It’s that time of year again when everyone is complaining about how much they are going to be responsible for in income taxes and railing against the takers, Mitt Romney’s 47%, those who pay no income taxes at all. It is one area where the GOP propaganda has been highly successful, they have convinced too many to be angry with the working poor, people living from paycheck to paycheck and barely getting by even with help from SNAP and Medicaid.
Those who are deserving of that animosity are not, however, the poor. That anger would be more appropriately directed at the “job creators” who, we are told, are taxed at the highest rate in the world forcing them to outsource our jobs to third world nations.
A recent report from Citizens for Tax Justice details how 26 of the most profitable Fortune 500 companies paid no federal income taxes at all from 2008 to 2012. That is only part of the story, 288 of those highly profitable companies paid, not the widely touted 35% but a mere 19.4% on average when they did pay taxes.
The study did not consider any company that had even one unprofitable year in the five that were looked at only those who showed a profit for all five years were considered.
The list of 26 companies paying no income taxes includes household names such as Boeing, Verizon and General Electric.
CJT also found that a full third (93) of the companies that were looked at paid an effective tax rate of less than 10% over that five years.
All of this refutes what the GOP has been telling us about the heavy burden that taxation places on doing business in this country, it is actually less of a burden than it is in much of the developed world.
There was much more learned in this study, such as the fact that 111 of these 288 companies paid no tax in at least one of the five years included.
The business sectors with the lowest effective rates over the five years of the study were utilities at 2.9%, industrial machinery 4.3%, telecommunications 9.8%, oil, gas and pipelines 14.4%, transportation 16.4%, aerospace and defense 16.7% and financial 18.8%.
Of course when these things are pointed out to those who have bought into the propaganda they are quick to respond that it is perfectly legal to use tax loopholes to reduce one’s tax obligation, and that is true but what they don’t tell you is that access to those tax breaks is available to a very few large corporations. Between 2008 and 2012 just 25 corporations claimed $174 billion in tax relief, nearly half of the $364 billion claimed by the 288 companies in the sample.
During the period of the study Wells Fargo, AT&T, IBM, General Electric, and Verizon enjoyed tax breaks amounting to more than $77 billion.
CTJ concluded that there were five points of reform that should be taken on by Congress to better balance this lopsided approach to taxation:
• Congress should repeal the rule allowing American multinational corporations to indefinitely “defer” their U.S. taxes on their offshore profits. This reform would effectively remove the tax incentive to shift profits and jobs overseas.
• Limit the ability of tech and other companies to use executive stock options to reduce their taxes by generating phantom “costs” these companies never actually incur.
• Having allowed “bonus depreciation” to expire at the end of 2013, Congress could take the next step and repeal the rest of accelerated depreciation, too.
• Reinstate a strong corporate Alternative Minimum Tax that really does the job it was originally designed to do.
• Require more complete and transparent geography-specific public disclosure of corporate income and tax payments than the Securities and Exchange Commission’s regulations currently mandate.
When you are filling out your tax return this year and you feel that anger beginning to bubble up for the “takers” who contribute “nothing” think about the findings in this report and let a little of that anger spill over onto those who may be contributing but who are taking much more than that guy down the street who will be paying no income taxes but who doesn’t know where he’s going to find the money for that new pair of shoes his child needs.