Much is being made of—and, fortunately, questioned about—the fact that 46 percent of households will owe no federal income tax for 2011.
Just to put things in context, the Government Accountability Office found, in a 2008 study [pdf], that a very high percentage of corporations reported no tax liability between 1998 and 2005.* As the chart above shows, of all foreign-controlled domestic corporations (FCDCs), on average 68 percent reported no tax liability, while 65 percent of U.S.-controlled corporations (USCCs) reported no tax liability. The percentages of large corporations (defined as those with assets of at least $250 million dollars or gross receipts of at least $50 million dollars) reporting no tax liability, while lower, were still substantial: 38 percent for foreign corporations and 31 percent for U.S. corporations.
Who, then, are the real “givers” and “takers” in the United States?
*The study was prompted by concerns about transfer pricing. Hence, the distinction between foreign-controlled and U.S.-controlled corporations.