Thursday, November 3, 2011

Is Corporate America overtaxed? Apparently not.

Biggest Public Firms Paid Little U.S. Tax, Study Says
November 3, 2011

It is not just a few wealthy individuals paying unusually low taxes to the federal government. Corporate America is not far behind.

A comprehensive study released on Thursday found that 280 of the biggest publicly traded American companies faced federal income tax bills equal to 18.5 percent of their profits during the last three years — little more than half the official corporate rate of 35 percent and lower than their competitors in many industrialized countries.
Using information from the companies’ own corporate filings, the study concluded that a quarter of the 280 corporations owed less than 10 percent of profits in federal income taxes and 30 companies had no federal tax liability for the entire three-year period.
The study said that the shelters and loopholes in the current tax system rewarded companies that aggressively avoided taxes at the expense of those that did not. A quarter of the companies in the study had a federal tax bill of 35 percent of their profits, while a similar number had an effective rate of less than 10 percent.
The report is based on data gleaned from the companies’ regulatory filings, which can be different from their corporate tax returns. Because most corporations do not release their tax returns, these corporate regulatory filings offer the best publicly available gauge of what companies pay and what strategies they use to reduce their tax bills.
The study found that two-thirds of  the American companies with significant profits overseas actually paid more in taxes to foreign governments than they did in the United States. Rather than lowering the corporate rate more, the study said, the federal government should end the subsidies and shelters that favor companies that game the system. 
“Closing the loopholes will have real benefits, including a fairer tax system, reduced federal budget deficits and more resources to improve our roads, bridges and school — things that are really important for economic development here in the United States," the report said.