Posts Tagged ‘taxes’

mike2may

Special mention

425FatCats 178619_600

178021_600

Special mention

178063_600 1fa323e01db7eb05b1c17299a830efd7

178166_600

Special mention

2b75285d9d4568e33926c410457ae83b 178153_600

oxfam

Yesterday, I argued that the U.S. tax system is broken. That’s because many corporations pay no federal taxes and, even when they do, the effective rate is much lower than the statutory rate.

And that’s just on the tax-revenue side. On top of that, as Oxfam (pdf) shows, U.S. corporations received a wide variety of subsidies. For example, from 2008 to 2014, the top 50 U.S. corporations collectively earned $4 trillion in profits, paid $412 billion in federal taxes, and received $11.2 trillion in support in the form of loans, loan guarantees, and bailout assistance from the federal government.

There is no doubt that data from this time frame is shaped heavily by the federal programs, like the auto-bailout and TARP, that were created to deal with the largest economic crisis since the Great Depression. Additionally most loans and bailouts are paid back in full with interest. There are also relevant distinctions to be made between companies and sectors on their tax practices and their receipt of federal support.

Companies benefit in different ways from federal investments and from tax laws, only some of which are revealed in the data Oxfam analyzed. The data also does not show the value of other forms of federal support that companies receive beyond loans, loan guarantees and bailouts.

Nonetheless, the data is useful to observe in aggregate because it puts in stark relief the taxpayer financed benefits large companies in general enjoy in relation to the taxes they pay.

In addition, those same corporations hold $1.4 trillion in offshore cash reserves, which are not subject to taxation. And they spent roughly $2.7 billion on lobbying from 2008 to 2014.

That means for every $1 they invested in shaping federal policy through lobbying, they received $130 in tax breaks and more than $4,000 in federal loans, loan guarantees and bailouts.

Those breaks indicate that not only is the U.S. tax system broken; so, too, is the political system.

Except, of course, for U.S. corporations.

corps-taxes

The other day, I wrote that, while the United States government is not broke, corporate income taxes represent a small percentage of total federal tax revenue and they’ve been steadily declining for a very long time.

And that’s because, as demonstrated in a new study by the U.S. Government Accountability Office (as requested by Senator Bernie Sanders), a large percentage of U.S. corporations pay no federal income taxes.

In each year from 2006 to 2012, at least two-thirds of all active corporations had no federal income tax liability. Larger corporations were more likely to owe tax. Among large corporations (generally those with at least $10 million in assets) less than half—42.3 percent—paid no federal income tax in 2012. Of those large corporations whose financial statements reported a profit, 19.5 percent paid no federal income tax that year. Reasons why even profitable corporations may have paid no federal tax in a given year include the use of tax deductions for losses carried forward from prior years and tax incentives, such as depreciation allowances that are more generous in the federal tax code than those allowed for financial accounting purposes. Corporations that did have a federal corporate income tax liability for tax year 2012 owed $267.5 billion.

Keep that in mind the next time someone claims that the U.S. corporate tax rate needs to be lowered. The fact is, effective tax rates are much lower than statutory rates. Thus, for example, the statutory tax rate on net corporate income ranges from 15 to 35 percent, depending on the amount of income earned. For tax years 2008 to 2012, profitable large U.S. corporations paid U.S. federal income taxes amounting to, on average, only 14 percent of the pretax net income that they reported in their financial statements.

Thus, the country is not broke—but the tax system, especially when it comes to large corporations, certainly is broken.

177960_600

Special mention

danzcolorplus6618_590_468 177936

177881_600

Special mention

177918_600 Wag_the_Bill_590_732