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Ben Secord on November 18, 2011 - 4:59pm
As the Occupy Wall Street movement continues to raise awareness about growing economic inequality and unchecked corporate influence over our political system, a new report released last week by the Citizens for Tax Justice and the Institute on Taxation and Economic Policy found that almost 80 of the country’s most profitable companies paid no federal income tax in at least one of the last three years.
The report, which surveyed 280 Fortune 500 companies, shows that many corporations received billions in subsidies while also seeing their tax rate go down. From 2008-2010, the companies surveyed received more than $220 billion in tax subsidies, while the average effective rate paid by these companies dropped to only 18.5 percent (the corporate tax rate is 35 percent). Shockingly, 30 of the companies actually had a negative tax rate over the last three years. One of those companies, General Electric, was the target of criticism earlier this year when a report found that the company had paid no income tax in 2010, even though its U.S. profits exceeded $5 billion.
The report shines a light on a number of other egregious examples of a tax code riddled with unnecessary loopholes and misplaced priorities that disproportionately benefit specific companies and industries. Pepco Holdings had a tax rate of negative 57.6 percent over the three year period. Wells Fargo received $18 billion in tax giveaways. Amazon paid a rate of less than 8 percent on profits of nearly $2 billion. The report also noted that the financial services sector received the largest share of tax subsidies while the top ten defense contractors saw their tax rate cut in half.
The release of the study comes as the Congressional supercommittee charged with reducing the country’s debt continues to stall with the November 23rd deadline approaching. If the committee can’t agree on a package totaling $1.5 trillion then automatic spending cuts will kick in. While deep cuts to Medicare, Medicaid and Social Security have been proposed, efforts to ensure that corporations are paying their fair share have gained very little traction. Robert McIntyre, Executive Director of Citizens for Tax Justice, noted the skewed priorities in giving away billions to companies that already enjoy huge annual profits, “This is wasted money that could have gone to protect Medicare, create jobs and cut the deficit.”
While Congress has yet to tackle the issue in a meaningful way, it’s clear that the public would support action to address corporate tax dodgers. A recent NBC News and Wall Street Journal poll found that three-quarters of respondents agreed with a statement that noted that “America needs to reduce the power of major banks and corporations” and that the “government should not provide financial aid to corporations.”
Full Resources from this Article
Citizens for Tax Justice and Institute on Taxation and Economic Policy - Corporate Taxpayers & Corporate Tax Dodgers, 2008-2010
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