Scott Klinger, director of tax policy for Business for Shared Prosperity. “Warren Buffett spotlighted the madness of a tax code that lets him pay a lower rate than his secretary. Likewise, Big Business shouldn’t be paying lower taxes than small businesses."
These business groups would like to see Congress craft tax reform to use taxes from large corporations to help solve the country's budget crisis.
"It would be budgetary suicide to accept corporate tax reform that doesn’t raise new money,” said Kelly Conklin, owner of Foley-Waite Associates in Bloomfield, N.J., and Main Street Alliance steering committee member. “We shouldn’t reward companies like GE and Verizon who dodge their taxes and stick us with the bill."