The Great Corporate Tax Dodge is alive and well. A couple of new studies show corporate taxes as a percentage of total tax revenues are at a 60 year low and many corporations pay no tax at all. The GAO issued a new report which shows use of corporate tax breaks cost the U.S. government $181.4 billion in 2011 alone.
In 2011, the Department of the Treasury estimated 80 tax expenditures resulted in the government forgoing corporate tax revenue totaling more than $181 billion. Many of these tax expenditures are broadly available to both corporate and individual taxpayers. More than two-thirds or 56 of the 80 tax expenditures used by corporations in 2011 were also used by individual taxpayers, such as other types of businesses not organized as corporations.
Beyond accelerated depreciation schedules, parking one's money offshore is the #2 cause of lost tax revenues. Below is the GAO's table of the top seven reasons tax collections were $181.4 billion short for 2011.
At this investigative site is a treasure trove of corporations and individuals parking their money offshore, using loopholes to avoid paying taxes and outright money laundering. Yet even when brazen, money laundering gets a slap on the wrist with no real penalties.
We have the Obama administration seemingly hell bent on cutting social security benefits through chained CPI, yet nary a wink and a nod occurs towards the loss of tax revenues from big business and individuals using pass through tax business entities to avoid taxes. We even have more tax avoidance being enabled through trade treaties. The below graph shows how low corporate tax revenues are as a percentage of total the government collects, the lowest in 60 years. Corporate profits, on the other hand, are at a 60 year high.
To wit, the Institute of Policy Studies has an updated list of the biggest corporate tax dodgers, reprinted below: Notice how some of these same companies demand more cheap labor, offshore outsourcing, fight any attempt to improve U.S. labor conditions and decry consumer protections.
Bank of America
Had $17.2 billion in profits offshore in 2012 on which it paid no U.S. taxes. Reported it would owe $4.3 billion in U.S. taxes if profits are brought home.
Had $42.6 billion in profits offshore in 2012 on which it paid no U.S. taxes. Reported it would owe $11.5 billion in U.S. taxes if profits are brought home.
Paid just a 15% federal income tax rate from 2010-2012, less than half the official 35% corporate tax rate – a tax subsidy of $6.2 billion. Had $43 billion in profits offshore in 2012 on which it paid no U.S. taxes.
Made $5.7 billion from 2010-2012 and didn’t pay a dime in federal income taxes. Got a tax subsidy of $2.1 billion. Received $10.3 billion in federal contracts from 2006-2012.
Made $88 billion from 2002-2012 and paid just 2.4% in taxes for a tax subsidy of $29 billion. Paid no taxes in 4 years. Had $108 billion in profits offshore in 2012 on which it paid no U.S. taxes. Received $21.8 billion in federal contracts from 2006-2012.
Made $5 billion from 2009-2012 and paid just $50 million in federal income taxes – a tax subsidy of $1.7 billion. Had $11.6 billion in profits offshore in 2012 on which it paid no U.S. taxes. Received $16.7 billion in federal contracts from 2006-2012.
Made $13.6 billion and paid $2.5 billion in federal income taxes from 2009-2012. Paid an 18.4% federal income tax rate, half the official 35% rate – a tax subsidy of $2.2 billion. Had $53.4 billion in profits offshore in 2012 on which it paid no U.S. taxes. Received $8.7 billion in federal contracts from 2006-2012.
Saved $4.5 billion in federal income taxes from 2009-2011 by transferring profits to a subsidiary in the tax haven of Puerto Rico. Had $60.8 billion in profits stashed offshore in 2012 on which it paid no U.S. taxes; reported it would owe $19.4 billion if profits are brought home.
Received $2.2 billion in federal tax refunds from 2010-2012 while earning $43 billion worldwide even though 40% of its sales are in America. Had $73 billion in profits offshore in 2012 on which it paid no U.S. income taxes. Received $3.4 billion in federal contracts from 2010-2012.
Made $19.3 billion in U.S. pretax profits from 2008-2012 but paid no federal income taxes during the period; instead got $535 million in tax rebates. Total tax subsidy: $7.3 billion. Received up to $6 billion in federal contracts from 2011 through 2023.
There are so many loopholes in the corporate tax code, multinationals never pay the official 35% corporate tax rate. As we see above many instead get money from us in the form of rebates. These same corporations are the ones lobbying for austerity, to cut social safety nets like Medicaid, Medicare and social security, while they demand Congress lower further the corporate tax rate and add even more loopholes.
Senator Bernie Sanders has been fighting hard against deadbeat corporations and managed to get an amendment adopted in committee to curtail corporations dodging their tax bill. The corporate tax legislation is in committee so we would be surprised if this survives at all on passage or isn't watered down to ineffective, in spite of Senator Sanders' heroic efforts.
The Senate Budget Committee today approved an amendment by Sen. Bernie Sanders (I-Vt.) to reduce the deficit by ensuring that large, profitable corporations cannot avoid paying income taxes.
Sanders’ amendment was adopted 12 to 10 as the committee began work on a budget blueprint for the next fiscal year.
“At a time when corporations are experiencing record-breaking profits while corporate income tax revenue as a percentage of GDP is near a record low, it is time that we demand that corporate America contribute in a significant way toward deficit reduction,” Sanders said.
About one out of four large, profitable corporations now pay nothing in federal income taxes.
“When Bank of America, Citigroup, Wells Fargo and other large financial institutions needed government assistance in 2008, they wanted all of the advantages of being American. They went to the U.S. Treasury Department and the Federal Reserve to receive trillions of dollars in financial aid. But when it comes to paying taxes, these same financial institutions want to avoid U.S. taxes by sheltering their profits in the Cayman Islands, Bermuda, the Bahamas or other tax havens,” Sanders said. “That is unacceptable.”
Like everything else in this country, the tax code is written to benefit the super-rich and multinational corporations. Congress is deadlocked and maybe that is a good thing, for if they reform the corporate tax code, odds are the hordes of corporate lobbyists will make sure the new tax rules will be worse than it currently stands.