Wednesday, February 26, 2014

Major US Corporations Not Paying their Fair Share in Federal Taxes

Maryland residents filling out their tax forms and paying their monthly utility bills might be surprised to find out that one of the companies that 526,000 of them write checks to has been dodging its fair share.

The utility company actually has received more money from the federal government than it paid in taxes over the past five years -- for an effective tax rate of negative 33 percent – according to a new report.

Pepco is far from alone. It is one of 26 Fortune 500 companies, including Boeing, General Electric, Priceline.com, and Verizon, that paid no taxes at all in the last five years, despite combined profits of $170 billion, according to research by the Institute for Taxation and Economic Policy and Citizens for Tax Justice. Their study of  288 highly profitable companies and found that one third paid a tax rate of less than 10 percent between 2008 and 2012. The average effective tax rate of all 288 companies analyzed in the study was 19.4 percent, barely more than half the statutory federal corporate income tax of 35 percent.

Source: Citizens for Tax Justice and the Institute for Taxation and Economic Policy

(Click to Enlarge)

The Maryland General Assembly is considering closing loopholes in the state’s corporate income tax; Congress should do the same.  The “Tax Dodgers” report proposes steps lawmakers can take to close these loopholes, emphasizing the need to  require companies to disclose in which states they pay taxes, and how much.  This will both assist Congress in holding companies accountable for their fair share of federal taxes and  help states close their own tax loopholes.

This is not simply a matter of playing by the rules. Like individuals and families, businesses benefit from what taxes pay for, like an educated and healthy workforce, reliable transportation systems to move their products, and the expectation of a clean air and water.  The point is not to demonize companies, but to make sure they pay their fair share for the public services and investments that help them prosper.

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