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Study: Major U.S. Companies pay 1/3 of the legal tax rate

Livewire

Livewire

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AKA, they pay incredibly little overall. It's not all rhetoric.

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.

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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Source

Thoughts?
 
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Mr. X

Mr. X

It's... kinda effective?
2,391
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Regular citizen abuses the tax-code to not pay taxes, the government is going to arrest him.

CEO of a major company does it, the Government is going to sit back pouting and asking them real nice to pay their taxes.

Give it a few more years and the USA will change to the UCA - The United Corperations of America.
 

Kanzler

5,983
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The best thing I learned from this is that now I've got some evidence against corporations paying abnormally low taxes. So if anybody talks corporate tax cuts, I'll know what I need to fire back. Other than that though, it's not very optimistic for me. I don't see how this will change in the future. It could be a significant revenue tool for plugging the deficit though.
 
Livewire

Livewire

14,092
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BlahISuck said:
The best thing I learned from this is that now I've got some evidence against corporations paying abnormally low taxes. So if anybody talks corporate tax cuts, I'll know what I need to fire back. Other than that though, it's not very optimistic for me. I don't see how this will change in the future. It could be a significant revenue tool for plugging the deficit though.
Click to expand...

Imagine just how we could close that gap by making Apple & Exxon cough up at 28% instead of 17% or so.
 
Mr. X

Mr. X

It's... kinda effective?
2,391
Posts
17
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Honestly, I'd support cutting the corporate tax rate... That is if the corporations agree to pay that rate, instead of abusing loophole after loophole to lower their rate.

That said, some companies end up paying no taxes after playing the loophole game.
 
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TRIFORCE89

Guide of Darkness
8,123
Posts
19
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Mr. X said:
Regular citizen abuses the tax-code to not pay taxes, the government is going to arrest him.

CEO of a major company does it, the Government is going to sit back pouting and asking them real nice to pay their taxes.
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If it's done legally, even if it isn't fair, no one is getting arrested. We're talking corporations here though, not CEOs. I don't know why those are often equated with each other. You could simultaneously raise upper-level income tax rates while lowering corporate tax rates. If someone's income is their company's profits there's a very significant problem there.

BlahISuck said:
The best thing I learned from this is that now I've got some evidence against corporations paying abnormally low taxes. So if anybody talks corporate tax cuts, I'll know what I need to fire back.
Click to expand...
Mmm... not quite. Larger companies and multinationals are able to afford million-dollar accountants who can game the system and take advantage of every loophole, but small businesses can't and very often don't. The purpose of lowering corporate tax rates is to help the small and medium sized business stay competitive. The effect is negligible for large corporations. Doesn't matter if the tax rates goes up or down, they're able to avoid it.

Tax code reform must go hand-in-hand with this in order to close loop holes and have those larger corporations paying more than they do now.


Us normal folks, at most, might use QuickTax software or something to try and maximize our refund. hat kind of solution is set up not to abuse the system though. We can't afford expensive accounts. If you have more money, you're able to save more money. That is wrong, and I disapprove of the practice, but it isn't illegal - therein lies the problem
 

Kanzler

5,983
Posts
15
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TRIFORCE89 said:
Mmm... not quite. Larger companies and multinationals are able to afford million-dollar accountants who can game the system and take advantage of every loophole, but small businesses can't and very often don't. The purpose of lowering corporate tax rates is to help the small and medium sized business stay competitive. The effect is negligible for large corporations. Doesn't matter if the tax rates goes up or down, they're able to avoid it.
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Yeah I meant for big businesses who earn big money and are also able to avoid it. I agree that small and medium businesses are proportionately more affected by corporate taxes. Though I don't think it would be too difficult to make legislation targeting small and mediums, I hear it in Ontario all the time. It might be a ridiculous criteria, but it would still be better than nothing.
 
Keiran

Keiran

[b]Rock Solid[/b]
2,455
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12
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I don't agree with lowering the rates to something they would be willing to pay. We should not have to make deals with greedy companies for them to stop ruining our country. Tax havens, among other things, should be illegal. We need major reform, an eradication of loop holes. The tax code is what, over 70,000 pages long? Clearly the real issue isn't that a tax rate is too high.
 

Kanzler

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I was just wondering though, if large corporations suddenly found themselves paying double the effective tax rate they're paying now, wouldn't there be some mysterious and well-placed disappearances/assassinations before it's business as usual again? Or at least mysterious disappearances next election cycle.
 

TRIFORCE89

Guide of Darkness
8,123
Posts
19
Years
BlahISuck said:
I was just wondering though, if large corporations suddenly found themselves paying double the effective tax rate they're paying now, wouldn't there be some mysterious and well-placed disappearances/assassinations before it's business as usual again? Or at least mysterious disappearances next election cycle.
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What the heck are you talking about? O_o
 

Kanzler

5,983
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hehehehehe. Let's just say there are some zealous members of Congress and the executive that manage to close the loopholes and it would be impossible for corporations to legally not pay an effective 35% tax rate. Do you think these public servants would disappear? Just a thought, wondering if corporations having to pay double taxes all of the sudden would lead them to become "politically involved" let's say outside of the status quo institutions.
 

Guest123_x1

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The problem with America's corporate tax code is not that the tax rates are too low or too high, but that the laws are choc full of loopholes that have been added and then increasingly exploited over the years. However, every time proposals are made to close these loopholes, corporatists complain loudly that they'll lose money and have to make massive job cuts and send even more jobs overseas, making the economy even worse, thus putting a screeching halt to such tax proposals. As recently as the 1950s, corporate taxes accounted for about 30% of total federal revenue, yet the economy did just fine back then. Now, corporate taxes account for less than 7% of all fed revenue, yet the economy is worse than ever before for the majority of Americans [source], with skyrocketing inflation (thanks to quantitative easing, which we absolutely do not need, despite financial pundits' claims that we need it to "save poor, innocent, struggling homeowners from foreclosure", "reduce our trade deficit", and "get Americans back to work") and incredible difficulty in being able to get a decent job anywhere. (And don't get me started on the Occupy movement, which was started by the same banking elitists that people participating in the movement claim to be protesting.)
An example of an increasingly used corporate tax loophole is the Reverse Morris Trust, which has been used by major corporations such as Disney (who divested ABC Radio to Citadel Broadcasting with this method, only for Citadel to go bankrupt due to the excessive debt load shoveled onto them), Procter and Gamble, and Verizon (who used this technique to divest large chunks of their landline network to smaller companies, with the Northern New England lines going to FairPoint (who went bankrupt from the excessive debt load incurred from the transaction) and assets in much of the Midwest (including my locality) and Pacific Northwest to Frontier Communications.) There have been calls to close this particular loophole, and legislation has even been introduced to do just that, but such legislation has been dead in the water, either by dying in committee, or being removed from revenue bills during the normal legislative process.
 
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