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By the Numbers: The Myth of the Overtaxed Corporation

For corporations, paying for tax breaks is still the best investment around.

It's an election-year staple: The United States has the highest corporate tax rate in the world. But the official tax rate is far higher than what corporations actually end up paying. How it happens:

Monopoly Illustration

1. More than ever, people pay more in taxes than corporations do.


Corporate taxes as a
percentage of federal revenue:

JTF: Corporate Tax Percentages

 

 

 

 

 

 

 

 

 

 

 

 

 


Monopoly Circle

2. But we tax corporate
income at 35%,
the highest in the world, right?
Not really.


280 “Fortune 400” companies showed profits every year from 2008 to 2010. Of those:

About one-quarter paid more than 30%

About one-quarter paid less than 10%


Individual income and payroll taxes as a percentage of federal revenue:

JTF: Individual Tax Percentages









Average tax rate?

18.5%

(That’s what a human being pays on $60,000 in taxable income.)

 

Monopoly Circle

3. And some of the wealthiest corporations pay no taxes at all.
They even get money back.

29

corporations from 2008 to 2010 paid

Zero

in taxes and received refunds totaling

 

$10.6 billion


GE Logo

General Electric was the champion. It made a $10.5 billion profit. At the statutory 35% rate, it would have paid about $3.7 billion in taxes. Instead, it got refunds of $4.7 billion. That’s a total tax subsidy of $8.4 billion dollars.

Also paying no taxes , 2008-2010

Verizon Logo

Verizon made $32.8 billion in profit and got
$951 million in  refunds.

Wells Fargo Logo

    Wells Fargo made $49.4   billion and got
$68 million in refunds.



Boeing Logo

Boeing made $9.7 billion and got
$177.6 million in refunds.

 

Monopoly Circle

4. Lobbying. The best investment around.

 

10,000%
For its tax subsidy of $8.4 billion, General Electric spent $84.4 million on lobbying: a 100-to-1 return on investment.

22,000%In 2004, Congress was considering a one-time-only “repatriation holiday” law. 93 companies spent a total of $282.7 million lobbying for the bill, which allowed corporations to bring billions of dollars home from overseas accounts, but to pay income tax on only 15 percent of the money.

The law passed, and the corporations that lobbied saved $88.6 billion. That’s a  220-to-1 return on investment.


Doug PibelDoug Pibel wrote this article for 9 Strategies to End Corporate Rule, the Spring 2012 issue of YES! Magazine. Doug is managing editor of YES!

Interested?

Sources:

"Corporate Taxpayers & Corporate Tax Dodgers, 2008-2010," Citizens for Tax Justice, November 2011

"Representation Without Taxation," U.S. PIRG and Citizens for Tax Justice, 2012

 "An Empirical Analysis Under the American Jobs Creation Act," Raquel Alexander, Susan Scholz, Stephen Mazza, April 2009

Corporate and individual contributions to taxes.

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