Forum Post: Study of taxes paid by 280 of the largest and most profitable US companies
Posted 13 years ago on Nov. 3, 2011, 12:16 p.m. EST by bronxj
(150)
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from report by Citizens for tax Justice
"# The good news is that 71 of our companies, 25 percent of the total, paid effective three-yeartax rates of more than 30 percent. Their average effective tax rate was 32.3 percent.
The bad news is that an almost equal number of companies, 67, paid effective three-year tax rates of less than 10 percent. Their average effective tax rate was zero.
Even worse news is that 30 companies paid less than zero percent over the three years. Their effective tax rate averaged –6.7 percent.
It’s interesting to note that the average pretax profits for the companies in each effective-tax-rate group were quite similar. But their average after-tax profits diverged widely"
How is it that companies with similar profits pay (or do not pay) tax at such different rates? There must be a change in preferential legislation and programs that allow government to pick winners and losers.
Link to full report: http://www.ctj.org/corporatetaxdodgers/CorporateTaxDodgersReport.pdf
The most profitable industries in the world (energy, healthcare, finance) have been given billions in government handouts and tax breaks. Meanwhile, they keep raising charges causing hardship for millions. With all those massive handouts, tax breaks, and obscene charges, profits rise to record high levels. Millions in bonuses are paid to the executives. With record high profits, record high dividends are paid. 40% of all dividends in the United States are paid to the richest one percent. The bottom 90 percent of Americans share about 10 percent (that's ten percent) of all dividends. The rest are paid to the top 5 percent and foreign investors. All of this causes a gradual concentration of wealth and income. This results in a net loss for the lower majority who find it more and more difficult to cover the record high cost of living, which again, is directly proportional to record high profits for the rich. As more and more people struggle to make ends meet, more and more financial aid becomes necessary. Most of which goes right back to the health care industry through Medicare, Medicaid, and a very expensive prescription drug plan. This increases government spending. This has been happening for 30 years now. During the same time, tax rates have been lowered drastically for the richest one percent. Especially those who profit from investments. These people pay only 15 percent on capital gains income. As even more wealth concentrates, the lower majority find it more difficult to sustain there share of the consumer driven economy. Demand drops as more and more people go broke. Layoffs results. Unemployment rises. This results in less revenue and more government debt.
Massive subsidies and tax breaks for Wall Street, massive tax breaks for the super rich, heavy concentration of wealth, record high charges along with record high profits and record high cost of living, more hardship for the lower majority, more government spending in the form of financial aid to compensate, more concentration of wealth, less demand, layoffs and unemployment. All of this results in slower economy and less tax revenue. At the same time more and more financial aid becomes necessary. It's a horrible downward cycle which gradually pushes the national debt higher and higher. The other big factors are the wars in the Middle East.
This post is not intended to excuse those who sit on the couch collecting welfare, make no attempt to find work, or squease out kids they can't provide for.
Thank congress. Since the US has the highest corporate tax rates in the world, companies choose to invest overseas and are creating jobs overseas. So they pay lower taxes overseas thus in its simplest explanation this results in lower tax rates.
I agree its congress and idiotic legislatiojn . For instance, a corporation may manufacture its product overseas and sell that product here yet pay no tax on the income generated in the US through "transfer pricing" which permits a US company to "buy" its products from its wholly owned overseas subsidiaries (keeping the "profits" in low tax havens while generating the actual profits here).
For instance, Company A manufactures Product B in Country C. The wholesale price of product B is $3 Gross margin on Product B is $2. Company A buys Product B from its wholly owned Country C subsidiary for $2.75 for sale in the US at $3, leaving $1.75 profit in Country C (taxed at Country C’s tax rates) and only $0.25 profit in the US, although all retail sales of Product B will be in the US.
I would not call them tax havens. They are other countries that know if you keep corporate taxes low you attract corporations which create jobs. Profits always migrate to low tax jurisdictions.
Yes, however the actual profits are generated in the United States. Of course a legitimate expense is created when you are purchasing the product from a third party (overseas or domestic) prior to distributing it in the US, but in many cases transfer pricing regs allow an expense to be created by purchasing from yourself.
They pay squat in America after you account for all the loopholes, massive subsidies, and charity.
We are the largest consumer market in the world by far. We should not be kissing so much corporate ass. They need us.