Nick Shaxson ■ Report: the Sorry State of U.S. Corporate Taxes, 2008-2012
A major new report from the indefatigable Citizens for Tax Justice in the U.S.
The Executive Summary begins:
The Sorry State of Corporate Taxes
What Fortune 500 Firms Pay (or Don’t Pay) in the USA And What they Pay Abroad — 2008 to 2012Profitable corporations are supposed to pay a 35 percent federal income tax rate on their U.S. profits. But many corporations pay far less, or nothing at all, because of the many tax loopholes and special breaks they enjoy. This report documents just how successful many Fortune 500 corporations have been at using these loopholes and special breaks over the past five years.
The report looks at the profits and U.S. federal income taxes of the 288 Fortune 500 companies that have been consistently profitable in each of the five years between 2008 and 2012, excluding companies that experienced even one unprofitable year during this period. Most of these companies were included in our November 2011 report, Corporate Taxpayers and Corporate Tax Dodgers, which looked at the years 2008 through 2010. Our new report is broader, in that it includes companies, such as Facebook, that have entered the Fortune 500 since 2011, and narrower, in that it excludes some companies that were profitable during 2008 to 2010 but lost money in 2011 or 2012.
Some Key Findings:
• As a group, the 288 corporations examined paid an effective federal income tax rate of just 19.4 percent over the five-year period — far less than the statutory 35 percent tax rate.
• Twenty-six of the corporations, including Boeing, General Electric, Priceline.com and Verizon, paid no federal income tax at all over the five year period. A third of the corporations (93) paid an effective tax rate of less than ten percent over that period.
• Of those corporations in our sample with significant offshore profits, two thirds paid higher corporate tax rates to foreign governments where they operate than they paid in the U.S. on their U.S. profits.
These findings refute the prevailing view inside the Washington, D.C. Beltway that America’s corporate income tax is more burdensome than the corporate income taxes levied by other countries, and that this purported (but false) excess burden somehow makes the U.S. “uncompetitive.”
Among many other things, it contains fascinating asides such as:
- Why the “current” federal income taxes that corporations disclose in their annual reports are the best (and only) measure of what corporations really pay (or don’t pay) in federal income tax
- Liar companies: the 17 Multinational Corporations that Do Not Provide Plausible Geographic Breakdownsof Their Pretax Profits. (Country by country reporting, anyone?)
Now read on. It is packed with fact and detail, and will be a landmark study for some time to come.
Those interested in this topic should also be aware of a new report from Good Jobs First in the U.S., entitled “Subsidizing the Corporate One Percent: Subsidy Tracker 2.0 Reveals Big-Business Dominance of State and Local Development Incentives”. Its press release begins:
“Three-quarters of all the economic development dollars awarded and disclosed by state and local governments throughout the United States have gone to just 965 large corporations.”
Indonesia launches investigation following ‘Macao Money Machine’ report
Taxing Wall Street: the Tax Justice Network December 2020 podcast
The UK’s #ImperialInequalities: Past, present and future
$427bn lost to tax havens every year: landmark study reveals countries’ losses and worst offenders
The State of Tax Justice 2020
20 November 2020