The latest study from Citizens for Tax Justice and the Institute on Taxation and Economic Policy should lend credence to the larger “Occupy” movement.
Many of this country’s biggest companies paid no federal taxes — or even made money through credits and refunds from the government — over the past three years by using an array of loopholes and tax breaks, according to a report released Thursday.
The authors examined the finances of 280 corporations from 2008 through 2010 and found that 30 paid zero taxes or used loopholes to wind up with negative tax rates. Local utility Pepco Holdings paid the lowest rate of all the firms investigated, clocking in at nearly minus 58 percent.
Under the federal tax code, corporations are supposed to pay 35 percent of their profits in taxes. But the study found many of the companies used legal tax breaks that allowed them to pay lower rates than ordinary Americans.
Plenty of politicians complain about the larger 35% corporate tax rate, which is high by international standards. But that assumes corporations are actually paying it — and they’re not.
As President Obama put it in his State of the Union address, “[O]ver the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries. Those with accountants or lawyers to work the system can end up paying no taxes at all. But all the rest are hit with one of the highest corporate tax rates in the world. It makes no sense, and it has to change.”
It’s why the notion of “corporate tax reform” has merit. For the right, the goal is to bring down the 35% rate, but for the left, the goal is to start getting these large, prosperous companies to start paying something.
The Citizens for Tax Justice’s report added, “[J]ust as workers pay their fair share of taxes on their earnings, so should successful businesses pay their fair share on their success. But today corporate tax loopholes are so out of control that most Americans can rightfully complain, ‘I pay more federal income taxes than General Electric, Boeing, DuPont, Wells Fargo, Verizon, etc., etc., all put together.’ That’s an unacceptable situation.”