Not only do hundreds of the most profitable U.S. corporations pay little or no income tax, dozens of them actually had a negative income tax rate from 2008 to 2010, a new report from Citizens for Tax Justice and the Institute on Taxation and Economic Policy has found.
The report, “Corporate Taxpayers and Corporate Tax Dodgers, 2008-2010,” found that of the nation’s 280 most profitable companies, 78 paid no federal income tax in at least one of the years between 2008 and 2010. Thirty of those companies paid less than zero income tax, despite combined profits of a staggering $160,000,000,000.
How is it possible for a company to pay “less than zero” tax? The answer, in a word: subsidies.
“These 280 corporations received a total of nearly $223 billion in tax subsidies,” Robert McIntyre, director of Citizens for Tax Justice and the report’s lead author, wrote. “This is wasted money that could have gone to protect Medicare, create jobs and cut the deficit.”
Those subsidies amounted to $222.7 billion for all 280 companies in the report in the years 2008-2010. Wells Fargo, a San Francisco-based bank, topped all recipients of corporate tax welfare, reaping $18 billion in tax breaks from the U.S. Treasury. At a mind-boggling -57.6% (yes, that’s a minus sign), Pepco Holdings enjoyed the lowest effective tax rate of all the firms in the report.
Overall, the average tax rate for the 280 corporations in the report over the three-year period was 18.5%; in 2009-2010 it was 17.3%, or less than half the official federal corporate income tax rate of 35%.
Among the report’s other findings:
- Taxation sometimes varied wildly within sectors; while UPS paid 24.1% in federal income tax, FedEx paid nearly nothing– just 0.9%.
- Financial services firms landed the largest share (16.8%) of all federal tax subsidies over the past three years. More than half of all federal corporate tax subsidies received by corporations in the study went to firms in just four industries: financial services, utilities, telecommunications, and oil, gas and pipelines.
- The ten largest defense contractors enjoyed a decline in their combined tax rate from 19.3% in 2008 to 10.6% in 2010.
- U.S. corporations which earned 10% or more of their global profits overseas paid tax rates to foreign governments that were nearly a third higher than they paid to the IRS on their U.S. profits.
#10- Carnival Cruise Lines: Made $11 billion in profits over the last five years, but its federal income tax rate during that period was 1.1%
#9- ConocoPhillips: $16 billion in profits from ’07-’09; received $451 million in tax breaks through dubious deductions.
#8- Citigroup: $4 billion in profits in 2010, paid no federal income tax AND received a $2.5 trillion bailout from the Federal Reserve and the US Treasury.
#7- Goldman Sachs: $2.3 billion profit in ’08; paid only 1.1% of its income in taxes AND received an $800 billion bailout.
#6- Valero Energy: $68 billion in sales last year; $157 million tax refund AND $134 million deduction.
#5- Boeing: received $30 billion Pentagon contract to build 179 airborne tankers; received $124 million IRS refund.
#4- Chevron: $10 billion in profits in ’09; $19 million refund last year.
#3- General Electric: $26 billion in profits over the last 5 years; received $4.1 billion refund from the IRS.
#2- Bank of America: $4.4 billion profit + trillion dollar bailout (that’s 1 with 12 zeros– $1,000,000,000,000); received$1.9 billion IRS refund.
#1- ExxonMobil: $19 billion profit in ’09; paid $0.00 in federal income tax AND received a $156 million IRS rebate.
And yet, Republicans actually want to lower corporate taxes?
Conservatives love to argue against higher taxes on the rich and corporation. “Why tax the job creators,” they ask, ignoring the fact that the vast majority of jobs they create are outsourced in foreign countries or that when the U.S. government gifted corporations with a tax holiday on offshore profits back in 2004, 13 of the leading beneficiaries of the tax break laid off 67,000 American workers. Citigroup, Hewlett-Packard and Bank of America slashed the most U.S. jobs.