Read

Search form

Why 1 in 9 of America's Biggest Companies Pay Zero Taxes

Why 1 in 9 of America's Biggest Companies Pay Zero Taxes
Wed, 10/30/2013 - by Alan Pyke
This article originally appeared on Think Progress

Among companies listed on the S&P 500, almost one in nine paid an effective tax rate of zero percent — or even lower — over the past year, according to an analysis by USA Today.

There are 57 separate companies listed on the index that paid a zero percent rate from the past year. Those companies include both household names like Verizon and News Corp. and lesser-known corporate giants like the data storage manufacturer Seagate (market value $15.9 billion) and Public Storage (market value $29.5 billion).

Many of the companies USA Today identified in its analysis as paying negative rates make the list because they lost money, but several were profitable. Previous analyses have shown that the typical corporation pays a lower effective tax rate than most middle-class families, and a far lower one than the statutory corporate tax rate against which business interests disingenuously rail.

Getting to a zero percent tax rate despite turning a profit requires creative accounting, but not lawbreaking. The corporate tax code allows companies to avoid tax liability even in years when they turn a profit. Some of the profitable companies on the newspaper’s list, such as General Motors, achieved a zero percent rate by banking tax credits from previous years when business was bad.

But the more common gambit involves moving revenues from parent companies to offshore subsidiaries based in tax haven countries in the Caribbean, Europe, and elsewhere.

Such offshoring of profits has caught the attention of policymakers in the United States and Europe this year, with the focus predominantly on Apple Inc. The U.S. tech giant not only avoided the American tax system, but managed to shelter about $100 billion in revenues from any taxes at all. That scheme relied upon a loophole in Irish law which that country’s government says it intends to fix, but the narrow change proposed by Ireland’s finance minister will not address the larger problem of corporate tax avoidance.

Tax dodging costs the U.S. about $300 billion per year. Much of that lost revenue is from individuals, rather than corporations. The country is cracking down on individual tax dodgers and striking deals with countries such as Switzerland and the Cayman Islandsthat will help identify tax cheats starting in 2014.

The corporate tax avoidance problem is thornier, as it is generally done through entirely legal methods. Coordinating international tax law in a way that would minimize corporate tax trickery is very difficult under the current approach, and a paradigm shift in business tax law may be necessary to end the accounting practices that rob countries of tax revenue.

Originally published by Think Progress

Add new comment

Sign Up

Article Tabs

Bernie Sanders supporters traveled to Philadelphia from every corner of the country this week to show their enduring support for his candidacy.

This week, as the DNC rages on, we're talking state surveillance – digging deep into the past and present with surveillance expert, Chip Gibbons from Defending Dissent

"We are in a political moment where we can dismantle not only the racist neoconservative Republican Party, but also the racist and equally destructive neoliberalism of the Democratic Party."

More than $50 billion in foreign aid is pumped into Africa annually – but did you know that roughly the same amount is illicitly siphoned out of the continent?

Democratic National Convention, Bernie Sanders, Jill Stein, Bernie protesters, progressives, Equality Coalition for Bernie Sanders, Migrants Rights March, Juntos, immigrant rights, Democracy Spring

We’re supposed to have a government of and by the people, but the government we have is only interested in protecting the rights of big corporations and billionaires.

Greek privatizations, transit privatization, Panhellenic Railway Association, TrainOSE, water privatization, Thessaloniki Water Supply & Sewage, Greek austerity policies

Late last month, the Panhellenic Railway Association took to the streets to protest a slew of public transport privatizations scheduled to take place later this year. "The government defiantly and shamelessly gives away the national wealth," it said.

Posted 5 days 15 hours ago
Democratic National Convention, DNC, DNC protests, Hillary Clinton, Bernie Sanders, Bernie supporters, Food & Water Watch, March for a Clean Energy Future

More than 10,000 people calling for a “clean energy revolution” filled the streets here Sunday.

Posted 2 days 19 hours ago
anti-fracking protests, Keep It In the Ground, protester arrests, undercover agents

Emails obtained through an open records act request show that the Lakewood Police Department in Colorado collected details about a BLM oil and gas lease protest from undercover officers as the event was being planned.

Posted 5 days 13 hours ago

“Reverse redlining” flooded communities of color with toxic mortgages, practically ensuring default.

Posted 6 days 15 min ago
#WebOfDenial, climate denial, fossil fuel industry, Exxon climate lies

In the U.S. Senate, champions for climate action and accountability are loudly putting the blame on think tanks and denier-for-hire front groups that have created doubt about climate science.

Posted 6 days 1 min ago
Universal Credit, Citizen’s Advice Scotland, U.K. austerity policies, welfare benefits reform, Citizen Advice, New Policy Institute, welfare payment delays

Claimants are facing hefty delays in receiving benefits and unfair sanctions.

marijuana legalization, cannabis legalization, legalized weed, Adult Use of Marijuana Act, AUMA, Monsanto, GMOs, seed patents, George Soros, corporate marijuana takeover

With the cannabis industry predicted to generate over $13 billion by 2020, there should be little doubt that companies like Monsanto are simply waiting for Uncle Sam to remove herb from Schedule I.

All Lives Matter protesters come together for a group hug with join Black Lives Matter activists in Dallas at Park Ln & Fair Oaks Ave. July 10th.

In recent weeks, the Southern Poverty Law Center has received a number of requests to name Black Lives Matter a hate group. In our view, these critics fundamentally misunderstand the nature of hate groups and the BLM movement.

Democratic National Convention, Bernie Sanders, Jill Stein, Bernie protesters, progressives, Equality Coalition for Bernie Sanders, Migrants Rights March, Juntos, immigrant rights, Democracy Spring

We’re supposed to have a government of and by the people, but the government we have is only interested in protecting the rights of big corporations and billionaires.

super rich, growing inequality, wealth inequality, joblessness, societal decay, pandemics, global terrorism

Perhaps they feel immune from the killings in the streets, for they rarely venture into the streets anymore. They don’t care about the great masses of ordinary people, nor do they think they need us.