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Pyke writes: "Among companies listed on the S&P 500, almost one in nine paid an effective tax rate of zero percent - or even lower - over the past year."

These companies include household names like Verizon and News Corp. (photo: AdBusters)
These companies include household names like Verizon and News Corp. (photo: AdBusters)


Over 10 Percent of America's Largest Companies Pay Zero Percent Tax Rates

By Alan Pyke, ThinkProgress

27 October 13

 

mong companies listed on the S&P 500, almost one in nine paid an effective tax rate of zero percent - or even lower - over the past year, according to an analysis by USA Today.

There are 57 separate companies listed on the index that paid a zero percent rate from the past year. Those companies include both household names like Verizon and News Corp. and lesser-known corporate giants like the data storage manufacturer Seagate (market value $15.9 billion) and Public Storage (market value $29.5 billion). Many of the companies USA Today identified in its analysis as paying negative rates make the list because they lost money, but several were profitable. Previous analyses have shown that the typical corporation pays a lower effective tax rate than most middle-class families, and a far lower one than the statutory corporate tax rate against which business interests disingenuously rail.

Getting to a zero percent tax rate despite turning a profit requires creative accounting, but not lawbreaking. The corporate tax code allows companies to avoid tax liability even in years when they turn a profit. Some of the profitable companies on the newspaper's list, such as General Motors, achieved a zero percent rate by banking tax credits from previous years when business was bad. But the more common gambit involves moving revenues from parent companies to offshore subsidiaries based in tax haven countries in the Caribbean, Europe, and elsewhere.

Such offshoring of profits has caught the attention of policymakers in the United States and Europe this year, with the focus predominantly on Apple Inc. The U.S. tech giant not only avoided the American tax system, but managed to shelter about $100 billion in revenues from any taxes at all. That scheme relied upon a loophole in Irish law which that country's government says it intends to fix, but the narrow change proposed by Ireland's finance minister will not address the larger problem of corporate tax avoidance.

Tax dodging costs the U.S. about $300 billion per year. Much of that lost revenue is from individuals, rather than corporations. The country is cracking down on individual tax dodgers and striking deals with countries like Switzerland and the Cayman Islands that will help identify tax cheats starting in 2014. The corporate tax avoidance problem is thornier, as it is generally done through entirely legal methods. Coordinating international tax law in a way that would minimize corporate tax trickery is very difficult under the current approach, and a paradigm shift in business tax law may be necessary to end the accounting practices that rob countries of tax revenue.


 

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-2 # Eldon J. Bloedorn 2013-10-27 22:13
Think when writers speak of corporations having not paid any tax, we have to further discuss that single idea. I'm sure corporations who have been mentioned in this article do pay into the Medicare and Social Security system. Real estate taxes on their corporate properties. Just to be specific, I'm not defending corporations who do not pay taxes on corporate income, profits.
 
 
+8 # BradFromSalem 2013-10-28 08:05
Actually, a fair point considering that we tend to dismiss the Rightie argument about the 47% (or whatever the number is) for not paying income taxes bu pointing out the taxes they do pay. I'm now sure to join you, Eldon, in that downthumbed world you are so erroneously put in.
 
 
+4 # BradFromSalem 2013-10-28 08:18
It really seems to me that we MUST increase taxes from corporations. Especially as a percentage of total federal revenue. Perhaps it may make some sense to tax a corporation based on their profit per the average employee's share of profit times the number of employees. Outsourced labor whether domestic or foreign should be counted as a single employee. So, if a company pays a vendor 1M, then that "employee" is a single million dollar employee. Also, the banked tax credits should be limited to decreasing any single year's tax liability by 1 tax bracket, and lastly we need to at least double the tax brackets for people and corporations.
 
 
+4 # crispy 2013-10-29 01:41
We know how to fix the tax evasion from moving profits to countries w a low tax rate (Ireland) or zero tax rate (Cayman islands).
The proposal was spelled out by a journalist in France in 2012 or 2011 - and others as well I'm sure.
Tax corporations'pr ofits proportionally to the amount of business (SALES) they do in each country.
GE's sales in the Cayman islands would get taxed at 0% but only sales made there.
They will find a way to go around that but we can make it a felony to do so with a min of 10 Y in jail and 10 times his/her total yearly earnings for the CEO. Dissuasion works well!!
THAT will get us a few billions coming in.
 
 
-1 # LAellie33 2013-10-29 04:14
LUDICROUS!
 
 
+4 # RMDC 2013-10-29 13:03
An essential part of Reagan's "supply side" economic theory was always that corporations should not be taxed. They should pay zero tax if that were possible. The "suppliers" should not be taxed, if you want the economy to grow, the theory held.

Before the 1980s and Reagan, corporations in the US paid about 40% of the income taxes the federal government collected. And they earned about 40% of the income. Now corporations pay about 3% of the income taxes the federal government collects.

Reagan's dream has almost come true. And we see the record is economic stagnation or decline, the rise of finance capitalism (derivatives, hedges), buyouts/arbitra ge/takeovers, and more things that are just bad for an economy. "Supply side" economics has been a miserable failure. It has created a global class of billiionaires who now corrupt governments at all levels with their bribes and things like the Legislative Exchange council (ALEC).

Time to give "supppy side" and Reagan the heave-ho into hell. Return to Keynes and "demand side" economics.

We've had enough of Reagan's hatred of "gub'ment" and his love of "bid'ness." The man was senile when elected and brain dead when he left office.
 
 
+3 # motamanx 2013-10-30 01:11
This article is a real eye opener. I knew that some oil giants paid no taxes, and even got massive subsidies. I never really knew how that imbalance was arranged, but it always smelled of graft to me; and articles like this one ought to be more plentiful and more widely circulated!
 

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