As American families rush to complete their annual tax returns, many will have paid more in federal income taxes than some of America’s largest and most profitable corporations. AT&T, Boeing, Citigroup, Duke Energy and Ford collectively reported more than $20 billion of US pre-tax income last year, yet none of them paid a dime in federal income taxes. Instead, they claimed refunds of more than $1.3 billion from the IRS.
These corporations are not alone in turning tax dodging into a competitive sport. Last year, US corporations paid an effective tax rate of just 12.1 percent, the lowest level in the last forty years, according to the Congressional Budget Office. Sixty years ago, when Republican President Dwight Eisenhower lived in the White House, corporations paid 32 percent of federal government's tax receipts; last year they paid 9 percent.
Below are six examples of how large corporations have rigged the tax rules to ensure that those who have the most get to amass even more, at the expense of everyone else. Figuring out how to unrig them is not rocket science, but it will require strong public pressure on lawmakers to ensure that America's most prosperous corporations pay their fair share.
Boeing's Double Dip
In each of the past nine years, Boeing has reported at least $1 billion in pre-tax profits, yet in only one did it pay any US corporate income taxes. In fact, the aerospace giant got so much money in tax subsidies that it had an effective tax rate of -7.8 percent during this period.
One of the main reasons Boeing has avoided the taxman is that the rest of us subsidize their research and development spending. Last year this amounted to $137 million. Congress first passed the research and experimentation tax credit during the 1981 recession, intending to provide a temporary boost to America's sagging economy. Though it has expired for short periods over the years, it has been renewed thirteen times, and Congress is presently considering making the tax credit permanent.
Government investment in basic research and development can be valuable, but the way the current tax credit is structured, much of the support goes to large well-resourced high-tech firms like Boeing that would have conducted the research anyway as a part of maintaining a vibrant business.
What's particularly disturbing about the Boeing subsidies, however, is that the company already bills the Pentagon for research costs. The third largest defense contractor, Boeing has landed more than $54 billion in government contracts in the past nine years. So essentially, taxpayers are paying for the company's research—twice.
GE's Tax-Free Offshore Profits
General Electric employs 975 people to mine the tax code for every possible deduction. One of their IRS returns ran an
To: Members of Congress
Region: The United States of America
Background: S.2075 Cut Unjustified Tax Loopholes Act is a bill to close unjustified corporate tax loopholes. By stopping offshore tax dodges, this bill would raise over $130 billion over 10 years.
Petition: We the undersigned Support S.2075 - Cut Unjustified Tax Loopholes Act and encourage our Members of Congress to pass this bill into law